One question we get asked a lot is whether you should do affiliate marketing or e-Commerce. Both of these business models can be very lucrative. You can make a very good income doing both but if you are new you should definitely only pick a one model.
It really depends on what excites you more. So let’s dive into the differences between an affiliate marketing and e-Commerce.
In this business model the idea behind it in its most basic form is that you are a commissioned salesperson. Large companies will have a product where they not only sell it themselves on their website but will offer affiliates the opportunity to sell their product and receive a commission once the sale has been made.
The identifier of the sale is generated through a unique link. This unique link identifies you as the individual responsible for a customer purchasing through your link. Once the sale is finalized you will get a commission depending on the vendors terms. Commissions can range anywhere from 2% to 70% depending on the offer.
Informational products such as courses on affiliate marketing for example typically will yield a higher commission rate. Where as commissions on physical goods is usually much lower. An example of this is with Amazon Products. If you are interested in starting affiliate marketing you need to decide whether you want to sell physical products or informational ones.
You can start to do this by creating your own review blog and simply preview products that interest you. You may need to purchase some of these products in the beginning but as your website grows and vendors take notice, you may end up getting products with free access or in the case of physical goods –sent to you.
The easiest way to get started is by checking out clickbank.com and find an offer that interests you. Keep in mind these are all informational products. However, there are many different categories to choose from. If you want to sell physical goods, Amazon could be a good place to start or you could just google the products that you are interested in and see if there are affiliate programs for them.
With e-Commerce, the focus is only on physical goods. In this business model we are using drop shipping which is the most common method. The idea behind this is that you can sell a multitude of products and never have to store them in your home or a warehouse.
You would list the products in your e-Commerce store and when someone makes the purchase you then order the product from the manufacturer who in then ships the product directly to the customer. The customer has no idea that the product was shipped from the manufacturer in the seams it came from your own store.
The way how you make money with this business model is through marking up the products. Typically any product gets marked up several 100%. Your profits on an e-Commerce store varies depending on your expenses.
The main expense for e-Commerce is advertising. The two most common platforms for drop shipping is facebook and google ads. There are also fees two your host and payment gateway provider which the most common platform is Shopify.
Which one to Choose
By now you should have a good grasp on the differences between these two models. As for startup costs, the affiliate marketing model is generally cheaper. If investing a little money is not a problem for you then you could go with the drop shipping route if that interests you more. However, if you’re a little strapped for cash, affiliate marketing is probably the better choice.
You will need some training in either one from a good affiliate marketing and ecom review blog like Drew’s Review. Other options are to watch a lot of Youtube videos as there is plenty of content available for free for both of these business models.