What is drop shipping?
Drop shipping is basically when you sell someone else's product directly through your website as if it were your own. With drop shipping, your brand and marketing are associated with each sale but the wholesaler is the one who actually packs up the product and ships it out under your name.Pros:
- Drop shipping sales are easier to make since there are fewer steps the customer needs to take in order to complete a sale. Much higher conversion rate. Quicker sales.
- You make a higher percentage of profit per sale than affiliate marketing
- This method is more hands-on which gives you greater control over your customer's experience. You take the calls, handle return requests, answer product questions, etc.
- Less time is spent creating a website that contains valued content to drive traffic (compared to affiliate marketing.)
- No capital investment. If there's too much stock to sell, it's not your problem.
- More profit. Usually your sales are getting wholesale pricing since companies can buy large volumes of inventory. This gives you a bigger profit when you make a sale.
Cons:
- This method is more hands-on, you need to deal with the customer, their questions, their complaints etc.
- Since your branding is associated with each sale instead of the wholesaler's this means you need to create a business brand, marketing materials, etc. to sell the product.
- If the transaction breaks down, you could be on the hook for the costs associated with the sale issues including charge backs, refund fees, shipping.
What is Affiliate Marketing?
Affiliate marketing is when an advertiser pays a commission of their sales to a publisher when the publisher brings them a sale. For example, some dude writes a blog talking about fidget spinners and in his article, includes a link to where you can buy a fidget spinner. If the reader clicks that link and completes an order, the publisher gets a cut of the sale.
Pros:
- Very hands-off approach. The publisher can merely set up their website and let the orders come through without even having to deal with a customer.
- Branding of products is associated with the manufacturer/wholesaler and not the publisher. If there's a problem with an order, the wholesaler gets all the problems and bad press that go with it, not the publisher.
- Once the content and website are well established the publisher can focus on market research and providing product links for items which sell well instead of worrying about order fulfillment or pesky customers. This is a great solution for someone who only likes marketing.
Cons:
- Takes longer to produce income. Affiliate marketing is a very passive sales technique. In order to make sales the website needs to have a lot of valued content to attract viewers/ readers to the website so they can be funneled into sales opportunities. Creating highly trafficked content to do so takes linger than merely setting up a website for direct sales.
- Smaller percentage of profits. Since you're not doing much work to complete the sale, you normally will get less of a percentage of the sale than with drop shipping.
- Lower conversion rates. Since customers have to click more in order to make a sale, the conversion rate is much lower. This means you need to have a much higher level of traffic coming through your website in order to compensate for the drop off.
How do I Get Started?
Affiliate Marketing:
If you want to sell products from a well established company, chances are they already have an affiliate system set up for you to join. Simply do an internet search for "company name + affiliate program" or something like that. If they don't have an affiliate program, you can set one up yourself through an affiliate network. Affiliate networks do all the tracking, accounting, and payment of commissions for you. Here are some of the top affiliate networks:
- Buy a domain
- Buy Hosting
- Buy Email Service
- Build a website with valuable content
Drop Shipping:
You can contact a wholesale company directly to see if they are interested in doing a drop shipping partnership. Be careful if they have never done one before though. You can also do a web search for "drop shipping + product you're interested in selling" to find suppliers who already have drop ship programs established.
Worldwide Brands is another good source for finding actual wholesalers who do drop shipping.
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