Introduction
Do you want to start your own online business or are you already running one? Or, do you just want to start earning some extra income through eCommerce?
If you answered yes to any of the above questions, then this post may be for you.
In this post, we will compare Affiliate Marketing vs Dropshipping vs Amazon FBA and take a look at these different types of online businesses and how they work, and what they require to get started with each.
What is Affiliate Marketing?
The concept of affiliate marketing is not new. It has been around for years. The first affiliate marketing program was launched in the 1960s. The idea behind the program was to promote the sales of books and other products through the use of an affiliate. The affiliate would earn a commission for each sale that he or she made. In the 1970s, the affiliate marketing industry began to boom. Today, the affiliate marketing industry is a multi-billion dollar business.
To put it in simple terms, affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each customer brought by the affiliate’s marketing efforts. The affiliate arrangement is mutually beneficial because the affiliate receives a commission for promoting the merchant’s products and the merchant receives free advertising and potentially new customers.
See? Win, win!
What are the benefits of affiliate marketing?
Affiliate marketing is a very effective and very profitable way to market your online business. Here are some benefits of affiliate marketing:
- Easy to get started
You can start promoting affiliate products almost instantly. All you need to do is sign up for an affiliate program and choose a few products that you like. Then promote them as much as possible. You don’t have to deal with stock issues, delivery problems, or order fulfillment. But beyond that, you don’t have to worry about building your store or purchasing domain names.
- Great source of passive income
One of the best advantages of affiliate marketing is that you do not have to work constantly to make money. Once you produce your content or promotional material, you can promote them online and sit back. They will be pulling in traffic and generating profits for the products you’re marketing. All you have to do is check that the content is up to date and optimize it for conversions occasionally. This makes it a perfect source of passive income.
- No need to stress about customer support
As an affiliate marketer, you act as a product evangelist, not a seller. All you have to do is to persuade people to buy the product. Any concerns that the customer might have regarding order fulfillment, deliveries, or returns will be taken care of by the seller/product owner.
- Location independent
To start your affiliate marketing business, all you need is a laptop and an internet connection and that’s it. It doesn’t matter if you are sitting cozily on a couch at your home or on a beach sipping margaritas, you can still run an affiliate marketing business.
What are the challenges of Affiliate Marketing?
Affiliate marketing can be a great way to make money, but it also has its challenges.
- Finding good affiliate programs and products to promote
There are countless affiliate programs and products available in the market today. So you need to be very careful while selecting the products to promote. You need to find something that you are passionate about and that you believe in, so you can enthusiastically promote it to your audience.
- Creating compelling content
To encourage people to click on your affiliate links and buy from you, you need to either write engaging blog posts, create helpful videos or design attractive social media posts first to gain their trust. If your content is not interesting or useful, the possibility of you making a sale I’ve very bleak.
- You don’t always get high-commission products
Since you only receive a percentage of every sale, you’ll need to do a lot of sales to make a sizable profit. Unfortunately, even if you send huge amounts of traffic to sellers’ websites, if they don’t buy the product, you get nothing. Make sure you partner with sellers that you can be confident can succeed as much as you do.
- There can be payment delays
Payments for affiliate commissions are generated every month or on reaching a particular performance target. But there are instances, however, when payments can be delayed due to a merchant’s backlog or a system error.
- You cannot control the product or pricing
Establishing control over what products are being sold at what prices are a crucial step in boosting revenue. However, affiliate marketers, who are not in charge of these decisions, may only generate smaller profits because of actions taken by the seller.
How does affiliate marketing work?
Affiliate marketing takes advantage of different individuals’ skills to enrich the marketing process. For every sale that is successfully generated, the contributors receive their share of the profit. Here’s how it works:
- As an affiliate, you select a product (by joining an affiliate program) that you want to promote using various marketing techniques like blogging, social media, videos, etc, and start promoting it using an affiliate link.
- The customer finds your content engaging and trustworthy and they click on the affiliate link.
- They are then redirected to the brand’s landing page.
- When the customer buys the product using your affiliate link, the brand pays out a commission to you for driving the sale, as per the rules set by the brand.
Sounds super easy right? Well, it is if you choose the right affiliate program. We’ve listed some of the best affiliate programs for you to get started.
Which are the best affiliate programs to get started?
Affiliate programs also called affiliate networks provide a platform enabling brands and affiliates to find each other and work together. It is on these affiliate programs that you can select the product you want to promote based on your niche.
These are the top 5 affiliate networks that you can join to start your affiliate marketing business.
- Amazon Associates:
The Amazon Affiliate program, also known as “Amazon Associates,” is the easiest way to start your online business journey. Simply sign up, receive immediate approval, and start promoting Amazon affiliate links. If someone purchases one of your links, you get the commission – it’s that easy.
- Commission Junction:
Commission Junction, possibly the second-oldest affiliate program after Amazon, is typically referred to as CJ. Rather than being an e-commerce site like Amazon, CJ is a network.
Unlike Amazon, CJ Affiliate specializes in big businesses, as well as smaller businesses and service providers.
- Clickbank
Clickbank is a digital marketplace that connects buyers and sellers of digital products and services. It is yet another online marketplace on the internet that has been there for ages. Starting in 1998, Clickbank has grown to 6 million clients worldwide and offers some of the highest commissions for its affiliates.
- ShareASale
Part of Awin, ShareASale is a great website with a vast selection of merchant options. ShareASale utilizes over 1,000 merchants from a selection of categories.
The process for signing up is pretty easy and you get access to tools that can help you build and grow your affiliate marketing business in addition to having a huge array of products and brands to select from.
- Impact
Impact is another remarkable affiliate marketing network like Clickbank and ShareASale though not as old.
But don’t let those numbers discourage you from signing up for the platform. After all, its founders created Commission Junction, which means they certainly know what they’re doing!
How to get started with affiliate marketing?
- Choose a platform
There are many platforms to promote affiliate products, but some work better than others. A key factor in choosing the right platform for your niche audience.
For example, if you are promoting weight-loss products, a good platform would be Instagram, as it is a visual medium and appeals to those interested in fitness and health. However, if you are promoting products such as home decor or pet supplies, Pinterest would be a better option, as these types of products are visually appealing and tend to do well on that platform. Facebook is also a great platform for affiliate marketing, as it has a large user base and allows for detailed targeting of ads.
Ultimately, the best platform for promoting affiliate products depends on the products and one that fits your interests and skills. Nonetheless, you need to find a niche that has great potential for affiliate marketing.
- Research affiliate programs to join
As we have already mentioned above, selecting the right affiliate program should be a top priority for you. The best way to find good affiliate programs is to do some research online. Many review websites offer information about different affiliate programs.
To make it easier for you, we have already listed some of the best affiliate programs above that you join right away and start your affiliate marketing business.
Once you join a program, be very careful when selecting the products that you want to promote because not all products are a good fit for affiliate marketing. It’s important to find products that are relevant to your audience and that you believe in.
Once you’ve found some good affiliate programs, don’t forget to read the terms and conditions carefully before signing up.
- Create awesome content
You don’t need to be a journalist or a writer to create awesome content. You just need to have a passion for the topic and love what you’re writing about. Your audience will take note of your enthusiasm in your posts.
Your goal should be to share quality content that will help your audience. People will know that you’re an expert because you’ll always provide quality content, which is why they’ll come back for more.
You need to spend time creating content that’s informative and engaging. Don’t fall into the trap of creating content for the sake of having something to put up on your site. You should be creating content that will drive traffic to your website and your offers.
- Drive traffic to your affiliate links
There are a few things you can do to drive traffic to your affiliate links and increase your chances of making a sale. Here are some of them:
- Provide high-value content to your readers.
- Start promoting on your social media channels
- Write guest posts on industry blogs
- Run contests or giveaways
- Make sure the links on your blog are optimized
- Email marketing campaigns
- Run Paid ads
There are a lot of methods of getting traffic to your affiliate links but to be successful with any method you need to stick to it and put in some time before you can start seeing some results.
- Get people to click on your affiliate links
Some simple things you can do to increase the chances that people will click on your affiliate links are.
- Including strong calls to action in your content. Tell your readers why they should click on the link and what they will get out of it if they do.
- Adding images or videos that include the affiliate link. This can help to draw attention to it and make it more likely that people will click on it.
- Finally, make sure that the links are easy to find and clearly labeled. If you put in the effort to make them stand out, people are more likely to take notice and click through.
- Convert clicks to sales
One of the most important factors is the quality of the traffic that is coming to your site. If you are driving high-quality traffic to your affiliate links, you are more likely to see conversions.
Another factor that affects conversions is the design of your website and the layout of your affiliate links. You want to make it as easy as possible for your visitors to find and click on the links they are interested in.
Finally, you need to have a strong offer that is relevant to your audience. If you can provide value and convince your visitors that it’s worth buying what you’re selling, they will be more likely to convert.
What is Dropshipping?
Dropshipping is a business model in which eCommerce entrepreneurs sell products without having to carry any inventory. When a store owner receives an order from a customer, they simply contact the supplier, who will then ship the products directly to the customer’s door. Dropshipping apps like Oberlo let you add products from various suppliers into your shop to fuel your product offering.
Dropshipping is the perfect business model for anyone who wants to start an online eCommerce store. It’s simple to set up and manage, and it doesn’t require a large up-front investment. You can also run your dropshipping business in your spare time – you don’t need to quit your job to start a successful store. Plus, there are several dropshipping tips you can apply to drive traffic to your store.
What are the benefits of dropshipping?
When done correctly, dropshipping can be a very lucrative way to run your business. Here are some benefits of dropshipping:
- Low startup costs
One of the main benefits of dropshipping is that it has very low startup costs. You don’t need to invest in inventory, and you don’t need to worry about shipping products yourself. This makes it a great option for entrepreneurs who are just starting.
- Easy to set up
Another big benefit of dropshipping is that it’s easy to set up. You can create a store on any platform you like, and you can use any supplier you want.
- Location independent
Dropshipping enables entrepreneurs to run their businesses from anywhere in the world. You don’t need a physical store or employees. All you need is a laptop and an internet connection. This makes dropshipping an ideal business model for digital nomads and location independence seekers.
- Experiment with different products with less risk
Dropshipping permits you to update your inventory quickly, easily, and economically. If you know a product is selling well for another retailer or vendor, you can sell it to your customers immediately, without having to wait for it to arrive at any warehouse.
What are the challenges of dropshipping?
Dropshipping has become a popular business model in recent years, thanks to its low barrier to entry and the flexibility it offers entrepreneurs. While dropshipping can be a great way to start a business, there are some challenges you’ll need to overcome if you want to make it successful. Here are some of the biggest cons of dropshipping:
- Low Margins
Because you’re relying on someone else to handle the fulfillment of your orders, you typically have lower margins than if you were fulfilling them yourself. This can make it difficult to turn a profit unless you’re selling a high volume of products.
- Limited Selection
When you’re dropshipping, you’re limited to the products that your supplier offers. This can be a problem if your target market wants something that your supplier doesn’t carry.
- Poor Customer Service
Because you’re not doing any fulfillment, you don’t have any customer service reps to help customers. This means you’re limited in what you can do to help customers.
- Limited Profits
The profit margins are typically low for dropshipping. This can make it difficult to turn a profit unless you’re selling a high volume of products.
How does dropshipping work?
The process of dropshipping is quite a simple one. It includes these simple steps:
- You set up your online store on e-commerce platforms like Shopify, Etsy, etc.
- A customer orders from your online store.
- Your store automatically forwards the order to your dropshipping supplier.
- The dropshipping supplier prepares your customer’s order.
- Then the supplier ships the order directly to your customer.
Which are the best dropshipping platforms to get started?
There are several different dropshipping platforms to choose from when starting your business. Each platform has its unique benefits and drawbacks, so it’s important to do your research before deciding which one is right for you. Here are some of the most popular ones:
- Shopify
Shopify is among the leading eCommerce platforms for dropshipping. It is one of the most effective eCommerce platforms for dropshipping. It hosts more than half a million drop-shipping web developer shops and web pages. In 2016, Shopify acquired Oberlo, a popular dropshipping plug-in that streamlines product shipment and customs form management.
Accounting for 20% of the overall market share, Shopify is the second-most widely used platform. But it’s a hosted platform. But if you are looking to create a self-hosted store, there are several other platforms out there.
- WooCommerce
WooCommerce is the most popular e-commerce platform, with about 29% of the market share. Major credit for its success goes to its being a free and easy plugin to install. Because of its simplicity of use, WooCommerce is an excellent choice even for non-technical users.
- Magento (Now Adobe Commerce)
Magento now known as Adobe Commerce is the second most popular eCommerce platform on the planet. It is powerful but it’s difficult to use and might not be the best choice for beginners. Magento is a development-friendly eCommerce platform and requires at least fundamental programming knowledge.
- BigCommerce
BigCommerce is a hosted eCommerce platform with a sizable portion of the market share. It offers hosted e-commerce services to more than 150,000 websites worldwide, including small businesses. It uses an easy-to-use interface and fast direct configuration options. Shopify’s transactional charges make it more expensive to function as an online storefront in comparison with BigCommerce, which makes it a viable option.
How to get started with dropshipping
- Select a dropshipping business idea
The first thing you need to do is spend some time finding the best dropshipping business ideas. Most people advise you to select a specific topic you are enthusiastic about, but that s only a partially appropriate piece of advice. It s on some level about a combination of revenue and preference, biased towards earnings.
- Analyze the competition
After deciding what you will be selling, it’s time to learn all about your competitors by analyzing what they sell, how they go about selling their products, and why they’re so successful. You can do a quick search on Google of the products that you want to sell and see who are the top competitors on the 1st page of Google.
You can also use tools like SEM Rush or Ahrefs to dig deeper into the competitor landscape across the world.
- Look for a supplier
You will be able to find a suitable vendor on AliExpress with a few clicks. After you are on the platform, you can search for items, identify suppliers from the search results, and read their reviews and how long they have been on the platform. These factors can help you select the vendor you need.
- Build your store
Once you have decided on a vendor, the next step would be to build your online store. You can use any dropshipping platform we have mentioned above to build your first e-com store.
- Market your business
Now that your well-thought-out online store has been created, exquisite products are put up for sale, and detailed information regarding your dropshipping company is already in place, it’s now time for people to see it to go even further in your dropshipping business. Promoting your dropshipping company is one of the most significant aspects of running an online retail business.
You will need to pull together all of the knowledge you have acquired from the competitor analysis and create a custom strategy that will overcome the competition.
- Optimize
The most significant element of a successful online store is to perform regular testing and optimization so that you can improve your revenue as much as possible. Doing this makes certain that your website will not squander any of the newest strategies and keeps you in direct competition with your competitors.
What is Amazon FBA?
In very simple terms, Amazon FBA (Fulfillment by Amazon) is a program that allows sellers to outsource the shipping and fulfillment of their products to Amazon. This is done by sending your inventory to an Amazon fulfillment center, and then when an order is placed, Amazon will ship the product directly to the customer.
If you’re thinking about starting an online business or are currently selling products on Amazon, it’s worth considering using the Fulfillment by Amazon program.
What are the benefits of Amazon FBA?
There are many benefits of Amazon FBA and we’ve listed some of them below:
- Trouble-free shipping
There is no doubt that shipping is a critical component of any business, big or small. The right shipping process can mean the difference between success and failure.
Too often, businesses are forced to deal with headaches like missed shipments, lost packages, and long delivery times. These problems can be extremely costly and damaging to a business’s bottom line. Fortunately, Amazon FBA allows you to save this headache by taking care of shipping for you.
- Return management is taken care of
Through FBA, Amazon takes over the return of unhappy customers. Amazon handles the logistics, packaging, and shipping documents. However, you will be charged for each return.
- No need to worry about customer service
Amazon offers exceptional customer support, which means you can let them deal with your customers daily. Probably the best thing is that they’re not only available on weekends and nights but also for a phone chat or phone call. The longer you take to respond to customers, the more customers you let go of.
- No limit on storage
When you have your storage facility, it is essential to run quality checks, operate it efficiently, and utilize the space as needed. Fortunately, when you use Amazon FBA, they take care of it for you and you will not face any limitations concerning stockholding and warehousing.
- Multi-channel fulfillment services
Using FBA makes selling to your targeted customers easily and you also gain access to new multichannel shipping opportunities. Using Amazon’s Multi-Channel Fulfillment (MCF) service allows you to offer your products and ship them from the platform on various channels to reach an expanded target audience.
What are the challenges of Amazon FBA?
If you are new to Amazon or thinking of becoming an Amazon seller, here are some common obstacles or issues you may encounter.
- Cutthroat competition
Amazon offers a large number of sellers the chance to sell precisely the same product. At the same time, the criteria for entering Amazon are generally quite less. Irrespective of whether a seller of an item offers it for a limited time or is marketing an uncommon object, he or she always faces fierce competition.
- Strict policies and restrictions
To maintain a high level of quality for products sold on Amazon, the company has strict policies and restrictions for its Fulfillment by Amazon service. These policies include guidelines for packaging, labeling, and shipping products. In addition, FBA sellers must adhere to Amazon’s inventory restrictions, which limit the number and variety of items that can be stored in each fulfillment center.
- Getting reviews and feedback
Consumer feedback and reviews have a great impact on customers’ impressions of your products. A handful of negative reviews might influence customers to question whether your products are good or not. At least one possible outcome might be that they refuse to make any purchases. But the overriding thing to think about is the large number of positive reviews you must have to appear credible to potential customers.
- High Amazon fees
Amazon charges fees for its services at all stages of the Amazon FBA process. Such fees can vary from one-time to regular. These charges can add up as your inventory grows. Some Amazon FBA sellers have reported as much as 53% of their revenue going to Amazon in the form of fees.
- Location dependent
Although Amazon FBA service is available in all the countries that have an Amazon Marketplace, if it is not yet available in your country, you won’t be able to register and avail of the benefits of this service.
How does Amazon FBA work?
Amazon’s FBA process is super simple.
- Vendors obtain the products and send them to an Amazon warehouse. Amazon will supply you with the shipping and delivery info you need.
- Products are placed at Amazon’s fulfillment center until a customer orders them. There is a storage fee based on the size of the storage.
- After a customer places an order, Amazon handles the transaction part and keeps your inventory up to date.
- Amazon then packs and ships the product.
- Amazon’s online portal is dedicated to customer assistance and provides order tracking. Additionally, returns and refunds are also taken care of.
- Your sales profits will be deposited every two weeks by Amazon.
How to get started with Amazon FBA?
- Identify your niche
If you’re going to sell on Amazon FBA, then finding and identifying a profitable niche is key because it plays an important role in your success. To run a successful business, you must conduct thorough market research and find related products to your passions and interests.
Find out the product trends by understanding the emotional impact, practical value, visibility, and popularity of the product. Try to identify the selling point or make a new popular selling point to make it go viral on the market.
- Do some market research
When you are certain about your niche, make sure it’s viable in the market by utilizing competitor sales over a certain period. Keep a close eye on your competition’s sales so that you stay on top of your competition. Take opinions from several suppliers and customers about the products by performing a small survey.
By verifying that the numbers align with what is found in the current market, you can move your planning forward. A steady market can enable you to confidently carry on with your plan.
- Find a supplier for products
Now that you know your industry, you should look for a supplier for products. There are numerous methods to locate supplier info. Alibaba and B2B platforms like AliExpress are useful online suppliers. Try to get the contact info and other details of the prospective suppliers and get in touch with them to make an informed decision.
- Place your first order
Once you’ve selected your supplier, you must place the order. Normally, the initial order should not be too big; you can place a small order and test it out on the marketplace to see if it wins customers’ approval. Testing out in this industry is a great way to grasp the general marketplace using your products.
- Sign-up as an Amazon Seller
If you do not have an Amazon seller’s account, you must register as an Amazon seller before moving on. There are 2 types of accounts available: individual seller or pro seller. The individual seller plan costs $0 a month, but you will be charged about $1 per item you sell on Amazon. The Pro Seller plan includes more tools and costs $39.99 per month.
- List your products
You have to create product listings to add items to the platform. There are several steps to creating your listing; you should include high-quality images with clear, detailed product descriptions. Make sure your products are prime-eligible and attract free shipping options with prime enrollment. If you don’t possess many goods, it is possible to create a listing manually.
- Ship your products to Amazon
Once you have listed your products, you need to send them to Amazon. But it’s unwise to just shove all of them in a box! You will need to follow a few steps as the seller to ready your products for shipping.
You will certainly need to prepare a special barcode label for each one of your products. This barcode label is unique to your Amazon selling account.
- Regularly check the customer reviews
You can rely on your customers’ reviews from previous purchases to provide you with an indication of your product’s value and credibility. Amazon customer reviews are important to your business. It is the credibility you’ve built with your customers that matters.
To attract more customers and increase your revenue, try to seek more positive feedback.
- Optimize your listings
Keep track of your sales performance, and try to learn more about your business within the marketplace. Use your product listings to increase site traffic and increase revenue. Optimization has to be a continual process for any Amazon seller.
Affiliate Marketing vs Dropshipping vs Amazon FBA: A head-to-head comparison
| Criteria | Dropshipping | Affiliate marketing | Amazon FBA |
| Working Principle | You don’t need to hold inventory or make shipments in Dropshipping. Simply accept orders and make a profit | You refer prospective customers to other businesses, if they make a purchase, you get a percentage of the sale as a commission | Sellers send their products to Amazon fulfillment centers, where they will be stored and then shipped when an order is placed |
| Ease of Use | Hard | Easy | Easy |
| Risks | Low | Low | High |
| Investments | Low | Low | High |
| Profits | Low | Medium. Depends on the commission percentage and product value | High |
| Customer Contact | Yes | No | No |
| Customer base | Small | Small | High |
| Risk of Shipping | High risk | Low -no risk | Low -no risk |
| Who’s Incharge | You have full freedom on the products and pricing | You are not in charge of the products and their pricing | You have full control of the products and pricing |
| Drive external traffic | Hard | Hard | Easy |
| How is the growth | It takes time to build a following for regular orders | It takes time to build an audience to whom you will cater but your growth depends on the how the product performs | Enormous growth potential but there is cut-throat competition |
| Future Prospect | You can grow this into a full-time business | This is a great source of passive income because you are dependent on the maker of the product | You need to invest more to get more storage if you want to grow this into a full-time business |
Conclusion
In conclusion, it is important to weigh the pros and cons of each eCommerce business model to see which one is the best for you. It is important to understand the distinctions between affiliate marketing vs dropshipping vs Amazon FBA to determine which one is the best fit for your business.
- Affiliate marketing is a great way to get started in online sales because it doesn’t require any inventory or upfront costs.
- Dropshipping is a good option if you want to start selling products online but don’t have the time or resources to handle manufacturing or shipping.
- If you’re selling products you have created, you should take advantage of Amazon’s FBA program. Amazon will securely ship your items to your customers without you having to deal with them yourself.
So do your research, try out a few different models, and find the one that’s best for you. Good Luck!
