Being an entrepreneur is difficult even if after deciding the niche. Finding a niche and specializing in it is a daunting task. But more daunting is the part that comes later: the business model.
People are usually confused between Affiliate Marketing and Dropshipping, but it need not be because both business models function on completely different sets of business terminologies. For a better understanding, here is a short, actionable guide to both:
Dropshipping a kind of online business model in which no products are kept in stock; neither is there need to have inventory. Whenever an order from a customer arrives, simply pass it on to the seller. The product seller is responsible for shipping the product to that customer. In this business model, entrepreneurs earn through arbitrage.
Pros of Dropshipping
Not only is dropshipping a great business opportunity for entrepreneurs across the globe, but it also helps customers find new products in the market, which they never thought existed before. This is all down to the novel approach of dropshippers. The following are the primary pros of dropshipping:
No Entry Barrier
Start a dropshipping business with almost zero investment. Only an e-commerce website is needed to start selling the products. This lucrative business model gives small entrepreneurs all the advantage and rights over their business.
More Earning Opportunities
With dropshipping, there are endless opportunities to earn with the smart advertising platform. Approach one or more buyers and attract them with exciting offers. In fact, in this type of business model, a significant amount of money may be made after deducting the costs of hosting, advertising, and more importantly, customer service.
Cons of Dropshipping
Every business strategy has its own downsides, which can shatter dreams if not taken care of responsibly in time. The following are the primary cons of dropshipping:
Since dropshipping is done through an e-commerce website, entrepreneurs should keep in touch with customers and frequently update the order and shipping status. Failing to manage the delivery of these services may cause loss of customers.
Control over Shipping
Although there is complete control over the types of products to promote or market on the website, shipping cannot be controlled because product sellers handle that. Sellers ship the ordered products at their own convenience (such as waiting to collect multiple orders from a single location and sending them all in one go). Because of similar reasons, customers are often seen complaining about late receipt of their orders.
For hands-on professionals, online marketing can be highly profitable. New ventures are started almost every day. Some of these ventures flourish and become successful; however, a few collapse even before they can stand properly. What sets them apart? Only their strategies.
So, any entrepreneur looking forward to starting a new venture in 2019 must first choose a niche followed by the desired category – affiliate marketing or dropshipping.
What is Affiliate Marketing?
Affiliate marketing is a kind of business model which promotes someone else’s products and earn on a commission basis when any are purchased. The marketer, does not handle orders or offer customer support. The marketer promotes products and earn on each sale. Simply put, assuming the right target market is selected, increasing promotion increases earnings.
Pros of Affiliate Marketing
Affiliate marketing is one of the oldest techniques of online marketing and has produced great results over the years. Some of the benefits are:
Prominent e-commerce websites have free-to-join affiliate programs. Anyone interested can join and promote the merchant’s links. The only expense is of website domain and hosting.
Passive Income Source
Affiliate marketing is a great way to earn passive income as there is no need to devote an entire day to it. Simply promote the merchant’s links and earn a commission.
No Customer Support
Unlike dropshipping, affiliate marketing requires no involvement in activities like full-time customer support. Once the customer is redirected from a link to the merchant’s website and a product is purchased, a commission is earned.
Cons of Affiliate Marketing
There are certain barriers in affiliate marketing, which may cause huge problems if ignored. These are:
The primary and the biggest con of affiliate marketing is that you’re paid on a commission basis. Since the commission is fixed, the cost of advertising to attract customers may exceed earnings.
Although commission-based payments are generally made monthly, a payment may be paused due to some backlog or some financial issue at the merchant’s end. This may not always be the case, but it is a common phenomenon.
Where Is The Profit?
Affiliate marketing or dropshipping – which will be more profitable in 2019?
Although affiliate marketing has been a great source of income for entrepreneurs, especially those who want to avoid the hassle of a customer support, dropshipping is a much better option keeping direct income in mind. An online dropshipping website can help make more money compared to an affiliate marketing website in 2019. As dropshipping can provide more profit, it can be leveraged with the strongest social media platforms like Facebook, LinkedIn, etc..
Facebook advertising for a dropshipping business can be structured in three stages:
- Campaigns (one advertising objective for each campaign)
- Ad Sets (target, budget, bid, schedule and placement at the ad set level)
- Ads (creative used to make up an ad)
These parts together make up what Facebook calls the campaign structure. Knowing how all these work together can help run ads and reach out to the target audience.