The Affiliate Business Model and the Dropshipping Model allows starting a new Online Business (OB) without investing a lot of money. These two methods are related to the Merchant model where sales are required to generate revenue, but having the facility of no necessary inventory and shipping, saving time and money. These models are similar between them and having singular pros and cons; but what model is better?
The Affiliate model objective is generating traffic to affiliate websites offering their products. This model generates revenues from the sales placed on the website of the affiliated companies. The affiliate is responsible for charging the product and shipping it to the customer. In the end, the affiliate pays a commission for each successful transaction of any user who has been redirected by the company to the affiliated. A great advantage of this model is as the sale is placed on the affiliate’s website, they are responsible for the customer’s satisfaction, this saves a lot of time and resources.
Although this method offers a lot of advantages in a matter of time and resources, the profits cloud not be the desired at the beginning. Usually, commissions from the affiliate are not the best, in addition to the low traffic for a new website could result in a not very high revenue. Another disadvantage of this model is about one-time customers; since the customers are buying from the affiliate, usually the customer return directly to the affiliate website the next time they want to buy again. Even with these disadvantages, this model, with time and dedication can become a good opportunity.
By the other side, the Drop shipping model offers most of the advantages of the Affiliate model with a bigger profit range. The drop-shipping model consists of finding a wholesaler who will take care of shipping the product to the customers. The company creates a website where the customers as difference of the affiliate model place the order for the product. Then the business owner buys the product from the wholesaler with the customer information at a distributor price, and the wholesaler ships it to the customer. This method offers a better income than the affiliate model because the owner is the one who set the final price instead of the affiliate fixed commission. This model offers a better opportunity to for more and returns customers because the customers are buying the product directly from the company instead of the affiliate or wholesaler.
The disadvantage of this model is the time required to place orders with the wholesaler, maintenance the website, and customer service. Yes, as the customer brought the product from the owner of the business, the responsibility for customer’s satisfaction rest on the owner.
So, what should I pick for my business? That depends on the time, dedication, and resources available. May working for a solely business propitiator the affiliate model sounds easier because once the customer is redirected to the affiliate website, the job has done. The drop shipping method could work better for small business partners where the task can be distributed. Doesn’t matter what model do you choose, the success is found it by hard work and dedication.