Drop Shipping vs Affiliate Marketing. Is Drop Shipping the same as Affiliate Marketing?

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Is a Drop Shipping Business the same thing as an Affiliate Business? Well the short answer is no.

What is Drop Shipping?
Drop Shipping is simply a sales model where purchases that are made online and the store or retailer doesn’t keep the products it sells in stock but fulfillment of orders are completed through a third party vendor or source. When an online store sells a product, the product is actually purchased from a third party and the seller or merchant, has it shipped directly to the customer. As a result, the seller or merchant never sees or handles the product.

The major difference between Drop Shipping and a “brick and mortar” store front is that the selling merchant doesn’t stock or own inventory. Instead, the merchant purchases inventory from a third party – usually a wholesaler or manufacturer as orders are placed and needed for fulfillment.

PROS of Drop Shipping
*There is no need to carry inventory
*Packaging, shipping, and customer service are all provided by a third party
*The merchant keeps all the proceeds for the purchased item
*Merchant is able to capture the buyer’s information (e.g. phone number, mailing address, email address, etc.)

CONS of Drop Shipping
*The merchant is dependent upon the supplier, if the supplier goes out of business so does the merchant
*Administrative or “hidden” costs can be high
*Merchant has to manage the relationships with all the suppliers
*Less control over product quality and shipping schedules
*Very little control over customer satisfaction
*Dissatisfied customers are directed towards the merchant, not the supplier
*There is very little, if any, personal interaction with the merchant’s customers

What is Affiliate Marketing?
Affiliate Marketing is simply an entrepreneur model where a company pays compensation to third-party publishers to generate traffic or leads to the company’s products and services. Not only does the merchant earn a commission for traffic sources and leads, but in addition, the company will often pay a higher commission for sales as well.

PROS of Affiliate Marketing
*Affiliate Marketing is a billion dollar business and growing
*A very low cost income model
*Generally, very easy to get started
*A very flexible income model
*Promotes an independent life style, work when you want and where you want
*Promotional materials are usually supplied by the supplier
*Ability to earn money while you sleep
*Affiliate marketing is a business that an entrepreneur owns with many tax write offs
*The income level is directly contingent upon the merchant’s work ethic

CONS of Affiliate Marketing
*As in a Drop Shipping business, the affiliate is dependent upon the supplier, if the supplier goes out of business so does the affiliate
*The affiliate doesn’t generate repeat sales but each sale is a one time only purchase through the affiliate
*The affiliate doesn’t build a buyer’s list, the customer’s information is not captured by the affiliate
*Because of unscrupulous promoters, affiliate marketing has been viewed as spammy and overrun by hustlers and scam artists.
*There is always a potential risk of not getting paid for earned commissions
*The reputation of the affiliate is dependent upon the integrity and quality of the supplier

So, as you can see there are many differences between a drop shipping business and an affiliate marketing business. It really depends upon your business and financial goals. Each business model has its pros and cons as you have seen.

To say one model is better than the other is really contingent upon what are your goals. Evaluating each business model and fully understanding the pros and cons of each model will provide what you need to make an educated and wise decision on which model will work for your and your business goals.

However, building a buyer’s list by capturing the customer’s information can be accomplished by an affiliate depending upon other strategies and methods that can be employed. In addition, Affiliate Marketing can be very lucrative by utilizing proven strategies and methodologies.
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