A couple of weeks ago, I was talking to my husband about my blog and what I was writing about. He then asked me to look into dropshipping and said that I should start doing that as well as a side business because he heard that it was free to start and people made a lot of money from it. I told him that someone gave him incorrect info and what I think he was referring to was affiliate marketing. He also mention Amazon as well (which is why I came up with the affiliate marketing).
Alright, so a bit of background for you. A few years ago, and even up until early last year, I was researching how to make money from home that I could do entirely online. This is because I live in a country where it isn’t all that safe (or cost-effective) to send or receive any type of mail or packages. That’s when I learned about dropshipping. Affiliate marketing on the other hand, I learned about ages ago because of my on-again-off-again blogging journey.
So, what is dropshipping?
Dropshipping is a type of retail fulfillment method for online stores, where instead of warehousing inventory, merchants purchase products from third-party suppliers as customers make orders. The products are then shipped directly to the consumer.
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Basically, it’s a business model where you create an e-commerce store, such as Shopify and sell products in your virtual store. You don’t need to worry about the inventory or the shipping or any of the costs associated with manufacturing and shipping your product. All you need to worry about is selling your product.
What you do is find a product that you want to sell and sell that item in your store at a price that you set. For example, you find a product being sold for $2 a piece (stores like alibaba are really good for this type of work). You take that item and post it into your own shop and markup the price to $10 a piece, you just got yourself an $8 profit everytime someone purchases that item. When someone places an order for the item, they pay the price that you set (see previous example). You then place the order with your supplier at wholesale price ($2 in previous example) and pocket the remaining amount ($8). From there, the supplier handles the rest so they will handle shipping the item directly to the customer.
Now that we’ve covered the basics of dropshipping, let’s look at affiliate marketing.
According to Investopedia,
Affiliate marketing is an advertising model in which a company compensates third-party publishers to generate traffic or leads to the company’s products and services. The third-party publishers are affiliates, and the commission fee incentivizes them to find ways to promote the company.
https://www.investopedia.com
Affiliate marketing can be done through a website blog (like this one) or a video (like youtube) or social media. However, you do need to be careful when posting affiliate links in that you need to make sure that your audience KNOWS that if they click on your link, that you will potentially make an earning from anything they purchase at no extra cost to them. So, you know when you go onto a website and open up an article and it has a disclaimer right at the top of the page saying that there are links on their page that they may make money off if you purchase a product? That is what is called an affiliate link. Or, another example is when you watch a youtube video and the person has links in their description of all the products that were listed in the video or all of the equipment that they use to make their video, that would be considered to be an affiliate link.
Now, what is the difference between the two?
Well, as you can see above, there’s a few differences.
Affiliate marketing is literally just a link you post on your website/social media and people click on your link and buy and then you make a commission off the sale at no extra cost to the buyer. Whereas with dropshipping, you’re giving your supplier the base price that they ask for and the remainder (the price you set) goes into your pocket so there’s a much higher earning potential with dropshipping.
With dropshipping, there’s a bit more work involved to make sure all orders are correctly filled. Though you don’t need to worry about shipping, because you are the first point of contact for your consumers, you are in charge of customer service and satisfaction. If your customer has any complaints, they will come straight to you. If your shipper sent the wrong item or something damaged was sent out, guess what, that’s your problem, not the shipper’s. Not only that but you also need to maintain your store and update any information. When it comes to affiliate marketing however, usually, people are going by your experience with a product/service of whether to buy (or click) or not. However, it is considered to be passive income if done right. Many people usually write a post, or article or make a video about a product/service and then post a link to it in the post/article or below the video and whoever is interested can just click the link and the creator makes a certain percentage off the sale (without adding any extra cost to the consumer).
If you’re looking to start affiliate marketing, then you can rest assured that it is completely free to get started however, more difficult to make sales and you should have at least a small following who trusts you before you get started otherwise it’s very difficult to get people to click on your link. On the other hand, when it comes to dropshipping, the person is usually looking to buy which is why they’re on your site in the first place. So, there is some startup costs involved such as paying for your e-commerce store but that cost is usually back in your pocket tenfold within your first few months if your marketing is done right.
The bottom line is if you’re wanting to make money without having to do anything, then there are very few things you can actually do. Even the ‘passive income’ work requires some level of work and attention to keep making money and growing whether it be dropshipping, affiliate marketing or anything else. For dropshipping, you need to fill your orders in order to make money. For affiliate marketing, yes, you post a link and wait for the clicks but you need to get people to SEE your links. You need to get them to TRUST you enough to click on those links so yes, it is a post and forget it situation but you still need to work on building those relationships with your audience.
I hope that this has helped you to at least start figuring out what you’re interested in doing as your online ‘passive’ career.
And check out my last post about how much you should work on your craft here!
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