If you are considering starting an online retail business, you will quickly realize that there are different business models. In case you are constrained by a lack of capital, but you are rearing to get started, business models that you ought to consider include drop shipping and affiliate marketing.
For those looking to start earning as soon as possible your best bet would be drop shipping as affiliate marketing does involve some element of blogging which can take a bit of time before you start seeing some returns.
What both drop shipping and affiliate marketing have in common is the fact that they do not require you to have a physical inventory neither do you have to ship by yourself.
Also, you need not get concerned with the logistical nightmares, and the cost of shipping products to your customers as this is taken care of by the third party company.
However, there are stark differences between the drop shipping and affiliate marketing, which we will address below.
To be an affiliate marketer, you would need to have a website or an online store. This e-commerce business model allows you to sell products without keeping an inventory.
It involves selecting a profitable niche such as ‘outdoor gear’ and offering those products for sale on your website or online store. This could be through your blogs where you write on topics of interest regarding your niche and link to relevant products. These unique links take your customers right to your affiliate partners website, where they can purchase items of interest to them, and you earn a commission usually ranging from five percent to 25 percent depending on your arrangement with the company.
How do you track your sales?
The link that the customer finds on your website tracks back to your affiliate account. When your customer clicks on the link and makes a purchase, they do it from your customer shopping cart on the affiliate’s website.
This business model can be profitable in the long haul but requires patience and passion in a given niche. The difference between affiliate marketing and drop shipping is that all you have to do in affiliate marketing is provide a link, and everything else including billing, shipping, and customer service is all handled by the merchant. Whereas drop shipping means that you have to deal with the billing while the drop shipper takes care of the shipping.
Affiliate marketers love the fact that this model requires little capital to get started and is hands off. However, patience is a virtue on this one.