Affiliate Marketing and Drop Shipping are two popular methods of making money online. In this age of Internet, these have caught up on popularity quickly. Here we look at both the business models in order to allow newcomers to decide on which is the best way to make a passive income online.
Both Affiliate Marketing and Drop-shipping comes with their share of advantages and dis-advantages. A thorough review of both is presented here.
Affiliate Marketing – Is it the best way to make passive income?
Affiliate Marketing is a term used when you earn a commission when a sale occurs through your channel of promotion. It does not involve you selling a product but it about promoting a product and directing it to the Seller.
The Pros of Affiliate Marketing are:
– Does not involve sales transaction but it is about earning commissions. Hence, the tax liability is limited to income taxes in your own country(Disclaimer: It is better to check this with your tax consultant before becoming an Affiliate Marketer as I am not an expert in this subject)
– You create content in your niche. You work on what you like working on.
– There is no handling of logistics involved. Logistics and returns, if any, is taken care by the Seller.
– There is no need to handle customer complaints. That is the responsibility of the Seller.
The Cons of Affiliate Marketing are:
– It takes a long time to mature.
– A good website and a great hosting service is the minimum requirement to build your own channel. Though, there are ways to do it without a website which has been covered in my other article here.
– You need to create engaging content to make your readers read your content
– You need to choose the right products to promote. If it is not relevant to your content, your readers will leave your site immediately.
– You need to promote your content in the right forum.
The Pros of Affiliate Marketing most often out-weighs the Cos. Hence, my answer is in affirmative when it comes to the question of Affiliate Marketing being the best way to make passive income.
What is Good about Drop-Shipping?
Drop-shipping was practiced widely even before the Internet gained in popularity. It is about getting the product shipped directly to a customer. You pay the supplier at a rate negotiated with them while you are paid your rate which you have negotiated with the customer. There is a margin at which you sell thereby making a profit.
It is easier said than done. In Drop-shipping, you are the only one known to the customer. Therefore, the quality of the product becomes your brand.
The Pros of Drop-Shipping are:
– You need not produce or manufacture good on your own. Hence, it does not require a huge set-up cost.
– The manufacturing costs might fluctuate, but you always sell at a margin to the customer.
Shipping and Logistics is taken care by the producer/manufacturer.
– There is no need to keep an inventory at your end. Hence, working capital requirement is least.
The Cons of Drop-Shipping are:
– Customer Service is still your problem.
– Any sales returns lower your earnings. The producer may or may not accept sales returns.
– Since logistics is not your responsibility but Customer Service is, that may lead to really stressful situations sometime of products are not delivered in time.
Affiliate Marketing or Drop-Shipping- Which is better?
We have looked at the Pros and Cons of both Affiliate Marketing and Drop-Shipping and by now have an opinion ourselves about both the business models. From my perspective, there is no direct answer to it.
For people handicapped to create content, drop shipping is a good option. It gives them a convenient option without creating content. Probably, the Cons of Drop-Shipping can be neglected in this case. Rather, Drop-Shipping is a good option for people having a liking for marketing. They market the product, state a price, get the product delivered while paying a lower cost price. This is a business where one needs real marketing skills to make an earning.
However, people good at creating content, Affiliate Marketing is always the choice of Business Model. They create content in their own Niche Topics. They continue to do what they like to do. It is about promotion of a product and not a direct selling of it. The contents in the Niche area helps in directing the readers to a product.
It is up to the people to choose which is better depending upon what they think they are good at. If one is not comfortable with content creation, they must either have good marketing skills or develop it. Some online stores like Shopify have made it really convenient for drop-shippers.
My Choice – Affiliate Marketing
Most people would like to have a job which they enjoy. It would be best if they are allowed to work in their area of interest. To top it, working from the comfort of your home without worrying about office time-lines and traffic woes would be best. This might be on the wish-list of anybody in a day-job. The Good News is that, Affiliate Marketing offers this all!
However, there are quite a few learning if you want to be a successful Affiliate Marketer. You need to learn the tricks of trade and make the right choices to be able to market your content. Hanging around wrong platforms might lead you nowhere. There are a lot of scammers in this space who are ready to take your money away without rewarding you with any returns.
I therefore, use this opportunity to recommend Wealthy Affiliates. This platform has great educational and practical content on how to be successful as an Affiliate Marketer.
Read my review of Wealthy Affiliate by clicking here.
Drop-shipping is quite convenient business for anybody with a knack of marketing. Many people have been successful in making an earning through Drop-Shipping. However, the best online business for building passive income is Affiliate Marketing. The only reason for this choice is that one gets to work on the subject of his or her liking.
In case, you need to know more about Affiliate Marketing and would like to “test” it for yourself, I recommend joining Wealthy Affiliate via my affiliate link in the Wealthy Affiliate Review page. It is Free to Join!!!