Affiliate Marketing VS. Dropshipping

Last Updated on Wednesday, 2 September 2009 10:23 Written by Carl Tuesday, 11 August 2009 08:32

The first commercial website I built was a few years ago. It was focused on selling Zippo Lighters. It was a great little website that I used to learn a lot about internet marketing with. And during peak season Nov-Jan I would really crank out the sales. At the time I thought this was pretty cool. I had a dropshipper lined up that I would just send the orders off to and they would ship them out to my customers. I would spend a few hours a day processing orders and handling customer service, I had about a 50% profit margin and thought life was good. Well here I am 5 years later, I still have dropshipping websites selling things from pedal cars to paintball and children’s furniture and everything between. So to some extent I obviously still believe in the concept. However, last year I built a site for a local company that builds high end swimming pools and fountains. On that site I have spent maybe a total of 40-50hrs in a years time. To date we are over the million dollar mark in leads for that company. That is roughly $20,000 an hour. With this as my spring board I have now began building lead gen sites for other companies but also building sites that are nothing but affiliate products. I am finding that I spend a fraction of the time maintaining affiliate based sites that I would with my dropshipping sites. And at the same time Im generating much bigger income. Though I learned a lot from my little Zippo website and made some money along the way. I don’t believe I will ever create another dropship based site. It is all affiliates for me.
To that end here is a checklist of things I look for before beginning a new affiliate based website.
1. Avoid merchants which will compete with you. If a merchant offers an affiliate program but also sells to the public and has already established brand recognition this is a problem. Who do you suppose a customer would buy from, you or the branded authority?
2. Make sure the program has a good tracking system. It is pretty common place to have sales statistics available to you. Make sure that your program has a way to monitor this online in real time.
3. Increase your revenue potential with two-tier programs. When you bring another affiliate to the merchant you are bringing them more profit potential. You want to make sure you are making money on affiliate referrals as well as product referrals.
4. Maximize your pay rate. Pay rates are all over the board with affiliates, from pennies to hundreds of dollars per pay out. It is pretty obvious why the higher the pay out the better. If you dont understand this concept maybe business is not for you. Or you could try learning a few things from the financialnut.com
5. Look for a unique product in a ripe market. If you are trying to sell the same thing as everyone else you are going to be at a disadvantage from the beginning. Try and find unique ideas that everybody and their dog is not already trying to promote.
6. Only accept a clear pay structure. Any legitimate affiliate program should outline how their program works and how you will be paid. I know this seems fundamental, yet there are many who forget this step and pay for it later. Unless the merchant spells out exactly what you will receive for your efforts, avoid them.
7. Seek programs that generate repeat business. This is just a basic fundamental. If you can help someone get what they need 1 time. And they enjoy the experience, they will likely return to you next time. If you have a product that requires a next time that is. Dont overlook how profitable consumable products are.
8. Look for programs that offer marketing support. If a merchant understand the more money you generate the more money they generate concept then they will do everything in their power to help you. Look for programs that offer the best tools to succeed.
9. Choose a program with community support. Community bulletin boards can really help you gain ideas from other affiliates and learn what is working and not working. This can be a big time saver. 10. Seek programs that have growth potential. If what your merchant offers is limited and no room for growth I bet you can guess what your site’s potential will be also. Look for merchants that are always looking for new and innovative ways to expand their products.