E-Commerce Archive

Affiliate Marketing Vs E-Commerce Small Business: Pros And Cons Of Each

An e-commerce website can be a great way to create an extra income or full time income. Many people have taken a hobby or found a product they liked and then created a successful e-commerce website.

Likewise, people who get into blogging, have turned their passion into a viable business with affiliate marketing.

What’s the difference between e-commerce and affiliate websites?

An e-commerce site sells products directly to a customer. An affiliate site refers website visitors to an e-commerce website (or membership site – something that does the selling). When you operate an e-commerce website you’re either selling your own products or drop shipping products. Drop shipping is an arrangement with a manufacturer or warehouse where your orders are sent and then the product is shipped.

Most e-commerce website owners are ultimately responsible to their customers. This is why many people choose not run an e-commerce website. Sure, you can easily outsource the customer service, but at the end of the day, if it’s your business, you’re responsible.

Cons to an e-commerce website in relation to an affiliate website

1. If there are returns or complaints, or even lawsuits, you’re likely involved. Yes, affiliates could be implicated in a lawsuit, but the affiliate relationship to the product/service vendor is much further removed from the e-commerce website owner. If you have affiliates selling your product, you could be liable for any mis-steps they take in promoting your product.

2. You have to build up your marketing presence from scratch. Your product may be new or not recognized in the market and so it may take time to generate sales. You can, however, sell existing products if you enter an arrangement with the manufacturer, wholesaler, or drop-shipping company that provides you products already recognizable.

3. You have to be cognizant of inventory levels and ensure customer service is delivered. As an affiliate, it’s not your responsibility to take care of anything other then sending referrals via links and/or codes.

4. Generally, you enjoy a lower start up cost with being an affiliate. You don’t have to create a product or service. Sure you can drop-ship or create a digital product to sell which is cheap or free – but generally it’s less money starting with an affiliate website than e-commerce (depending on the type of e-commerce you go into).

Pros of an e-commerce website over an affiliate website

There are benefits to being an e-commerce website owner that you don’t enjoy as an affiliate. They are as follows:

1. You control whether the product remains available. If you’re an affiliate, you’re at the mercy of the products you promote. Any day a website you’ve built dedicated to a particular product may have to be completely revamped because the product/service is no longer available. Even worse, if you create a site dedicated to a particular product/service, and that product/service is discontinued, you’re site if is useless unless you find something comparable to promote.

2. You get all the profits with an e-commerce site. This is a no-brainer; you set the price and get to keep all the profits (unless you have your own affiliates who you pay a percentage of the sales they refer to you).

3. You can do vendor affiliate marketing. In other words, you can set up an affiliate program and pay affiliate commissions to affiliates who market your product. This is a huge advantage to running an e-commerce site because you can get loads of links to your site and a great deal of non-fixed-cost advertising. It’s a non-fixed-cost because you only pay for the advertising when a sale is made.

4. You control the customer service and quality. This is more work, but can result in better word-of-mouth and lower refund rates. If you’re an affiliate marketer, you can have the greatest pre-selling website, but if the vendor messes up the customer service, it can affect the affiliate marketer’s sales beyond the affiliate marketer’s control. Of course the affiliate marketer can stop promoting that product/service if returns/refunds are too high.

At the end of the day, if you get a high-demand product, there’s probably more money in running an e-commerce site. However, it’s not easy creating a successful product and you may launch a few duds along the way – which can be costly or is a huge loss of your time.

I run affiliate sites and two e-commerce sites. I like doing both, but overall I prefer affiliate marketing over running an e-commerce site. I like writing and promoting and doing SEO more than doing customer service. This means I’ll keep my e-commerce sites going of course, but I do invest more time in affiliate marketing.