Start making money with your own online business.
Sounds easy enough, right? Entry barriers are low and you can start anytime, anywhere. You have tons of resources and options– but with so many paths, which one is for you?
Right now affiliate marketing and ecommerce are two of the most popular business models for aspiring entrepreneurs to earn money. Naturally, both approaches have their differences, advantages and disadvantages. Shocking, right? 😉
Well today I’m here to guide you through every element of these two business models to find the best fit for you: affiliate marketing vs ecommerce.
What do affiliate marketing and ecommerce have in common?
These two business models aren’t one and the same, but they do share a few basic similarities.
Easy to get started
It’s never been easier to start an online business. Generally speaking, both online business models have a much lower barrier to entry when compared to a traditional brick and mortar establishment. The start up costs are much lower for these business models. Moreover, you simply need a lot less stuff to get going online than with a physical storefront– just grab your computer and let’s go!
Growing online customer base
The amount of people shopping online is huge– and with this pandemic to top it all off, this number is only increasing. In 2020, 49% of people say they’re shopping more online than before Covid19. There’s no doubt that the internet is taking over nearly every aspect of shopping because after all, who can deny the convenience of a package delivered right to your door with just one click?
And this is where affiliate marketing and ecommerce come in: the ever-growing number of people offers ever-growing opportunities to make money. Especially now, during coronavirus, with everyone stuck at home and glued to their screens there has never been a better time to start an online business.
Data analysis & lots of optimization
These two business models require one big thing to be truly successful: continual tracking and improving. It’s essential to gather and track your data on consumer behavior. But that’s not all– data is just the beginning. To create profitable online businesses you must experiment to see what works best in your marketing strategy. There are always tons of variables to experiment with to optimize performance.
This is where of course we come into play. Our tool does the tracking, reporting and even the optimization for you. If you’re going to get into any sort of online business, a tracking tool is essential.
Some time, money & effort
Even though affiliate marketing and ecommerce are wayyy easier to get into than your standard brick and mortar business, there’s still some elbow grease involved. But don’t let it scare you! Anything that’s worthwhile requires some effort, and that’s why we’re here to help 💜
However!! This is where the differences between affiliate marketing and ecommerce start… There’s a big divide in how much time and money is needed to succeed. I’ll give you a hint: ecommerce is usually considered harder, and affiliate marketing easier 😉
Now we begin to diverge….
As we look at both business models separately, keep some things in mind to decide which is best for you:
- How much money do you have to spare?
- Is this going to be a side hustle or your new full-time job?
- Do you have a specific product or business model envisioned?
- Do you have the energy for nitty-gritty work or prefer something with less effort?
So, without further ado, let’s look at the pros and cons of each to find the best fit for you and limitless success (online). 🚀
Why should you start an ecommerce online store?
The exponential growth of online shopping is undeniable, but as you can assume, lots of internet business opportunities are expanding at wild rates. So what makes ecommerce the business model for you?
The ecommerce business is growing like crazy
More and more customers are transitioning to ecommerce; this past year has brought record-breaking traffic statistics in ecommerce. Even before the pandemic, people have been spending more time in front of screens and ecommerce has been growing at remarkable rates. Also, the ecommerce industry is continually developing more convenient solutions for business owners: shipping alternatives, cheaper and easier website construction, and more online marketing options.
(Near) infinite control
You are totally, fully in charge of your ecommerce store. There’s really no aspect that is out of your control: website, product, advertising, customer service, and more.
If you have a precise vision of how you want your business to look like and you’re equipped with the resources, an ecommerce store could be the way to go. In this business model, you have the power to adjust anything to your liking and be as creative as you want.
Pricing flexibility
This point is related to the former. But I highlight it when taking into consideration affiliate marketing vs ecommerce. With ecommerce, you have a lot more flexibility in how you price, package, and sell your product or service.
Your marketing, pricing, packaging etc. possibilities are endless. As the business owner, you can set up pricing, promos and bundling and experiment to your heart’s content… but just make sure your pricing is profitable, because, as the business owner, that’s all on you.
Ecom is great, but nothing comes easy
As you may have sensed, ecommerce can be exciting and lucrative – but there’s some work to be done.
The responsibility is all yours
You want control? That’s great, but every coin has two sides…
Your ecommerce business rests heavily on your shoulders; you must run every aspect of your business. These are the essential steps for starting an ecommerce business:
- Start with lots of research and find a profitable niche. You need to find a product that has an audience of buyers that you can target online. Ecommerce is a growing industry, research your competition and find a product/service that’s not oversaturated.
- Deal with the legal bureaucracy. This depends on your country, but you’ll need to choose a legal structure and obtain the necessary permits and licenses. Also, take into account the sales taxes that you’ll have to pay.
- Next, select an ecommerce platform and set up your website. Consider factors like cost, design, practicality, and future developments. This is a key decision in your business plan– after all, the website you choose will be your virtual storefront.
- Obtain inventory. Here’s where the hands-on aspect of ecommerce kicks in. Whether you’re making or ordering your products, make sure you have enough space to store them and materials to eventually package them.
- Start advertising your business to generate traffic and demand for your product. At the beginning, you won’t have much organic traffic visiting your site. You have a ton of online marketing options out there, so it’s essential to keep track of what works best. Keep in mind, with affiliate marketing vs ecommerce, this fifth step is the first for affiliate marketer newbies.
These are the core steps to creating an ecommerce business. If this is a one-man-show on your part, you’ve got to do it all, and do it well. But this is just what it takes to get the ball rolling… ecommerce also comes with plenty of day-to-day tasks.
Ecommerce is a demanding 24/7 job
Unfortunately, your business isn’t going to run itself. Moreover, even though ecommerce is digital, it still requires “physical” actions. You’ll have to manage a slew of daily logistical work. Running your ecommerce business is time-consuming; don’t expect to easily balance this alongside a bunch of other projects. Three main sources of tedious work:
- Customer service– As we all know, people can be a huge pain in the ass. Either you’ve been the one furious with some employee, or you’ve been on the receiving end. This is all comes with running your own business. However, the job of customer support is not just about the occasional angry phone call from customers. Customer service encompasses a variety of daily work: answering emails, resolving complaints, picking up the phone, handling returns and refunds.
- Marketing– Advertising your business costs time and money. As I’ve mentioned, there’s a lot of experimenting involved which should be checked and adjusted on a daily basis. But don’t forget about organic traffic. Search engine optimization (SEO) is one of the most effective ways to increase organic visitors on your site. SEO is a lot of research and content creation in itself, and most definitely doesn’t happen overnight.
- Shipping– It’s one of the biggest challenges in managing an online store. Not only must you order, store and package your inventory, you also have to ship it. And on top of that, the “shipping” stage represents a dark hole of oblivion for both the customer and business owner: even if you can track your products online, you still never really know how they are being handled and what condition they arrive in. Unless you’re driving the truck to each and every customer, this stage will always be out of your control.
Dropshipping is an alternative for traditional shipping in the ecommerce industry; it’s when the manufacturer does the shipping for you straight from the warehouse. With dropshipping, all you have to do is market, advertise and promote products on your site. In fact, you never really even physically see these products. And this is where dropshipping can be a double-edged sword: it’s a part of the customer experience that you can’t control or monitor. Shipping times, conditions and product packaging are crucial aspects of customer satisfaction. Ecommerce mainly benefits from returning customers. If you’re losing customers due to shipping issues, then your entire business model could fail.
Ecommerce comes with a lot of hats to wear. You may not be entirely confident in every job that comes with ecommerce; the alternative is hiring professionals or getting trained in those areas. This of course comes with a hefty price tag.
Hard to scale
A lot more orders and customers may not necessarily indicate immediate success; one of the biggest obstacles in ecommerce comes with scalability. Expanding your business to accomodate more orders and customers is a whole new job on its own.
You need to acquire and handle more inventory, find alternate solutions for packaging and shipping, and deal with a lot more customer support. You also need to make sure you have the technological capacity to support increasing traffic.
Most of the time, you’ll have to look for outside solutions or hire some employees. This can significantly cut into your profits if not done effectively.
Ecommerce has lots of potential– but you have to be able to dedicate lots of time and resources. Typically this business model is best for those with some experience under their belt already. If this business model scared you a little, don’t give up hope, keep on reading!
Looking for a simpler route? Go for affiliate marketing
To be perfectly honest, affiliate marketing comes with many more advantages. There’s a lot less to risk and a whole lot to gain.
Quite easy to get started
Whether you’re a newbie, time-constrained or just lazy, an “easy start” is always good to hear.
One of the best parts of the affiliate marketing business is just how easy it is to dive into the profession.
To start you only need three components:
- An offer you want to advertise– you can easily find one in an affiliate program (more on finding profitable offers here)
- An audience for your campaigns– To market your offer you need to get traffic from ad exchanges like Outbrain, PropellerAds, and Taboola (read this to find the best traffic sources in 2021)
- An ad tracker like Voluum to optimize and scale your campaigns with ease– more on that later.
Convenience
Like I mentioned, all you need to run an affiliate marketing business is your computer and internet access. You can work from anywhere you want: your home, a coffee shop, a paradise island. Your campaigns can make money for you while you sleep.
There isn’t a facet of affiliate marketing that can’t be done from your laptop or desktop– unlike ecommerce.
Variety of products to promote
Whether you’re new to the affiliate world or just like change, this business model let’s you explore your options. The endless variety of products, offers and verticals to choose from is one of the most exciting parts of affiliate marketing.
Affiliates have the freedom to try and test a wide range of products to promote without making a huge time or financial commitment. You never know how your interests or the market will change; affiliate marketing provides the flexibility to switch whenever.
With ecommerce, there’s no way you can simply change-up your site’s profile.
You can make money quickly
Mhmm this sounds pretty great, right? Well, no lie, it’s one of the best parts of this business model. That, along with the minimal risk. 💸
First off, your start up costs are very low– especially compared to ecommerce. Plus, you can get started much faster because you don’t have to wait for licenses, preparing inventory and shipping, or getting your ecommerce website up and running. Aaand, without the loads of logistics that comes with an ecommerce business (customer support, packaging, shipping), you have lots more time to dedicate to optimizing your campaigns. Also, whereas in ecommerce you can only make money through purchases, in affiliate marketing you can make a profit off of just clicks, registrations, forms, etc.
What’s more, if you put enough time and effort, you can make really good money. It is hard to average all the affiliate’s earnings, but you can expect figures between $1,000 – 10,000$ a month if you go all in. The possibilities are endless 💫
All of this makes affiliate marketing a very attractive option. Aspiring entrepreneurs debating affiliate marketing vs ecommerce, who want to make money asap should go with this route.
Challenges in affiliate marketing
Okay, so even we know that nothing’s perfect and affiliate marketing has its hurdles too.
Finding the right combinations
Discovering pockets of profits with the best combination of offers, creative, copy and targeting can be an arduous process. The most effective message needs to meet the best audience. You may have to dedicate a decent amount of funds into finding the right approach and audience before you start making money. Here’s where a tracker can be a blessing: it will keep track of all your campaigns, generate accurate reports, and even optimize performance.
The learning curve
As with every new adventure, there will be some preparation beforehand. A beginner affiliate marketer needs to learn some skills: creating graphics, possibly building a landing page, understanding the technical side, writing copy are some of the most important. Don’t ever get discouraged though– the internet is filled with forums, webinars, groups, courses and more to help you out. Be brave, there are no dumb questions. 😉
Stick with it
Patience is key here. It can take a lot of time and effort to create profitable campaigns. Like I’ve mentioned before, you have to gather data and actually do something with it. With the data collected from your campaigns you can create reports, analyze your strategy and make improvements. On your own this can be a data-nightmare, but this is where a tracker can save you time and effort.
Which model is for you?
Hopefully at this point you’ve picked up on the main differences between affiliate marketing and ecommerce.
To dive into ecommerce you need some money, time and experience. Also, remember, it takes a lot longer to start seeing profits from your ecommerce business.
If you’re new to the world of online businesses, affiliate marketing is a safer bet; it’s a lot less to risk and you can earn more money, sooner. But of course, affiliate marketing isn’t just for newbies.
No matter which route you choose in the great affiliate marketing vs ecommerce debate, online marketing is essential. Don’t let your hard-earned money go to waste on aimless, untracked campaigns. Let Voluum bring you three steps ahead of the competition.
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