Dropship or Affiliate Marketing
Many wonder about the choice between Dropshipping and affiliate marketing for earning passive income.
While dropshipping may appear more lucrative at first glance, it comes with its own set of considerations.
Firstly, are you prepared to handle customer service inquiries promptly? Swift responses are expected, as delays may lead to disputes over charges.
Secondly, do you have a system in place for managing returns, or do you anticipate these going back to your supplier? Handling returns is often the responsibility of the retailer in dropshipping scenarios.
Thirdly, if you opt for dropshipping, where will you source your products? It's vital to discuss with your supplier what happens in case of lost packages, a common issue in shipping. Determining who bears the cost is crucial.
Here's a quick rundown of pros and cons for both dropshipping and affiliate marketing:
- No need to maintain inventory; you pay your supplier upon receiving an order, minimizing inventory risk.
- Supplier handles packing and shipping.
- Easy to diversify your product range.
- Upfront margin retention.
- Customer service management required.
- You bear the cost if the supplier delays or fails to ship.
- Risk of bearing the loss if a package is lost in transit.
- Customer claims may be directed at you, not the supplier in case of wrong items.
- Responsibility for managing and monitoring fraud cases.
- Time and subscription fees for managing your ecommerce storefront.
- No startup costs.
- Earning potential on par with dropshipping.
- Brand/supplier takes care of customer service.
- Supplier handles everything in case of lost packages.
- No need for a website to run the business.
- No worries about fraud; it's the supplier's responsibility.
- Limited ownership of the customer.
- Waiting for commission payouts.
- Harder to build a direct customer relationship.
- Limited access to customer information for retargeting.
Ultimately, the choice comes down to your preferences and willingness to take on certain responsibilities. If you're comfortable with the risks and tasks associated with dropshipping, it can be a lucrative side hustle, potentially evolving into a full-time job. On the other hand, if you prefer a lower-risk approach with minimal involvement in customer service and returns, affiliate marketing may be the better fit.
If pursuing affiliate marketing, seek programs offering higher commissions (15%-25%). This can be a more favorable model than dropshipping, considering the associated risks.
For dropshipping, clarify with your supplier who bears the loss in case of a lost package and how they determine if it's lost. This is especially crucial when working with overseas suppliers or platforms.