Do you own a small business? Have you ever wondered which option to choose between dropshipping or affiliate marketing? You are most likely here because you are. Francisco is my name and I’m the owner of Planet Marketing. We are a digital marketing agency. My company is a specialist in Facebook Ads, Google Ads, and Remarketing. My company has been in existence for more than a decade. I understand the struggles of many new businesses when it comes dropshipping vs FBA and affiliate marketing. This article will:
Dropshipping: What does it mean?
It is difficult to run a retail store. This is especially true if you sell a broad range of products. Let’s say you just opened an online shop selling men’s clothes. You will need to not only find the right products for your store, but also manage the risks and costs of stocking the goods you sell. Is there a way to avoid all of this while still enjoying the benefits of selling a broad range of goods in your shop? Dropshipping is a great option. What is dropshipping, and how can it be useful for small businesses?
Dropshipping: Definition
Dropshipping allows retailers to sell the goods they do not have in stock. Dropshipping is where a customer purchases goods from a company. Instead, the company purchases the goods from third-party companies. The goods are shipped directly from the third-party to the buyer, without ever reaching the seller.
The Advantages of Dropshipping
Dropshipping offers many benefits, especially for small businesses.
- This will help you avoid the storage costs and risks associated with large quantities of goods being kept in your shop.
- Dropshipping is a way for small businesses to start without much capital. All you need to invest in designing and launching an eCommerce site is design. Usually, the cost of an eCommerce platform like Shopify is lower than that of designing and launching a website.
- There are virtually no headaches involved in moving stock. Your only loss is revenue if something in your inventory doesn’t sell. It is not your responsibility to decide how to dispose of unsold products.
- It is possible to sell many goods from different suppliers. This is not a limitation.
- You don’t have to be restricted by where you are located. You don’t need to be located in order to communicate with suppliers or customers. This can be done anywhere on the planet.
The Disadvantages Of Dropshipping
Dropshipping can be a great way to start businesses, but it has its drawbacks.
- Low profit margins Dropshipping is easy and you can make a lot of money. You are not the only one doing what you do. The price becomes a competitive point. You will likely have very few sales if you attempt to sell a product you purchased for $5 at $30.
- You don’t know what you’re selling. This could put you in trouble with your customers if the product turns out to be defective.
- Your customer service is very limited. Most customers will refer their concerns to you. This creates an explosive situation in which your product description does not match the reality.
Fulfillment by Amazon (FBA)
FBA stands for Fulfillment By Amazon. Dropshipping is a similar service to FBA. If you decide to use FBA, the products you sell are not stored in your warehouse. Instead, the goods are kept in Amazon fulfillment centers. Amazon packs the goods and then ships them to customers who have purchased the item from you. Dropshipping is different from FBA.
The difference between dropshipping & FBA
Dropshipping is different from FBA because of the way that goods are sourced. FBA requires you to source suppliers for the goods you want to ship from Amazon’s fulfillment centres. Let’s suppose you sell mobile phones. You have found a supplier from China. The next step is to purchase the goods in China and have them shipped directly to Amazon. This is where the difference lies.
Dropshipping requires very little capital investment. FBA is where you are responsible for stocking up the products you sell. Amazon is only responsible for the warehousing, packaging, shipping, and customer support of the goods you sell.
FBA benefits;
Here are some benefits of Fulfillment by Amazon (FBA).
- Your business grows faster because you don’t have to worry about shipping and packaging the goods to your customers. Customer support is also completely automated. Amazon handles all of these tasks.
- The Amazon Brand: Amazon has become a household name around the world. Joining the FBA program will allow you to tap into that goodwill.
- FBA has higher profit margins than dropshipping. Because Amazon is such an established brand, people are more likely to buy at a higher price.
FBA disadvantages
- Complex Inventory Management: Your goods remain in Amazon’s warehouses. You can easily lose track if you don’t manage your inventory properly.
- Competition Everyone is welcome to apply for the FBA program. You will likely face intense competition no matter what you sell.
- Amazon is at your mercy Amazon’s kindness is the foundation of your existence. If they change their policies, you could lose your business.
- You have no contact with customers. Amazon is your customer for all intents. They handle customer service. Therefore, you are not capable of cultivating the type of relationships with customers that are vital for the growth and success of any business.
Affiliate Marketing
We now move on to the affiliate marketing part of the dropshipping debate vs FBA. Let me just say that affiliate marketing is something I’m very familiar with. My affiliate program is not only for brands I am affiliated with, but also my affiliate marketing program. Planet Marketing offers a variety of digital marketing products including a Facebook Ads Marketing Course and SEO plans. These products are being promoted by my team of people all over the world. What is affiliate marketing? How can it help you grow your business?
What’s affiliate marketing?
Affiliate marketing allows brands to use people and businesses around the globe to sell their products and services. Affiliates get paid when a specific outcome is achieved. This could be a sale or signup, or any other outcome. Affiliate marketing has been proven reliable in establishing legitimate online businesses over the years. Affiliates promote products and services via blogs and websites.
The advantages of affiliate marketing
A comprehensive affiliate marketing guide has been written previously. You can find it at the link below. You need to know that affiliate marketing involves two sides. One is the vendor and the other is the affiliate. This article assumes that you are a small company looking to become an associate for other businesses. Here are some benefits of affiliate marketing for small businesses.
- It doesn’t take a lot to develop products or services. Affiliates help sell products and services of others. You will receive a commission if you find customers.
- Shipping, storage, and other costs associated with running a business producing goods and services are not necessary.
- There are many brands you can work with.
The disadvantages of affiliate marketing
- You may not have a brand. Selling goods and services to other people is all you do at the end.
- You don’t have any control over the products and services you sell.
- In some areas, there is a glut of affiliates. It is difficult to break through. Web-hosting is one example. Because there are many established players, miracles will be required to achieve breakthrough in this field.
Dropshipping vs FBA or Affiliate Marketing: Which one should I choose?
The final decision will depend on many factors. These guidelines will help you make the right choice.
- Dropshipping or affiliate marketing are good options if your budget is tight. These two options are usually cost-effective and require little capital.
- If you sell your own products, you can opt for FBA. Amazon will store and ship your products to you.
- Dropshipping or affiliate marketing is a good option for people who want to sell only other people’s products. FBA requires you to spend money on inventory, while advertising is the only thing you will spend.
