Starting an online business is something a lot of people desire to do and with good reason. An online business can provide you with a ton of freedom in terms of your work schedule and where you can work. Many online business owners choose to work from home, others rent a small office, and some online business owners such as myself decide to work while traveling the country or even the world! How many other businesses can you own that provides this type of freedom?
If you’re reading this, chances are you are already well aware of the massive benefits being an online entrepreneur can bring you. The biggest issues you’re likely now facing is two fold…. HOW do you start an online business and WHAT TYPE of online business should you start? While there are many different types of online businesses you can start, this article will focus on whether affiliate marketing or ecommerce is a better business model. I will also get into my own personal experiences and why I have chosen affiliate marketing as my preferred career path.
What Is The Difference Between Affiliate Marketing And Ecommerce?
Essentially, as an affiliate marketer you would be promoting and selling other peoples products and services. In exchange for doing so, you will earn a predetermined percentage commission for each product you sell. Running an ecommerce business is a bit different. You would actually be selling your own products and services (or becoming a reseller) and you set the prices to keep whatever profits you’re able to obtain. In fact, if you decide to take the ecommerce route, you can actually recruit affiliate marketers to promote your business for you! Obviously, there are some advantages and disadvantages to each business plan, so I’d like to discuss those things now.
Advantages To Starting An Ecommerce Business
Starting an ecommerce business is certainly not easy, but it may not be as difficult as you think. You don’t need to be an inventor or even manufacture anything. Many online marketers will start a website to create their own training courses for sale or as a platform to sell an e-book. Other ecommerce owners decide to have a fully stocked store and use drop shippers to ship product. Some ecommerce owners will purchase certain niche product in bulk, allowing them to sell those products individually on their website at a marked up cost, thus earning them profits on every item sold.
Perhaps the biggest benefit to starting an ecommerce business over an affiliate marketing business is the freedom you have in terms of pricing, promotions, and acquiring repeat customers. When someone purchases directly from you, it allows you to collect names, addresses, phone numbers, and everything else you need to get repeat business. You can also get a good idea of how to price your product for the most profits and determine the best way to promote what you are selling. You will never have to deal with an affiliate manager, set pricing that you can’t control, unfair affiliate contracts, or restrictions on what type of advertising you can use. It’s all you, and that is a pretty awesome benefit.
Ecommerce is also something that can be scaled up very quickly as compared to an affiliate marketing business. If you do find success with ecommerce, you can usually exponentially grow your business by finding advertising methods with a high ROI as well as getting repeat customers who will buy from you over and over again.
Disadvantages Of An Ecommerce Business
Starting an ecommerce business usually requires more risk and more financial investment (but not always). For example, if you want to become a reseller by purchasing items in bulk from China then reselling them on your website for a marked up profit, you will need to purchase enough of the product to qualify for bulk pricing. Of course, this also means you need to store that product somewhere and find a way to pick, pack, and ship product once it’s sold. You also need to set up payment processing systems, provide customer service, accept returns / refunds, and manage all of the day-to-day operations. This can get extremely time consuming and stressful, especially for new online entrepreneurs.
Advantages To Affiliate Marketing
Affiliate marketing provides many advantages of its own. Since you are selling other peoples products and services, you don’t have to worry about customer service, payment processing, sales taxes, warehousing, storing or shipping product, or any of the other time consuming aspects of selling your own products. All you need to do is link to other peoples products and services. When someone clicks on your affiliate links and makes a purchase, you can get anywhere from 5% to 75% commissions. I have affiliate partners that pay me 75% commissions and I get that customer for life. That’s pretty incredible! There are also thousands of products and services you can promote covering just about every niche out there, so you’ll have lots to choose from.
Another huge benefit to affiliate marketing is the extremely low barrier to entry. The startup costs are extremely low, making this a viable option for just about anyone. All you need is the ability to create a blog or website and you can be in business without taking big financial risks or purchasing a large quantity of products.
Disadvantages To Affiliate Marketing
One of the biggest disadvantages to affiliate marketing is that you lose a lot of freedom. Any affiliate partner can drop you at any time, change commission rates, go out of business, or begin deteriorating and there is nothing you can do about it. There will almost always be restrictions on how you can advertise as well. For instance, there may be an outright ban on PPC advertising which would take a huge amount of profit potential away from you. It’s also likely that you will have a very tough time acquiring repeat customers and multiple commissions from the same referral unless you specifically promote products and services that give you repeat commissions on customers you refer. When you simply refer someone to purchase something on another site, that site is the one who will get the customer information such as email addresses, phone numbers, addresses, and other information they can use for retargeting and making more sales in the future.
What I Recommend For Beginners
As an affiliate marketer my opinion may very well be biased here, but I always recommend brand new internet entrepreneurs to try affiliate marketing first. By going with an affiliate marketing business model, you can dive into online marketing without all the risk. If you are able to succeed with affiliate marketing and selling other peoples products and services, there is no reason why you can’t succeed in ecommerce. However, it is important to test and learn by selling other peoples stuff first before you take all the risk of starting your own online business. Just a year or two of affiliate marketing experience will help prepare you for the world of ecommerce.
Ultimately, your goal should be to have a business that earns profits from both affiliate marketing AND ecommerce. As an online business owner, you will want to diversify as much as you can. So, while I recommend newbies start off with affiliate marketing, it is also important to have a goal to eventually start selling your own products and services as well.
Why I Personally Prefer Affiliate Marketing Over Ecommerce Sites
Quite frankly, I believe in making things as simple as possible in both life and business. I always try to take the path of least resistance and so far, it has worked like a charm. By running an affiliate marketing business, I can focus on what I love to do the most which is writing articles and helping people make good product and service purchase decisions. I really have no interest in storing products, providing customer service, packaging and shipping, accepting returns, complicating my taxes, dealing with legal issues, or having to put up with most of the other aspects that are required to run a business. I simply refer people to a product or service and if they decide to buy, I get paid and wash my hands of any future responsibility. If they don’t purchase, I’m not out anything other than maybe a little bit of my time. Affiliate marketing of rme is the easiest and most stress free way to earn a living online. While I am confident I could run a fantastic ecommerce business online where I sell my own products and services, I just have no interest in doing so at this time.
How To Get Started With Affiliate Marketing
One of the greatest things about affiliate marketing is how easy it is to get started. If you want to build your affiliate marketing business the same way I have, you will need to learn a few things. Here’s what you’ll need to learn first:
Niche Research: Before you can ever get your business started, you’ll need to perform some industry research. You wouldn’t open a restaurant without first analyzing profit potential and the level of competition you’ll have, so why would you start an online business with no research? Here are some excellent videos on how to research the best niche for your affiliate marketing business. You’ll need to sign up for an account to view the videos, but it’s free to sign up.
How To Create A Website Or Blog: A website or blog will be the main way you acquire leads and make sales. There are many “guru’s” out there that say a website isn’t necessary to make money through affiliate marketing, but even if they are right, you would be ignoring the single most profitable way to monetize your business. In my opinion, having a quality website or blog is a must. I know this scares many of you, especially those who are not very technically inclined, but I assure you that starting a website or blog has never been easier than it is today and it will only get easier with time. You don’t need to know any computer code at all to get started. In fact, I really don’t know much computer code at all. Here are some videos on how to get your first affiliate marketing site set up. You can also go onto YouTube and use videos that walk you through the entire process of starting a WordPress website. Check out the below video for an example of what I’m talking about.
How To Write Great Online Content: In the affiliate marketing industry, you will be focused on doing three main things. Writing content, writing content, and writing content. Honestly, if you don’t love to write, affiliate marketing is probably not the business for you. The only way to truly create a high quality affiliate marketing business is to provide high quality information that people can find by using search engines, just like the strategy I use on this very website you’re on now. Writing content on the web is going to be a bit different than what you learned in school, so check out these videos to learn more about how to write great content that will attract lots of website visitors from search engines, which you can then refer to your affiliate partners.
Having The Patience Of A Monk: When I first started affiliate marketing, I could start a website and have it making money in about 6 months. Over time, however, that duration has increased substantially. These days, it takes me anywhere from 1 to 2 years before a site is profitable and earning me any meaningful income. That means, you’ll need to create a ton of content and write for months or even YEARS before you can expect any revenue at all. This is where the vast majority of affiliate marketers fail. Most rookies to this industry will put in all the hard work that is necessary to succeed for a few months, but then they will lose motivation due to a lack of website traffic or sales. If you are not willing to work for about 12 to 24 months with zero financial return, you’ll never make it. The good news is, once you do start to earn some revenue, that revenue will increase over time and you’ll literally earn money while you sleep. Put in the hard work now and reap the residual income rewards later. Be honest with yourself before you even start… Do you REALLY have the patience it takes to succeed in affiliate marketing?
If You’re Going To Start, Do It Now
It is getting more difficult to succeed with affiliate marketing as time goes on, not easier. The longer you wait, the more difficult it will be to succeed. The timing will never be “just right” to start your business, so if you’ve decided to start an online business, make today the day you start it! While you likely have a lot to learn, at a certain point research and learning just becomes a barrier. Get started today and use guides like this to walk you through the process. You CAN do this!
