Affiliate Marketing Or E-commerce?

affiliate marketing or e-commerce

In recent years the question “Should I start an online business?” has changed to “What type of online business should I start?” The two most common choices are affiliate marketing or e-commerce.  Both models have there pro’s and cons but are often misunderstood. In this post we’ll compare the two.

Whether you choose affiliate marketing or e-commerce as your first online business venture it’s important to understand one thing. Both depend on Internet marketing. In today’s world this is a skill set which can open a million doors and help create a en enviable lifestyle. It could be argued that learning Internet marketing should come before even deciding on a business model.

That being said, let’s dive in and look at affiliate marketing and e-commerce in some detail.

What Is Affiliate Marketing?

Affiliate marketing or e-commerce - cartoon Image of a megaphone symbolising affiliate marketing

Affiliate marketing is essentially the Internet’s version of commission only sales. You sell other people’s products online and are paid a commission. The product owner provides you with the products, marketing materials and hopefully some training and support.

These days you can be an affiliate for almost any product you can think of. You can approach a product owner directly or via one of many affiliate networks. You’ll get a unique affiliate link – a unique url which tracks any sales to you. Any marketing materials such as banners, sales pages or websites you are provided with will incorporate that link. Alternatively you can simply use the link itself with your own content.

Your job as an affiliate is to promote that link to a relevant audience through websites, blog posts, videos, social media and advertising. It is undoubtedly the quickest and cheapest way to start an online business from scratch. Lower value affiliate programmes are generally free.

The higher paying (high-ticket) programmes generally require you to first invest in the products yourself. They often include recurring commissions through membership sales. These products – training, e-learning, business and mentorship platforms, can have extremely profitable up-sells.

The best high-ticket programmes include up-sells, which require no further work from you. You just make the initial sale, which is often low cost, and are automatically paid on any further purchases the customer makes.

Low cost affiliate products will often pay a high commission on a sale – sometimes 100% – but not on any other purchases that customer makes. This is important to grasp if you are thinking that paying to be an affiliate is some kind of a con. We’ll get into this again shortly.

What Is E-commerce?

affiliate marketing or e-commerce - image of an iphone screen showing a truck on a desert highway. This represents the idea of e-commerce

E-commerce is slightly more like a traditional business model in that it deals with physical products. These have to be bought, stored and shipped to customers. This model has come a long way from the days of Ebay home businesses. Nowadays platforms like Amazon will take care of all the warehousing, shipping and handling for you leaving you concentrate on Internet marketing.

A plethora of platforms like Shopify, Etsy and Woo commerce have sprung up in recent years to facilitate e-commerce. They basically form a bridge between your websites, suppliers and payment processors. There are a number of ways you can run an e-commerce business:

Buy, store and ship products yourself

Leverage Amazon or other third party’s to do fulfilment for you

Use the drop shipping model: You pay a wholesale price to a product manufacturer or distributor who fulfils orders for you as they come in. This saves you having to maintain stock levels but does reduce your margins.

A variation on drop shipping specific to printed media is Print on Demand. As the name suggests, photos, canvas’s and other artworks are sold via websites but are printed and delivered after purchase. Again this saves a ton of hassle but at a cost.

Choosing Affiliate Marketing Or E-Commerce

As mentioned earlier whether you use affiliate marketing or e-commerce as the business model, Internet marketing is the lifeblood. The storefronts for both are websites of one kind or another. Websites need internet traffic in the same way as a traditional business needs people coming through the door.

The other extremely important factor is ROI. Although both of these business models can be cheap or even free to set up there are costs involved. The biggest of those is going to be advertising.

 The Internet wins hands down over any other form of advertising due to the targeting information it provides. It’s way cheaper and far more efficient than print, radio or TV. Sadly that doesn’t mean you can’t lose your shirt if you don’t know what you’re doing. It does mean though that you can accurately track, control, improve and scale your results.

 The margins you can negotiate on e-commerce products will determine what you can afford to spend on ads to acquire a new customer.

It’s the same deal with the commissions you are paid on affiliate sales. I‘ll come back to something I touched on earlier here about high-ticket affiliate products. As I said these often start with a low cost initial product. That customer then enters a sales funnel where they are offered higher value products. Those pay higher commissions. This has several advantages to the affiliate. 

Doing The Maths

  1. You earn higher commissions with no extra work
  2. You are leveraging top level copywriting, marketing nouse and content which helps create those upsells
  3. You can afford to spend more on ads and outbid the competition because your ROI can be extremely high. You’ll often see high-ticket affiliates happily paying $100+ to get a $30 sale. That’s because they know that these can turn into many $thousands in commission over time.  

That’s what you pay for – aside from the products themselves – when you invest in high-ticket affiliate partnerships.

Internet marketing as mentioned a time or two already is what makes these basically quite simple models work. For more detail on that and whether or not affiliate marketing or e-commerce is the path you choose I’ll hand you over to a man who has been incredibly successful in both fields. He’s also an expert on Internet marketing.

Stuart Ross is the co-founder of Six Figure Mentors and Digital Experts Academy. If you click on the link below you can join him on 3 free online workshops. The workshops cover affiliate marketing, ecommerce and Internet marketing. You’ll learn how this all works, how to get started quickly and how his organisations have helped thousands of people do it over the last 10 years.

green banner image with the words - get the free workshops now on yellow type. When clicked this takes you to a page where you can register for a series of free workshops about affiliate marketing and e-commerce

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