Dropshiping VS Affiliate Marketing: Part 1

April 11, 2015

 

 

With the recent implementation of the Goods and Services Tax (GST) by the government, the online market provides a significant opportunity for the ordinary people like you and me to replenish their income. Moving forward from stagnant salaries and rising prices, many are now looking at other alternative ways to generate more income in meeting their daily needs.

 

 

 

Dropshipping and Affiliate Marketing marks a holistic chapter as an alternative way to dive into the small business structure. Although the level of understanding of such concepts are still low in rural areas, it started to gain momentum ahead of the GST implementation. Indeed, the prospect of making money passively without much effort and capital is absolutely attractive. However, there are so much hype being put by the internet marketers and this article will address some of the crucial points that you need to consider.

 

 

 

Ok then, let us learn the differences, pros and cons and tips between those two.

 

 

 

DROPSHIPPING

 

Dropshipping can be simplified as selling stuffs online where you don't have to spend money to store inventory and you also do not need to ship product. Really? Is that simple? Yup. The principal method is just like that. Now, how exactly it works? Well, you need to set up your own storefront (your own website) or using social platform (Instagram, Facebook, Blog, etc). Display the products and collect the money from your potential customer.

 

So, instead of trouble yourself to pack and ship the product once you receive an order, you simply place the identical order with your distributors / suppliers and they will take care of shipping the product to the end customer for you. As for the profit, your selling price minus the distributors / suppliers price.

Pros

 

1) There is no need to invest thousands of Ringgit in inventory. Instead, you will purchase only the product that your customers are paying for.

 

2) You can offer a wider range of products with no commitment with any suppliers / distributors. 

 

3) Your risk is reduced significantly as you do not have to worried about the products that may not sell.

 

4) Once your customer paid the order, you can place the order to your suppliers / distributors and let them do all the shipping details.

 

5) You can set your own profit margin. 

 

 

Ahh...the scary part :P

 

Cons

 

1) You need to provide a customer service support. People are not robot. They have feelings and lots of curiosity. Customer service is the ultimate platform for customer to air their complaint, questions etc.

 

2) You may wonder, am I the only dropshipper for this particular products? To tell you the truth, many supplier / distributor engage a great number of dropshiper to push their sales. Bloody price wars? Well, you may anticipate that if you are selling the same products at the same market platform such as Ebay, Facebook, Mudah.my etc.

 

3) By the way, how do you keep in tab of the inventory from the suppliers / distributors? Imagine, the customer already paid the order, and to your horror, the products are already sold out. 

 

4) Not all distributor / supplier are good in their terms especially with returned goods. If you are unlucky, you may need to fork out your own money to refund the customer.

 

5) You need to do your own marketing and promotion works to drive more sales.

 

 

Stay tune for the second part :)