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  1. #1
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    Question Dropshipping vs Affiliate Marketing
    Will only apply really to those who have dabbled in both

    what have you found has worked bettter?

    also should you ever mix dropshipping with affiliate marketing on a site or keep them seperate??

  2. #2
    It is very difficult to answer this without more informatin.

    What is the product in question and how are you marketing it?
    [email="dbird@profitistic.com"]Dave Bird[/email]
    Affiliate Manager
    [URL="http://www.profitistic.com"]Profitistic - Affiliate Network[/URL]
    CPA, CPS, CPC, CPM Offers Available
    [COLOR=DeepSkyBlue][URL=http://www.profitistic.com]Merchants: NO SET-UP FEES and NO MONTHLY MINIMUMS![/URL][/COLOR]

  3. #3
    Affiliate Manager cbsturg's Avatar
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    Personally I've had a hard time finding a dropshipper who was willing to sell me a product at a good enough rate, and allow me to resell the product at a low enough price, to make it much worth my while. There are some distinct advantages to dropshipping, including (but not limited to) having complete control over the user's experience. That is, if your site doesn't make you money, you've got no one to blame for bad conversion.

    But again, I haven't found that the profit margins in dropshipping are that great. But that could be because I've looked at all the wrong vendors.

    As far as mixing the two is concerned, if the situation merits it, then sure. It's a context specific decision.
    Chris Sturgill
    "All my life I've had one dream, to achieve my many goals." - H. Simpson

  4. #4
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    I wouldn't feel comfortable handling only the customer service half of the business enterprise without knowing if the warehouse was able to handle the sale.

    I dealt with a drop-shipper on a fairly big-ticket item. Wasn't a pleasant experience.
    Dr. Strangeweb, or how I learned how to stop worrying about SERPS and love the WOM.

  5. #5
    Domain Addict / Formerly known as elbowcreek Thomas A. Rice's Avatar
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    I've dropped shipped some tarps before, one of which resulted in a customer siccing an attorney general's office on me simply because they had not received their item within 11 days of placing the order. While having a merchant site or drop shipping products seems to result in a lot higher margins, I find I also spend more time dealing with psychos, people that are just waiting to complain asap, hoping to get free stuff out of the deal. Sometimes I think there must be a site where shoppers post threads like, "Hey if you complain enough, this merchant will give you free stuff."

    I always try to respond pleasantly, with a "Have a nice day," but it is hard sometimes.

    From the affiliate side, you get a smaller margin, and you have to deal with trust issues, etc., but man there are a lot fewer headaches, IMO. Build the site, build the traffic, build the sales, next.
    Following everyone else is a GREAT way to become average.

  6. #6
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    Unhappy If Affiliate Marketing is a headache, dropshipping is a brain tumor
    In September of last year I shut down most of my affiliate sites and set up two beautifully designed sites that I used to dropship products. I was so happy when my first few sales came in. By November I was selling like crazy. Then the problems began. I spent more time dealing with lost shipments, items that arrived at their destination broken, the completely wrong items shipped, rude customers, nasty phone messages and chargebacks then anything else. By the end of March I slowly started to phase out my dropshipping sites to save my sanity, and began revitalizing my affiliate sites.

    In my experience, dropshipping is far more trouble then its worth. Of course, I read threads here that said just that before I started the sites, but I'm one of those people who has to learn hard lessons first hand. I find affiliate marketing to have serious problems and drawbacks and I definately saw a bigger chunk of the pie when I was successfully able to dropship an item, but the customer service end made me want to rip out my hair. I also hated the fact that I was tied to the phone all day answering customer service related questions.

    Take it from a former affiliate marketer turned dropshipper who has returned to affiliate marketing, affiliate marketing is the better of the two.

  7. #7
    Affiliate Manager
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    Dropshipping works great if (and only if) you find a great dropshipper. Most of them are not great - far from it - and you won't find any good ones by searching on Google. You need to go out to tradeshows and actually talk to the manufacturers directly.

  8. #8
    Classic Rocker Mack's Avatar
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    I did some "drop shipping" for a merchant, sorta. There was this neat little craft shop near me that hand made stuff from driftwood, sea shells, etc. All stuff from the beach. A retired couple did it as a hobby then they opened a shop. Very nice stuff.

    Anyway, I asked if they would want to sell any stuff on the Internet. I set up a simple oscommerce site, faxed the orders to them and they filled them. They were surprised when the online orders were more than they made at the shop.

    Eventually, they asked me to stop. They were doing it as a hobby, not really a business. I was making them work too hard. The shop has since closed and they fully retired. I sure miss it, still have a bunch of stuff sitting here on my desk from there.

    Anyway, point being. Drop shipping can be a pain, but if you do want to be the merchant and not the affiliate, check into places close to where you live. See if there are any shops that you could sell stuff for online. Find a few of those and you might find a way to make a go of it.

  9. #9
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    Can you guys recommend any good drop shipping companies ? I see some people make reference to you need to find a good one but don't mention any names... maybe they haven't found that good one yet ?

    I want to add an online mall and see if i can get my members to shop through mysite instead of going someone else to do it. Seems like a good idea, and I can hire someone full time to deal with the customer service (nightmare) that people here have been talking about. I wouldn't think about it if I was a one man operation.

    Any suggestions of good drop shipping companies to use would be appreciated. I see someone said " don't use google " damn... wish i would have read that 30 mins ago

  10. #10
    Affiliate Manager
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    Nobody will tell you about a good dropshipper. If somebody recommends a good dropshipper to, don't trust them - it's probably a company shill. Believe me, leg work is the only way to make it work. The recommendation of talking to local shops is a good one. This way you can get your feet wet without having to create relationships with distributors or manufacturers.

  11. #11
    Domain Addict / Formerly known as elbowcreek Thomas A. Rice's Avatar
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    thomasnet.com has listings for thousands of American based manufacturers/distributors.........
    Following everyone else is a GREAT way to become average.

  12. #12
    OPM and Moderator Chuck Hamrick's Avatar
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    I have a friend who is the affiliate manager at Doba.com, ask for Crystal and tell her I sent you.

  13. #13
    Newbie ccupak's Avatar
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    If there ever was an appropriate time for me to jump into ABW, I guess this is it. Goodbye, lurker status.

    I am definitely a part of both of these worlds, as the affiliate manager for a drop shipper. Actually, Doba.com isn't technically a drop shipper - we don't handle the warehousing and shipping ourselves. We have relationships with wholesalers/dropshippers (about 100 of them right now), aggregate their products into one streamlined tool, and sell access to those 250K+ products in a subscription.

    A few of my observations from the last 6 months of working here:

    - It's very difficult to compete in an industry with so many shills, as TheNewDonald so aptly put it. Distinguishing yourself in this market as a reputable, reliable company is a continuous battle. I can only imagine how hard it is sorting through them as a potential distributor. If your looking for dropshipper directories, lists, aggregators (like us) - rather than one to one relationships with a drop shipper - you're more likely to fall prey to some less than moral types. Third party endorsement by someone you do trust, like eBay, is a good indication of reliability. For example, Doba is a eBay certified service provider.

    - Those truely profitable, one-to-one dropshipper relationships are hard to come by. Many of these types of success stories I've heard start with a chance meeting on a ski lift or through a friend of a friend. That's why so many people end up looking for directories or lists, and so many people end up getting ripped off by less than reputable companies.

    - After 3 years in affiliate marketing and 6 months in this dropshipping/wholesale industry, I would recommend trying out a combination, if you're up for it. All the cons of drop shipping mentioned in this thread are definitely annoying, though. But if you have a direct relationship with a drop shipper, or an active customer service department like Doba's behind you, you can overcome many of the headaches which come from dealing directly with customers. I have a site that sells drop shipped items and affiliate items side by side and typically, my dropshipped items convert better and have a higher profit margin. However, if you're looking for a set-up and sit-back online business, don't mess with the hassle of dropshipping. It's much more hands-on than affiliate marketing.

    Here are a few other companies that are considered reputable in our industry, assuming you already know about Doba:

    Worldwidebrands.com
    Shopster.com
    Hienotedirectory.com
    Salehoo.com
    Dropshipdesign.com

    These guys are our competition, but we play nice. There are others I suspect of being decent, but haven't had time to investigate them fully.

    And of course, if you want to promote the dropshipping idea and business model, let me know, and I'll hook you up in our affiliate program. It's pretty awesome too.

    -Crystal
    Last edited by Chuck Hamrick; April 27th, 2007 at 05:09 PM. Reason: Sorry, I mispelled one of my recommendations and I don't have edit privs yet. It's Hienote.com or Hienotedirectory.com.

  14. #14
    OPM and Moderator Chuck Hamrick's Avatar
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    Props to Crystal, she was one of the managers with MyFamily/Ancestry and consulted for us when we co-managed their program. She is also the Treasurer of our local affiliate networking group RMAMA. Excellent response Crystal, hope to see a forum here someday!!

  15. #15
    Zulubabe, the newbie Colette's Avatar
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    To add to Crystal's great comments...

    If you don't want to hassle with the customer calls and the product return issues, and you prefer the joy of actually just marketing a product hen affiliate marketing is definitely the choice. But there is a great source of income available in selling physical goods. I just got back from a seminar with some top sellers online who were all earning well over 7 figures with their companies selling only online. A few of the gentleman only have online stores that sell through dropshipping only but they have several stores to make that happen right.

    If you're really interested in selling physical products then You want to make sure you are working with qualified suppliers. Services like Doba.com and the OneSource Product by WorldwideBrands.com who are both eBay certified profiders work to assist sellers with finding those qualified suppliers that will work with online retailers.

    As Crystal mentioned above, it's very important to have that direct relationship with the supplier. That is how you negotiate better rates and build those profit margins.

    The Pros for Dropshipping are that you don't have to handle any inventory. The Cons with Dropshipping however is that its a small profit margin compared to other product sourcing methods like light bulk.
    If you don't want to hassle with the customer calls but you like the conversion and profit margins of selling physical profits, there are also fulfillment centers like Amazon Fulfillment that will handle all the logistics for you. You choose what you what to sell and handle the marketing and order processing and leave it to your fulfillment company to handle the rest. There are many that you can use. It also gives you more control on business operations. This increases your profit margin even more because you can then buy from suppliers in light bulk quantities or larger volume quantities.

    Dropshipping is great for testing products in the market place as well as testing your supplier and starting that relationship with the supplier. Once you find a marketplace that has a need for a particular product and that product hits. If you quickly move up into doing light bulk, you'll find that you will be able to handle the shipping and handling yourself lowering any concerns of shipping related concerns.

    Here are two Entrepreneur Magazine internet radio shows that Worldwide Brands hosts each week where they bring experts on from around the industry to talk everything from affiliate marketing to all methods of product sourcing. It's a free resource if you want to learn from other experts in the ebiz (great for listening on your ipod to )
    www.ebizshow.com
    www.productsourcingshow.com

    There are also free videos educational videos available on Worldwidebrands.com if you want learn more about the different methods of product sourcing from dropshipping to liquidation and importing and more.

    I would have to agree with Crystal that a combination is great option for consideration. If you're already driving a lot of traffic to your site for a particular group of products but there's a need that is not being filled in the marketplace that you have a supplier for then by all means....fill the need with selling the product yourself!

    Colette
    Worldwide Brands Affiliate Manager

  16. #16
    Member DoradoVista's Avatar
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    Drop ship vs. Affiliate marketing
    I now see a pattern. Let me paraphrase what folks have said here;

    To be an affiliate, I take responsibility for traffic control & get paid a percentage of sale or some part of it. I have little or no Risk in the product and Customer support.

    To drop ship, I am a merchant once removed. I Control traffic and I support the customer back to the manufacturer. I get more percentage, but risk more due to support costs and resolving customer issues.

    To be a manufacturer, I own the product and its reputation. I may or may not directly sell. I do warrant the products fitness and safety. I need a sales team to get the word out. My work is cut out for me...

    There are merits and risks for each role. The Affiliate program gets a sales team out there for customer contact and introduction. Primary risk here is one of cash flow and keeping on top of how the product is perceived by the customer. Oh, and sales affiliates and merchants both own a truth in advertising obligation.

    The merchant gets the business of product and customer interaction.

    To drop ship is to attempt to do both Merchant and Sales Affiliate without the distinct benefits of either.

    Did I capture the picture correctly?
    Gold Prospector just Prospecting Sales! :coolsmile

  17. #17
    Zulubabe, the newbie Colette's Avatar
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    Your wording to me is a little confusing to me. Here is my summary:

    A Manufacturer produces the product. The manufacturer normally has no interest in selling the product . Their only interest in producing the product, so they will distribute the product to a Factory Authorized Wholesaler.

    A Factory Authorized Wholesaler - The wholesalers main responsibility is buying the product from the manufacturer and finding retailers to purchase the product out of their warehouse. They normally are still not interested in the selling aspect. Their marketing is geared towards finding retailers. If a retailer choses to use drop shipping as their method of sending product to the end consumer, then the wholesaler will handle shipping the product directly to the customer for the retailer.

    The retailer/online merchant Is in the business of selling the product to the end consumer through a variety of marketing channels. A wise online merchant will add an affiliate program to their store to open up an affiliate marketing channel. This is their best sales force because the affiliate is focused on driving traffic that will purchase the product from the retailer in exchange for a commission. The merchant will have the direct relationship to the customer and will handle all aspects of relations with the end consumer (customer service, returns, shipment etc )

    Drop shipping is just a method of shipping a physical product to the end consumer. It's a choice that the merchant will make depending on how much of a profit margin he/she would like to obtain.

    As an affiliate, you main concern is drifing that targeted traffic to the online merchants website and either converting them to making a purchase before they go to the merchants site or rely on the merchant to make the conversion. A good merchant will always make sure their site is converting as high as possible so that any traffic an affiliate drives to the site will convert. In addition, the merchant will work the affiliates to make sure they have everything they need to be able to provide that source of traffic.

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