Monday, April 25, 2005

Affiliates who are also Drop Shippers

Drop Shipping might be a method of breaking into the affiliate world. Or vise versa.

I have had this post sitting in my drafts folder for a couple of weeks now. I have been trying to collect enough data to write something that my readers may find useful about the overlap of affiliate marketing and drop shipping.

While I do not use drop shipping it should be obvious to anyone reading this that I am an affiliate marketer for various merchants. I came to affiliate marketing through the online seller channel. I have been selling books and collectibles via various online auction sites for the past three years or so. And this introduced me to many individuals who use drop shippers and I feel that I understand drop shipping as well as you can and not be a drop shipper.

My take on it is that I prefer to sell items that I know a great deal about. That is why I sell books and a very narrow set of collectibles. The collectibles that I sell can not be drop shipped (they are antiques, and there is no manufacturer or distributor for them). You can check out my selling site Fitz' here. But that is just my business model, you on the other hand (armed with the right knowledge) could make a go of drop shipping.

OK now that I have gotten that out of the way I want to try to answer a question that I found on a forum devoted to online marketing.

While surfing online to get ideas and to rub elbows with other affiliates I often see beginning affiliates ask about drop shipping. As in this question;

Affiliate Income vs. Drop Shipping?

I think to answer this question it is probably a good idea to start with a few definitions so that we have a common starting point for further discussion.

I also blogged about these definitions in my Online Seller Tips blog.

Drop shipping defined - Drop shipping is you selling items for a manufacturer or distributor. The manufacturer or distributor does all the product developing, inventory tracking, maintaining inventory and shipping. This allows you to sell high quality, brand-name products on your Web site for a profit.

Affiliate marketing defined - Affiliate marketing is you creating a web site, where you display links to merchants that you are affiliated with for the purpose of sending traffic to their site. In different affiliate programs you may be paid for generating sales, leads, impression or clicks.

Advantages to drop shipping;
Saves on inventory cost
No leftovers
Quick selling of new items
No need for storage space
Less physical and administrative work
Access to a large and varying inventory of items
Access to professional quality marketing resources

Disadvantages to drop shipping;
Customer service (you have no control over this)
Quality Control (you have no control over this)
Unlimited choices (this can actually be a bad thing as well)
Complicated Fee Structures
Difficult in finding reputable drop shipper
Lots of Competition in successful programs

Issues with affiliate marketing;

Affiliate marketing also has pros and cons. But they are beyond the scope of this post. But I want to say that one of the biggest pieces of misinformation out there is that affiliate marketing is easy. You will read many articles and post in forums about how all you have to do is buy an ebook and you can instantly start making large sums of money. One of the most difficult parts of affiliate marketing is getting accurate and credible information.

I am reminded of the "California gold rush" where it is rumored that it was not the miners that got rich but the general store owners who sold them all the picks, axes and shovels used in mining. That is what many affiliate marketing programs are like. The sellers of ebooks are getting rich while the actual affiliates earn little to nothing.

So my advice is to do the due diligence needed to understand affiliate marketing. I have tried to provide information in this blog that will help you make good decisions.

How drop shipping might help the beginning affiliate.

1. Drop shipping can help you learn about online retailing. While selling stuff is a very common practice and there are those who argue that everything is sells. Online retailing has some fine details that drop shipping will help you learn as you also do affiliate marketing.

2. Help you learn customer service. As an affiliate you are paid to send traffic to other web sites where the customer service is handled by the merchant. To make good decisions about which merchants are good to work with you need to understand customer service from the shippers point of view. This is why some online sellers who use drop shipping fail, they depend on the shippers to get the customer service right without knowing customer service from the inside out.

3. Help you learn some basic web design and other presentation skills. To be an affective affiliate or drop shipper you have to build web pages and one complements the other.

There are many ways to skin a cat

So the old saying goes. And there are many models of being an online entrepreneur. You can sell items on the various auction sites. You can sell items for distributors (drop shipping) or you can sell items for other merchants via an affiliate program. It does not have to be one or the other. You can mix and match these approaches to selling online, it just depends on your skill set and your goals.

I look at it like a cafeteria menu, you can take a little here and a little there. And like creating a meal, you can create an online business by selecting and combining the features of affiliate programs and drop shipping.
  • You can build a site that sells items that you buy to resell and on that site you can be an affiliate for a merchant that sells items that complement the items that you sell. And you could drop ship similar items or complementary items.
  • You can create an information site (or blog) that provides information on a subject that you are knowledgeable about and use it to also be an affiliate for a merchant that sells items that complement the information that you provide. And you can also drop ship similar items or complementary items. Here is an example of that, this is a music information blog that I created to do affiliate marketing for music merchants (BackBeat @ journalspace)
The best way to determine the mix of affiliate to drop ship is to arm yourself with knowledge. To help in that endeavor I provide the below books for you to check out.

Books At Amazon on Drop Shipping

Books At Amazon on Affiliate Marketing

Drop Shipping as a Marketing Function : A Handbook of Methods and Policies

Marketing Your Products via Drop-Shipping. : An article from: Web Marketing Today Free Weekly [HTML]

Drop-shipping cuts reseller inventory cost. : An article from: Computer Dealer News [HTML]

Drop shipping marketing methods

Money in Your Mailbox : How to Start and Operate a Successful Mail-Order Business (Small Business Series)

Other online resources.

Using Drop Shippers for Your Online Store: Article from

Cut Startup Costs By Using a Drop-Shipper: Article from

Drop shipping guide - dropship tips and strategies.

Drop Shipping:Five Rules to Profit By

One last word, if you have any good ideas about how affiliates can use drop shipping feel free to let me know.

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