Two of the most popular ways to start a business from home are affiliate marketing, and eCommerce.
But what’s better in 2022, affiliate marketing vs eCommerce?
You can make a lot of money with either business model. However, both have some pros and cons you need to be aware of before you take the plunge.
Affiliate marketing has been around for a few decades now, and the industry is getting bigger each year.
eCommerce stores have also been around for a similar length of time, and provide a great opportunity to launch a profitable business.
If you’re trying to decide which one will be best for you, then here’s what you need to know about each business model.
Let’s dive in!
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What is Affiliate Marketing?
In affiliate marketing, affiliates earn commissions by promoting products or services via their websites or social media pages. The product owner pays the affiliate when someone buys through the affiliate’s unique link.
For example, if you’re an affiliate working in the sleeping niche, you can sign up for the Puffy mattress affiliate program. Here, you’ll earn 20% on each sale that results after someone clicks on your affiliate link and then makes a purchase.
Since the average Puffy mattress sells for around $1,000, you as the affiliate will earn around $200 per sale.
Some affiliate programs offer only very small commissions on low-priced items. Personally, I avoid those programs as you’ll need to refer a lot of customers in order to make decent money.
Fortunately, there are a lot of companies that offer high-ticket commissions on specific products.
Depending on what niche you’re working in, you can also find programs that will pay you a recurring monthly commission too.
For example, companies that sell products on a monthly subscription basis (think software, courses, membership subscriptions, repeat order products, etc). These programs will often pay affiliates a recurring monthly fee for each month their referral remains a customer.
Choosing to promote high ticket and recurring programs is one of the affiliate secrets to making a lot of money in this industry.
Affiliate marketing is growing in popularity all the time. As an example, affiliate spending increases by around 10.1% per year on average, with over 16% of all online sales being generated by affiliates.
Needless to say, affiliate marketing is here to stay!
What is Ecommerce?
eCommerce is a form of commerce that takes place over the Internet. In e-commerce, businesses sell goods or services directly to consumers who can access your store via the Internet.
The B2B eCommerce market is predicted to grow annually by around 18.7% between 2021 and 2028.
With an eCommerce business, you have full control over what you sell and how much you charge. You decide what inventory you keep in stock, when to order more, and how quickly you fulfill orders.
You also get to set your own prices and run your own discount and promotion offers.
You can choose to operate as a traditional brick-and-mortar store with an online arm to your business, or you can work entirely online.
Affiliate Marketing vs eCommerce: Why Should You Choose One Over The Other?
Both affiliate marketing and eCommerce are great business models. It ultimately comes down to what kinds of day-to-day activities you would enjoy doing in your business, and how much money you have behind you to invest.
For example, you will need some start-up capital to begin an eCommerce business. Particularly, you will need money to buy stock, and create an eCommerce store-type website.
eCommerce websites are much more expensive than an affiliate site if you’re looking to hire this task out. If you plan to build your website yourself, then you can absolutely do this. However, it’s a lot harder than building an affiliate site.
The best way to go is to use an eCommerce website builder. While Shopify is probably the most well-known, they are expensive and have a lot of additional costs as you go along.
The best eCommerce store website builder and shopping cart solution (especially for beginners) is GrooveKart.
You can get started quickly with a free GrooveKart account. You can build unlimited eCommerce stores, and serve an unlimited number of customers on the free plan. However, you will have slightly higher transaction fees (4.95% + 30c USD for credit card transactions, and 2% on 3rd party processors).
However, if you upgrade to a paid account then your credit card transactions fees reduce to 2.85% + 25c USD, and 0.0% on 3rd party payment processors.
GrooveKart is one of many apps that come with the all-in-one marketing software platform, GrooveFunnels.
To use GrooveKart for free, simply open a free for life GrooveFunnels account here.
If you want to use GrooveKart unrestricted and benefit from the lower transaction fees, then you can upgrade to a GrooveFunnels paid plan from inside your free account.
At the time of writing this, GrooveFunnels are offering a lifetime deal to their Platinum account. For a one-time payment, you can have unlimited access to all GrooveFunnels apps with no resource limits.
So, if you’ve got a budget behind you to invest, and you like the idea of sourcing products for resell (or creating your own), then an eCommerce business might be a good fit for you.
It’s important to know that besides the marketing, product creation, negotiation, shipping, and day-to-day running of your business, you will also need to deal with customer service, including complaints, refunds, and returns. Some people love this. Others don’t.
So, the other alternative is affiliate marketing.
As an affiliate, you don’t need to spend time sourcing or creating products or have any of the customer service issues to deal with. It’s pretty hands-off besides generating traffic and sending people to affiliate offers.
If you don’t have any money behind you, to begin with, then it is possible to start an affiliate business without money upfront. Starting this way though will take longer for you to your business, and you will also spend more hours in your business.
Once you start earning money from affiliate marketing, I recommend investing your earnings back into your business so you can grow more quickly.
Since the main task of an affiliate marketer is driving traffic, your primary task will be to create content that links to your affiliate offers.
For example, if you like writing, then starting a blog would be a good way for you to go. You would then focus a lot of your time on creating articles that are relevant to your niche (or paying other people to write them for you if you have some money to invest), and posting them on your blog.
Your articles will, of course, contain affiliate links to the products you promote. Someone clicks your links and makes a purchase, you get paid. Simple!
If writing is not your strong point then don’t worry, there are loads of other ways you can build a successful affiliate business without blogging. Here are some other great platforms that work really well for affiliates:
- YouTube (publishing product review videos as well as other niche-related content)
- Facebook (networking and Facebook groups)
- TikTok (15-60 second videos)
If you’re new to online marketing, then I’d suggest starting off with affiliate marketing because it’s easier to learn and more scalable.
You can take some free affiliate training here with super-affiliate Spencer Mecham. Spencer is one of the top-earning affiliates in the world. His courses are great (I can personally vouch for that), and he holds nothing back in his training.
Another option to get started quickly is to take the 15-Day Legendary Business Builder Challenge for $7. This short course is run by another well-known and respected marketer, Dave Sharpe.
Dave has made millions online through affiliate marketing and now runs training courses on various forms of digital marketing (including affiliate marketing and eCommerce).
The 15-Day Legendary Challenge is for people who want to start a high ticket affiliate business (selling high ticket products).
The training gives you a solid blueprint to follow, various resources and templates to get your process and funnel set up, and even a one-to-one coaching call with an expert. It really is excellent value, and highly recommended by Entrepreneur Nut.
Affiliate Marketing Pros
Affiliate marketing has many advantages over eCommerce. It’s easier to set up than an online store, and it doesn’t require you to pay for and hold any inventory.
One of the biggest advantages is that affiliates don’t have to worry about product returns, or dealing with customer service. Affiliates simply refer customers to retailers who do all the selling and customer management.
Here are more pros of affiliate marketing:
- You don’t need to worry about shipping
- You can get started for little or no money
- You can choose to promote any products you like
- There are lots of great products out there to promote
- You can earn passive income
- You can work as much or as little as you like
- Some programs pay out huge commissions
- Some programs pay you a monthly, quarterly, or yearly recurring commission
- You can work from anywhere
- You are your own boss
- You call the shots in your business
- Lots of great courses available to learn affiliate marketing
Affiliate Marketing Cons
The biggest downside of affiliate marketing is that it can be hard to know what are good products to promote when you’re first getting started.
This is why a lot of affiliates like to plug into affiliate Facebook groups. Here they can network with others to find out what’s selling well, and gain other useful marketing tips.
Here are the main cons of affiliate marketing:
- There is competition in many niches
- Sometimes programs change their terms
- Sometimes affiliate programs can shut down
Starting an eCommerce business requires a whole different skill set than affiliate marketing. You’ll need to understand how to sell things online, manage inventory, keep track of payments, and deal with customer support.
The biggest advantage of eCommerce is the ability to sell directly to consumers. This means you don’t need to worry about finding retailers who want to carry your products, and you don’t have to pay any middlemen fees.
Here are the main pros of eCommerce:
- You can create an online store right away
- It’s easy to get started
- You can sell anything you like (as long as it’s legal!)
- You completely control your stock
- You can start small and grow your business over time
- You can scale your business at anytime
- You can use free platforms like GrooveKart
The biggest downside is the high start-up costs and setting up and running an online shop.
There are also legal issues and tax considerations around selling products from overseas, especially if they contain hazardous materials like drugs or alcohol.
There’s a lot more to consider when getting into eCommerce, and you’ll have more on the line than an affiliate.
Here are the main cons of eCommerce:
- Higher startup costs
- Need to manage your online store
- Need to deal with customer complaints and returns
- Constantly need to invest in new stock
- Shipping costs
- More tax considerations
- More legal considerations
- Need to store your inventory
- Need to track your inventory
Which Business Is Easier To Start?
Hands down, affiliate marketing.
You can simply sign up to an affiliate program and post your link on social media. Congratulations, you’re now an affiliate marketer! Although, that strategy will not get you very far.
With some simple affiliate training, you can start making money as an affiliate within a month, providing you are doing the right things.
As someone who has been working in the industry for 9 years at the time of writing this article, I can tell you that this 15 day training course with Legendary Marketer Dave Sharpe, is probably the fastest way to get started making money as an affiliate.
What Do I Need To Start Affiliate Marketing?
All you need to do to start affiliate marketing is:
- Choose a niche
- Then, choose a product (here are some great programs for beginners)
- Learn the basics of the trade (I recommend you take the 15 Day Business Builder Challenge)
What Do I Need To Start an eCommerce Business?
If you want to start an eCommerce business then you will need:
- Capital to invest in products
- A website (I recommend GrooveKart for this)
- An inventory management system (I recommend GrooveKart for this)
- Payment processing software (I recommend GrooveKart for this)
- Customer service software (I recommend GrooveKart for this)
- Marketing tools (I recommend GrooveKart for this)
My Final Thoughts – Why Affiliate Marketing Is a Better Business Model
So, there you have it!
Deciding between affiliate marketing vs eCommerce can be a tricky choice at first.
If you’re new to online marketing, if you have little or no money to invest in your business, and if you don’t like the idea of dealing with customers, managing inventory, or dealing with weird tax issues from selling in other countries then I recommend you go for affiliate marketing.
If you have some online marketing experience and a decent amount of capital behind you, then you may enjoy the additional challenges that an eCommerce business will bring.
Whichever business model you choose, I wish you all the best of luck!
Steve West is the founder of entrepreneurnut.com, and has been working online since 2013. He specializes in SEO, YouTube, and affiliate marketing. Besides running his online business, he likes hiking, keeping fit, and eating cookies (which is why he needs to keep fit!)
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