E-Commerce Versus. Affiliate Marketing
A couple of friends of the site had a back and forth question-and-answer session. They were Walt, who you can find at this Twitter account, and James, who you can find at this Twitter account.
Walt asked James about whether he should start either an e-commerce project or an affiliate marketing project.
James gave a video response, which you can see below.
If you want to start an ecommerce site, I recommend you watch all of James’ videos on ecommerce. He gives practical information from real experience with ecommerce, and he does it without being an irritating YouTube celebrity who waves their hands, sits on Lamborghini’s and generally annoys the hell out of you.
Anyway, Walt’s question is a good one.
Should you concentrate on affiliate marketing, ecommerce niche websites or something else?
I’ve gotten this question a few times – including just this morning, when I woke up to a comment from reader Al, who wanted to know about building multiple tiny niche sites versus concentrating on a single big site.
People clearly want to know about how to pick projects, and so I’m going to do the totally noble thing and piggy back off James’ content.
So, if you wanted to start one internet project this year and it was either an affiliate marketing site or an ecommerce site, which should you choose?
Affiliate Marketing Versus E-Commerce: Major Concerns
The first major concern with choosing ecommerce versus affiliate marketing is your budget.
Don’t get me wrong – you can spend thousands on affiliate marketing and thousands on ecommerce.
But what you have to spend and what you’re willing to spend are key considerations.
If you have $50 and your internet business project is a total hobby, then ecommerce is out of the equation. Affiliate marketing isn’t, but you’re going to rely on organic traffic and your time horizon is far longer.
If you have $50,000 but you want a fast return on investment, then your goals, strategies and techniques are going to be different.
As a general rule, you need a bigger budget for ecommerce but you can scale faster and more dependably.
The upfront costs of affiliate marketing are basically domain + hosting. Then you can write articles and get organic traffic from SEO and social media. This is low cost.
With the same marketing approach for ecommerce, you need a bigger budget. You need to buy the products upfront (even if you’re drop-shipping) and unless you’re also blogging, you aren’t going to get SEO traction because ecommerce sites are content thin. You also have to account for software requirements (either Shopify or Woocommerce & themes and add-ons.)
Then there’s the marketing aspect… but let’s talk about the skills, because they lend weight to whatever choice you make.
The Skills Cross Over
If you want to be a top-dog, making many, many figures, then you will need to learn how to run PPC campaigns. That’s whether you choose e-commerce or affiliate marketing.
You’ll also need to learn copywriting – though in different forms. E-commerce generally relies on short-form sales descriptions and email marketing. Affiliate marketing also requires email marketing – but in a funnel setting – and more long-form copy.
E-commerce is more graphic heavy and you have to have at least a slight eye for optical design, because ecommerce stores can’t be ugly. Whereas everyone knows that affiliate sites can be ugly as possible and still convert.
In any case, look at your selected project choices and make a list of two things: Skills that you’ll have to learn and skills you can avoid.
Most of them are going to cross over at some point. All of them are worth learning.
But the timeline is different. You’ll need to learn PPC immediately when you start ecommerce whereas you can put it further down the timeline for affiliate marketing.
There aren’t any right answers here… just considerations.
Leverage
Here’s the big deal when it comes to whatever business you start online. I’ll have to expound in a dedicated article, but:
In order to succeed in online business, you need to control as much as you can.
When you sell your own products you have control of the product and everything else. Nobody can take that away from you. Your success is determined by your own actions and your logistics. This is good.
When you sell someone else’s products, they can take them away. This is bad.
Now in this argument, affiliate marketing can be a pain in the arse because you can get some momentum going with a product or offer, and a lot that’s out of your control can kill your campaign:
- The owners may stop producing the product
- The affiliate terms might change (and your commissions evaporate)
- Your market may get tired of the product
- Some super affiliate marketer might steal all the market share
With affiliate marketing, you’re looking for the new offer and you rinse and repeat.
Most of your work must be in building your own authority so that people will listen to what you have to say.
Long term you must move into creating your own products (or brand.) This is your long term play.
Now with ecommerce, you have the same issue but they aren’t readily apparent. You have control over the product, and more importantly, the list is yours. But you have to work out the supply chain (because dropshipping encounters the same difficulties with a product going out of stock and you holding the tab.)
But because more is in your control, you have more leverage with ecommerce. It’s your store, your products and they’re your customers.
This is key for scaling and asset building.
Commitment
On the other hand, Ecommerce is more of a commitment, because you have live products and you essentially own a “real business” where customer support, ad tracking and everything is on you.
This isn’t something that’s easy to do if you can only devote one hour a day to. It’s doable, but a pain because people having issues with ordering won’t wait 23 hours for your reply.
Whereas with affiliate marketing, it’s hands-off in that regard. You set up the funnel or write the sales letter, and people will click through and become someone else’s problem once they buy.
If you have less time, then affiliate marketing is easier in that regard (until you run into the same issues with ad management and tracking – which if you’re running multiple offers on multiple platforms you will.)
That said it’s a lot harder to scale affiliate marketing than it is ecommerce.
Affiliate marketing is heavy on the content (which is time consuming, hard to outsource and crucial to the whole operation) whereas ecommerce isn’t. You can add more products with a few clicks of the button and scale your marketing to the moon with little time commitment.
Affiliate marketing is harder as you scale up: You write more content, create more funnels and get more of a headache.
What you outsource/automate falls in favour of ecommerce. It’s expensive and difficult to outsource affiliate marketing because you’re using writers who charge a lot if they’re good.
I know this because I’m good and I charge a lot.
With ecommerce, you can outsource customer support and site maintenance which aren’t so lucrative as fields.
Final Thoughts
The above isn’t really an argument as much as a bunch of considerations. It all depends on your risk tolerance, time commitment and personal situation, as well as skills you already have and want to learn. Finally your budget.
If you have a very limited budget, then start with affiliate marketing and an SEO approach. This will teach you to learn the internet marketing ropes.
If you want complete control over the product and more leverage, go into ecommerce.
You can also do both, or even mix affiliate marketing with ecommerce. (i.e. you act as an affiliate for your own store and build both skill sets.)
As a closing thing, I’d recommend focusing on the skills you have and the skills you lack. Then think about the skills you can build.
When you have a set of skills, you can apply them to new situations.
For instance, if you learn FB ads, then you can apply that to affiliate marketing, ecommerce or both.
If you are a decent copywriter, then you can write content and product descriptions for ecommerce sites and also affiliate marketing projects.
If you’re lacking a certain skill set, say PPC advertising, then either you’ll say, “I have the budget and time to learn this so I can do ecommerce” or you’ll think, “I don’t have the time and budget to learn… but I’ll start with something else and build up the budget to learn later.”
Hopefully the collected thoughts will help you come to the right decision.