Is Affiliate Marketing A Better Option Than An Online Store?

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Today’s post comes from Geoff, a fellow entrepreneur whose wife also quit her job and author of the free eBook, 10 Powerful Techniques to Increase Affiliate Commissions.

Photo By Claudio Gennari

Everyone knows Steve (the guy grinning at you above) is a strong believer in the money-making potential of online stores.

And I completely agree! But there are other ways to make money online that deserve some attention too.

So I asked Steve if I could write about affiliate marketing and he agreed, can you believe it :)?

Editor’s Note: Depending on how this article goes, this could be your last guest post:)

Not too long ago Steve ran a post comparing a drop ship store to affiliate marketing. You can probably guess who won.

Drop shipping of course! So today I’d like to open up a friendly debate on why affiliate marketing may actually be a good option for some people. Let’s take a look at Steve’s post and provide an alternative view to some of his points.

Affiliate Marketing Sites Don’t Get Repeat Visitors

Steve’s Point: If a customer wants to make a repeat purchase, they’ll skip your affiliate site and go directly to the store for subsequent purchases.

And when a customer is pleased with a product, they won’t provide referrals or social love to your affiliate site, but rather the store where they actually bought something.

Geoff’s Counter Point: If you create an authority website that kicks ass, people will return and recommend.

Steve’s Counter Counter Point: Creating an authority website requires an order of magnitude more effort than starting a dropshipped online store so it’s not an apples to apples comparison.

See related article: Income Report: How Much Money Do I Make Blogging And Is It Worth My Time?

Thin-content affiliate niche sites are no longer a sustainable business model. To stand out, your site must be a deep resource that comprehensively covers a topic. A good, authority site will focus on solving a significant reader problem and recommend products that help solve different aspects.

For example, a site on home buying may make affiliate commissions on mortgage brokers, inspection agencies, moving companies, insurance, etc.

Covering a broad scope with quality advice keeps the reader coming back for more.

Let me share a little story about an authority site I created, A few years ago I was buying a car and decided to get prices online.

Being an obsessive, price-hunting freak, I reached out to EIGHT car dealerships and made the salesmen compete for my business. Some might call that excessive, but with only a few hours effort I saved several thousand dollars.

I ended up buying my car below dealer cost and was so excited that I wanted to share my experience with the world.

I made myself an expert on all the financial aspects of a car purchase and created a website that detailed my car buying strategy. I taught people how to get a deal on every step of the car buying process: negotiating car price, haggling a trade-in, finding the best financing, and surviving the Finance Office at the dealership.

Now I don’t actually sell anything on this site, but I do make an affiliate commission if you click through one my links for items like financing and insurance.

And because my site talks about every aspect of a car purchase, people will leave to visit partner sites, but they keep coming back to read the rest of my money saving strategies.

And when they brag about their deals, they rarely talk about the car dealership, but instead about the website that helped teach them how to negotiate.

The moral is, if you solve a big problem or add value to a purchasing decision, you can become the real destination.

You Can Make More Money With An Online Store

Steve’s Point: You can typically make a 50% gross profit on your drop-shipped goods, however the commission earned from being an affiliate marketer is typically much less.

Geoff’s Counter Point: You can make more money per sale with an online store but an affiliate site can potentially earn the same or more as a whole.

I agree that you can make more margin drop-shipping an individual product. But affiliate marketing may result in a higher volume of transactions and a transaction doesn’t always mean a purchase of a physical item. Let me explain:

  1. You don’t always have to complete a sale to earn money through an affiliate program. Many programs are setup so that if you simply generate a “lead” and the customer provides their contact information, you’ll make a commission. In this case, the customer doesn’t even have to complete a sale for you to make money.
  2. You can sometimes make more money per visitor by guiding them through a series of steps related to their goal. For instance, if you’re providing advice about planning weddings, you could generate commissions from formal wear, jewelry, floral arrangements, DJ’s, photographers, honeymoon travel, etc.
  3. Directing people to buy one product through an affiliate site can be more effective than offering a wide range of choices in a store (paralysis of choice). Think about it this way, you’re not likely to run an online store that sells just one item. So sometimes people won’t buy because they can’t make up their mind on your site (yup, this happens). But in the affiliate marketing world, it’s quite common to only recommend a single tool or service to solve a problem and that can result in a higher conversion rate.
  4. You can promote many items you can’t even buy through an online store. You can be an affiliate of almost anything: solar panels, airfare, car rentals, job search websites, legal services, hosting, you name it. And some of those items have ridiculously high commissions per sale.
  5. There are a variety of ways you can increase your affiliate profits to get closer to the margins of an online store. If you want to learn some of these techniques, download my free eBook: How I Tripled My Affiliate Profits Without Adding Traffic and You Can Too

A Few Other Affiliate Marketing Misconceptions

Steve did mention a few positives about affiliate marketing, but to be fair, I can’t say I agree with those either! Here a few common beliefs about affiliate marketing I’d like to debate:

  1. Affiliate marketing is passive: The “passive model” rarely works anymore. Believe me, authority sites take a lot more effort to maintain than thin, niche sites. You’ve got to constantly add strong content, socially promote and build backlinks, and engage with your readers to be successful.
  2. Affiliate marketing is free: It’s not expensive, but there are a few costs to keep in mind. The biggest of which is typically your time (or money for staff writers) to create quality content. Hosting, web design, and an email service provider add up too.
  3. You don’t have to do customer support: If you’re doing it right, you’ll communicate with your visitors a lot. If a visitor asks me a good question, I’ll often spend a fair amount of time researching so I can answer them in the comments or privately. The most successful affiliate sites develop a strong community and that means a lot of interaction with your readers.

The Bottom Line

There are merits to running an online store and an affiliate site. But know this, affiliate marketing and an online store are not mutually exclusive!

You can do both within different aspects of your site. Look at how successful MyWifeQuitHerJob has become and this site uses a mix of both models. And here’s another thought, why not start your own affiliate program to entice others to start promoting your store?

Readers, do you agree with my arguments? Who’s right? Me or Steve?

p.s. Steve- thanks for letting me poke a little fun at your post!

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If you are really considering starting your own online business, then you have to check out my free mini course on How To Create A Niche Online Store In 5 Easy Steps.

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23 thoughts on “Is Affiliate Marketing A Better Option Than An Online Store?”

  1. Terry Wells says:

    Having never opened an online store, I can’t really make a good comparison but affiliate marketing is a great way to make money online, especially if you have a blog. The best part is that there’s no customer service. I rarely communicate with my visitors about my aff links. Usually they just click and make a purchase.

  2. Chris Oppenheim says:

    “All you have to do is create an authority site!” Not as easy as it sounds. Back then you could throw up a site with the keyword in your domain pump a bunch of junk at it and rank. These days, ranking for anything is a pain. The better your profit per sale, the more money you’ll make cuz the less traffic you’ll need.

    1. Nope, it’s not easy. I’ve been at it since 2009 and have just finally started making decent money from it.

      1. Jeremy says:

        Real world ain’t easy either.

        Even many entry level McJobs want a college degree. Tens of thousands in tuition plus four YEARS and that’s just the opening ante so you can schlep yourself back and forth to a job 40-50 hours per week!

        Now all that hard “work” of writing about a topic that interests you and building backlinks doesn’t sound so bad, does it?

  3. Thanks for the post Geoff and how dare you defy me!!! Since I make a good deal of money with affiliate marketing as well, I think there are merits to both models depending on how fast you want to make your money and the level of effort required. We’ll just have to see what others think.

    1. Steve,

      I think you hit it exactly. Effort is key. Most people do not want to put the effort into an online store, not realizing that affiliate marketing can be just as arduous.

      Great post guys.

  4. Eric D says:

    i lean more towards steve’s view that there is just more benefits to running your own store although i will say that not having to deal with customers in affiliate marketing is very appealling – customers are such a big headache!

    1. Hey Eric,
      Yes, customers can be a big headache but they are also a big source of future business via word of mouth. But yeah, I know what you mean:) It’s a tradeoff.

  5. Vince D says:

    You guys are comparing the two different online animals. It’s like trying to find out which Olympics athlete is better than another, the swimmer or the tracker. However, I appreciate the facts that each of you point out for both business models so the readers can lean toward whichever way they want to spend their time and efforts. Thanks!

    1. Hey Vince
      Good to hear from you! The 2 models aren’t all that different. EIther way, you have to generate traffic for your site. The main difference is who gets to complete the sale.

  6. Trey says:

    I’ve tried affiliate marketing in the past and have failed miserably. It’s not easy and you need the traffic. Steve, does an online store require less traffic to make money?

    1. Hey Trey
      In general, the answer is yes mainly because the payout is higher.

  7. Terrence says:

    The fact that aff marketing has evolved away from niche to authority sites in such a short period of time implies that it is not as stable as owning a business where you have an established brand. So I’d vote store.

    1. I’d have to agree with you here:) But an authority site has a much better chance of sticking around than a niche site no matter what GOogle does.

  8. Cassie says:

    The article does make a point but here is a concept yes there is some costs you have to both register as a business to retro-active call a business. But here are some really good points I would like to confirm with both of you.

    You can do both on a web based store pending your web building skills – format your website for store front sales and provide a customer blog/feed back site where marketing complimentary businesses you pre-arranged support. This way you don’t invest in two websites but there are occasions which you do.

    This is my stickler say your a retail eCommerces site for tires & rims and you know a great mechanic so you make arrangements he plugs your site and you plug his to encourage more sales now consumers know where to well professionally install/rotate/balance those custom rims and tires. You’ve established a base with sound pro and yes would pre-investigate their service records and consumer reports via complaints or etc.

    Just wary who you market may compete with you in the future selling the same or provide lousy service issuing complaints or even slander your product quality to cover up their service mistakes. But if in a blog format instead advising how they can find the best mechanic then your off the hook and do place disclaimers that service providers listed are only options to investigate no fully endorsed unless you make or confirm some pre-arranged legal agreements prior to marketing such as no-compete or terms of endorsements that one business cant slander the other. Also disclaimers of limit of per say endorsements prior experience that was positive and may not assume all expectations the same- why people are sue happy as heck and some really ruthless attorneys love to go after guilty by association mentality seen it done! Do copyright your sites – seen people duplicate your words (product descriptions or etc) then copyright and sue the original creator stealing your well effort & have your site blocked it sucks! :(

  9. Promote any niche, affiliate offer, or mlm business with this easy point and click software that lets you make money while you sleep. It was created by a microsoft developer and its truly amazing. It will help you get the traffic you need.

  10. Thanks for this post. I’m a affiliate marketer and I’ve had great success so far. But I want to open a online store too. I hope it’s worth my time.

  11. Great post Steve, ultimately the big money online is creating your own products and getting affiliates to promote them. But I do like your model because you do both affiliate marketing and have an online store as well. Makes sense to me, thanks for the nice comparison.

    1. THanks Tyronne! All of the models have their own pros and cons.

  12. Great article and take on both ways to look at marketing your business line.

    I am in the process of changing my website over from a Service model (I am a Certified Home Inspector and Journeyman Electrician with over 30 years in the construction industry.) to an Authority model, but have looked at both an online store and that of an Affiliate with different companies. I have lost most of my hearing and can no longer deal with customers on the phone or in person, so this left me looking for new sources of revenue.

    I think that what Geoff said about taking the time to make your website one that people will want to come back to time and again is the best solution for me and I can also see where an online store may become attractive in the future. There’s always room for both, but to start off, I like the Authority model with an affiliation to 1 or more online stores that offer me commission is the best solution for me.

    I also like the idea of becoming the ‘Go To Guy’ in the Home Inspection, Real Estate and Contractor markets, where I not only offer up-to-date information for each area, but use the website like a blog where I can do product reviews based on past experience. At the same time in order to offer credible advise for customers, whatever your product line is, making contact with manufacturers to arrange to preview there new product lines would be beneficial.

    The bottom line is that whichever model someone chooses, it’s going to be a lot of hard work, and no one is going to get rich quick in this day of very competitive online sales.

  13. Lucia says:

    Steve, I just found your site and this is great info! Thanks. One question… we have a online shop and we’re very interested in launching an affiliate program for others to promote us. How do I go about to start or even do that? Thanks Steve! Thanks Geoff!!

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