Someone who is just starting a new online business could decide to go down the traditional route and choose to set up an eCommerce website or they could set up an affiliate website.
The difference between an affiliate website and an ecommerce website
An eCommerce site is where someone sets up their business to sell their own products or services to consumers using an online shop, and they earn money by people purchasing those products based on the margins.
An affiliate website is set up so that the website shows products from several different brands. Instead of the visitor going through to a shopping cart on the affiliate website, the visitor will end up on the brand’s website, or a specific product and purchase through their shopping cart. In return for referring a customer who buys something from the brand’s website, the affiliate will earn a commission on every sale they make.
Although both look very similar to the untrained eye, they are very different.
A typical example of an eCommerce site is someone like Book Depository. Their customers go onto their website, and through the whole process on that website. Plus, they have access to their shopping cart in the right hand corner.
An affiliate site might look similar.
In this example, the website has different categories you can click on, but instead of having a shopping cart in the top right hand corner, when you click on buy it takes you through to the advertiser’s website.
Of course, there’s nothing stopping you from doing both, or combining affiliate with drop shipping.
Which website should I set up?
There are several pros and cons to both situations, and there are questions you need to ask yourself before you start:
- How much time and money are you prepared to put into it
- Who is your competition and your target audience?
- Your skill gaps
Thinking about how much time and money you are planning on putting into it is important. An affiliate website might be easier if you are planning on doing this as a side job, or after work. If you have more time on your hands, then maybe an eCommerce store would be easier to spend time setting up.
Make sure whichever route you choose, that you check out your competition and look at what they do well, and what they need to improve and take notes for yourself.
Look at what your skill gaps are, as you may need to spend more time educating yourself on marketing methods, for example, or paid search. The other option is to spend money getting people with those skills to help you.
Arguments for an affiliate website
When you’re trying to decide whether or not an affiliate website is for you, setting up an affiliate website costs less.
Creating an affiliate website would have a much smaller cost than you would have with setting up an eCommerce store. For both you would have the cost of setting up a website. With an eCommerce site, there would be additional costs with your shopping cart, buying product in bulk, and storage costs.
With an affiliate website, the additional costs aren’t there because you are showcasing other brand’s products, without having to buy them, store them and ship them to your customers.
You don’t have to worry about customer service
With an affiliate website you are partnering with other brands, so it means that customer service is not something you have to pay close attention to, although it is a good idea to work with brands you know have a good reputation. All you need to do is provide a link to a product on your website and the brand does the hard work for you.
You can earn commission on items you aren’t showing on your website
Because you are referring people to a brand’s website and earning a commission on the sale value of their purchase, it doesn’t matter that what they buy isn’t what they clicked on in your affiliate website, because you were the person to refer them to the brand. This means you have more potential to earn a commission.
Arguments for an eCommerce website
You can make more of a margin on your products
Because there are no rules on what margin you make on your products, you’re free to set your own because it is your website. With an affiliate website, the commission rate is usually a set percentage of each sale you referred, which means that you are tied to a commission rate.
You have more control over it
Want to run a promotion for new visitors? You can go ahead and do it with your own eCommerce website. With an affiliate website, you’re tied to whatever promotions the brands you have on your website are doing. Of course, you can always ask the brand if they would be prepared to run a promotion with your affiliate website, but there’s no guarantee.
Whichever type of website that you use for your online business depends on what you want to get out of it - if you care more about giving people great customer service by being in control of it, then a traditional eCommerce site might be for you. If you want to spend more time working on your website and marketing, then maybe an affiliate site would work better for you. It’s important to consider all of the options, and look at how much time and money you’re prepared to invest in it to make it a success.