Affiliate Sales vs. Selling Own Products

I keep going back and forth between wanting to sell my own products (either having a supplier that drop ships or storing inventory in a spare room) and just being an affiliate.

I started out just with affiliate sales—having Google Ads that send the customer to a vendor site through my affiliate link. But then when the Google slap hit, I decided to try setting up my own ecommerce site and selling my own products.

The problem with that is now I have inventory I haven’t been able to sell. I’m leaning towards affiliate sales again.

Here are some pros and cons to each:

Selling and Storing Own Products

I’ve tried my hand at both selling products that are drop shipped and storing my own inventory. Some of the same pros and cons exist for both.

• Pro: You have more control over the analytics.
  If you use a tool such as Google Analytics, you can see exactly where you traffic is coming from that converts and make changes accordingly.
• Pro: You can be in touch with customers easily.
  Don’t know why people aren’t buying from you? Put up a live chat box or a prominent Contact Us link and try to find out.
  
• Pro: Higher profit margin
  Your profit is basically the amount you charged the customer minus the cost you paid the supplier. Normally this is higher.
• Pro: Keyword freedom
  You can bid on any keywords you want.
• Con: Customer Relations
  Since the product is “coming from you,” you have to deal with customer questions and problems.
• Con: Stocking Inventory
  Even if you’re using a drop shipper, you should still stock some items at home in case the supplier runs out. And if you’re not using a drop shipper, that stock takes up a lot of room! My husband’s favorite phrase is, “so when are we getting all those squirrel feeders out of the garage, exactly?”
• Con: Shipping Products
  Since the customer is ordering from you directly, it means that you have to go to the post office or FedEx drop box in the rain, late at night, etc. (An aside, I tried scheduling a pick up from the post office, but it didn’t work. They never came. Can’t trust it to get the order out.) Even if you’re using a drop shipper, you still have to constantly check to see if orders came in that need processing.
• Con: Bigger Expense
  Many suppliers require an initial purchase of a few hundred dollars. If you don’t sell that inventory, you’re out the money. Even one supplier who would drop ship a single order required me to purchase six first, just to make sure I was really a serious reseller and wasn’t just trying to buy the product for personal use at wholesale prices.

Affiliate Sales

• Pro: Customer Relations are from Vendor
  Your part in the transaction is invisible so you never have to deal with answering client questions.
• Pro: Shipping is from the Vendor
  No going to the post office when you feel like watching the Red Sox game.
• Pro: Make Money While you Sleep

Once you set up your ads, it runs on autopilot. So you can have people “buying” your products while you sleep.
• Pro: Less Financial Risk
Since I only pay money when someone clicks on my ad, I’m only paying for a potential buyer and I don’t have to pay for inventory I might not sell.
• Con: More Restrictions on Keywords

After the Google Slap, vendors started restricting the keywords I can bid on more and more. I made a good amount of money in the past bidding on the product name, such as Go To My PC. But now that’s a restricted phrase, so my conversions went way, way down.
• Con: Limited Analytics

Since you can’t put conversion tracking tags on the vendor site, it isn’t easy to relate who bought from the vendor with what keyword they searched for. I did post about a little technique to help with this.

Posted by susb8383 under Affiliate Marketing | No Comments »