What are the advantages and disadvantages of affiliate schemes and drop shipping in generating website revenue? By Pui-Ling Lau

Content What are affiliate schemes? Advantages and disadvantages of affiliate schemes in generating website revenue What is drop shipping? Advantages and disadvantages of drop shipping in generating website revenue Summary and advice References

What are affiliate schemes? Affiliate marketing: A business will give commission to those who bring paying customers to their website. In 2006, total sales amount generated through affiliate networks was £2.16 billion in UK alone. Four key players to an affiliate scheme – Merchant (the retailer) – Network (the middleman) – Publisher (the affiliate) – Customer

Merchant Customer affiliate

Affiliate Network affiliate merchant

Advantages of affiliate schemes Make money for doing very little No need to store or develop the product Wider marketing environment for merchants You must ensure traffic to your site and getting your visitors to click on your affiliate links

Disadvantages of affiliate schemes Affiliate sites may not be honest The pay can be sporadic Security issues spam Search engine spam

What is drop shipping? You are the retailer. A consumer purchases a product from you, you then liaise with the wholesaler who will ship the product directly to the consumer.

Consumer Your site Wholesaler £100 £80 £20 profit

Advantages of drop shipping No stock needed No shipping concerns Drop shipping is transparent No inventory costs Item pictures provided in catalogue

Disadvantages of drop shipping Difficult to make profit Out of stock/back-order issues Bad customer service Drop ship scams

Summary and advice Summary Affiliate schemes You provide a link to merchant’s site. You will be paid for commission if a consumer clicks through AND purchases a product from the merchant Drop shipping You are the retailer. An order is placed with you and you purchase the product from wholesaler at a lower cost in order to gain profit. Advice Ensure research is done into companies. Look for reviews Make sure they are reputable Drop shipping directory?

References Affiliate schemes 1.Affiliate Seeking, The Advantages and disadvantages of affiliate marketing, [Online] Available: [Accessed 14 March 2011] 2.Why Affiliate Marketing, Why Affiliate Marketing, [Online] Available: [Accessed 14 March 2011] 3.WikiDirect, Advantages and disadvantages of affiliate programs, [Online] Available: rograms [Accessed 14 March 2011] rograms 4.Wikipedia, Affiliate marketing, [Online] Availiable: [Accessed 14 March 2011] 5.Wired, Shady web of affiliate marketing, [Online] Available: [Accessed 14 March 2011] Drop shipping 1.Ezine articles, The Advantages and disadvantages of drop shipping [Online] Available: Advantages-and-Disadvantages-of-Drop-Shipping&id= [Accessed 14 March 2011] Advantages-and-Disadvantages-of-Drop-Shipping&id= Wikipedia, Drop shipping, [Online] Availiable: [Accessed 14 March 2011] 3.Wilson Web, Distribution Decisions: Drop shipping vs. Inventory vs. Fulfilment House [Online] Available: [Accessed 14 March 2011] Useful websites 1.Amazon.co.uk, Amazon.co.uk Associates [Online] Available: [Accessed 14 March 2011] 2.Webaffiliate.co.uk, Webaffiliate [Online] Available at [Accessed 14 March 2011] 3.Why Affiliate Marketing, Why Affiliate Marketing, [Online] Available: [Accessed 14 March 2011]

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