Affiliate Stores vs. Ecommerce Stores

It’s no secret that the internet has created a unique and exciting new avenue for thousands and thousands of entrepreneurs around the world. Many motivated and self-starting entrepreneurs have found success with online marketing, and countless others are excited to get into the game while it’s still fairly new. Starting an online store has never been quick or easy, but it’s certainly doable. In fact, I’ve worked with many people over the years, many of which are individuals or parnerships who had little knowledge of computers, dropshippers, MSRP, or anything in-between. Those who are motivated and willing to learn, however, can create an online store and become successful with online marketing.

So now that you’re motivated and ready to get started, a very important question still stands – what type of online store should you create? Generally speaking, there are two types of stores that you’ll find online. First, a traditional ecommerce store. Ecommerce stores are normally very simple and fresh, focusing on a specific niche, such as bird cages. Ecommerce store owners normally ship products to you by either dropshipping (having the manufacturer ship to you blindly) or buying products at wholesale prices and reselling them to you for a margin. The second type of store is called an affiliate store. Typically, an affiliate store lists products on their site (also focusing on a specific niche or keyword) and then refers you to a supplier or manufacturer upon checkout. Put simply, you never actually purchase anything from an affiliate site. If you end up purchasing the item from the suppliers store, the affiliate site (the site who referred you) will take a percentage of the sale. Both sites are very worthy and capable of providing a decent income. Some owners operate several stores all at once.

I stumbled across an article titled Affiliate Marketing Vs. Ecommerce Small Business: Pros and Cons of Each. I’d like to go through the article, detailing the pros and cons of both types of stores. Along the way, I also have several pointers I’d love to throw in that may or may not help influence your decision.

Ecommerce Stores

As explained above, ecommerce sites actually process orders on their site and ship products to customers under their name. Depending on the method these products are shipped and sourced, ecommerce stores can have a fairly high margin on their products, creating a more stable and reliable source of income. This is perhaps one of the largest benefits of owning an ecommerce store as opposed to an affiliate site: the profit margins. In many situations, you’re given some flexibility with pricing, with some obvious exceptions. You can choose your prices, collect money, pay your supplier and pocket the difference. As an owner of an ecommerce store, you’re also more than capable of setting up an affiliate program for other affiliate sites to feed you customers for a small percentage of the profit. This can be done quickly and easily, helping you increase traffic and conversion for just a small price. While these benfits are greatly sought after, it’s also true that running an ecommerce store as opposed to an affiliate store requires more time and work. For example, ecommerce stores most definitely require customer service. This doesn’t necessarily have to be a bad thing, however. You’ll need to lista phone number in your header, allow people to contact you via forms, or even provide a button for live chat. These calls, emails and chats can certainly lead to more sales and a better conversion rate, if you have the proper time and knowledge to see it through. I’ve always been big on customer service, and it’s my personal belief that you simply cannot own a successful store without providing quality customer service. Another con of running an ecommerce store as opposed to an affiliate store is the simple fact that ecommerce stores generally require a little bit more overhead. This is solely dependant, however, on whether or not you’ll be outsourcing the work. Affiliate sites require few up-front costs, such as purchasing your domain, getting a logo done, and paying for hosting. Ecommerce sites require those same costs, as well as a few others, such as paying to get into certain shopping portals, paying customer service representatives, etc. If you’re dedicated and willing to do a lot of the work yourself, however, you can cut costs down greatly. I have created ecommerce stores from start to finish that required less than $100 (obviously excluding all marketing strategies that are used in the later stages of creating a stage). Lastly, an ecommerce store will also have to deal with the unavoidable returns and complaints from your customers. Again, with good customer service, stable and detailed support pages and policies, this can be used as an advantage. An ecommerce store is definitely the route to take if you are looking to invest a little more and making a higher profit margin per sale.

Affiliate Stores

Like an ecommerce store, an affiliate store has several pros and cons that are worth thinking about. First and foremost, affiliate stores are easier to set up, require less overhead and don’t require as much maintenance. While an affiliate store still requires a considerable amount of unique content, you can save a lot of time, money and resources by not needing to deal with customer service, returns, contact forms or anything like it! Instead, whoever your referring your end customers to will deal with these issues. While this is a huge relief to some, others like to be in control, knowing what customers are struggling with and always wanting to find a way around it. A huge benefit of creating an affiliate store is the fact that you already have a brand that your trying to sell. You sell what your supplier sells, while ecommerce store owners need to build their brand and target audience from scratch. Affiliate stores, however, generally do not make as much of a margin as a traditional ecommerce store does. This can be balanced by focusing on the amount of traffic you have coming to the site. Lastly, affiliates have the opportunity to make money on more products than they are even offering in their store. Amazon, one of the largest affiliate companies in the world, has set up an incredible program for their affiliate partners. Let’s say you own an affiliate store that refers all clients to Amazon. Let’s assume that your niche is ping pong tables. A customer gets on your site to purchase a ping pong table, and eventually adds on to his or her cart. When they go to checkout, they’re automatically taken to the Amazon checkout, with the ping pong table still in their cart. Once your customer hits this stage, there are three scenarios. First, your customer might just check out. You’ll earn a percentage of the sell and everyone is happy. Second, you customer decides not to buy anything and eventually closes out of Amazon. Both you and Amazon lose the sale. With this scenario, your customers are normally inclined to sign back onto Amazon directly rather than going through you in the future if they decide they really do want to purchase the product, cutting out the middle man and you still lose the sale. The final scenario, however, is one of the most beneficial pros to owning an Amazon affiliate store. You customer is on the checkout page, ready to order. They decide, however, that they don’t really want a Ping Pong table anymore. They delete it from their cart and continue browsing on Amazon. They eventually buy 1 or 2 products from Amazon and log off. Here’s the catch – no matter what they buy from Amazon, you still get a cut because they referral came through you. It doesn’t matter if they buy the product your promoting or a totally different product – because you referred them, you get a cut! An affiliate store is definitely the route to take if you want low start up costs and less maintenance.

Where To Go From Here

Whichever storefront you end up going with, Store Coach offers free and professional training to any and all entrepreneurs looking to get into online sales and marketing. Store Coach, started by former Niche Blueprint creators, provides in-depth and detailed training in the form of seven phases. These phases have been tested and proven by the Hermansen brothers to be a successful recipe for all online stores. We strongly encourage everyone to head on over to Store Coach to learn more about the process and recieve one-on-one help as you build your store! If you’re interested in starting an ecommerce store, we strongly suggest you use BigCommerce to host and build your store. BigCommerce is incredibly intuitive and simple, allowing anyone and everyone to create a beautiful and functional site. If you’re looking to build an affiliate store, we recommend using Hostgator to host your site. An affiliate store can easily be created with WordPress, an intuitive and professional system designed for blogs and websites alike. Click here for instructions on building an Amazon affiliate store with WordPress. Have questions or concerns? Let us know what you think in the comments below!