Affiliate and Drop Ship Business Model

Learning about Business Models

I learned this week about two ways of doing a web business: Through the drop ship and the affiliate model. 

The drop ship model's best example is Amazon. They do the marketing, the customer service, and receive the money for the purchases. Then they ask their providers to ship their products. We, as customers, are not required to "know" the suppliers. 

I found one way to start this kind of business here: https://www.oberlo.com/ 

The affiliate model is all about redirecting traffic to a manufacturer. It will pay you as tracking your references (through "cookies") once they make any purchases. 

There are other differences:

1. Profits: 
• Affiliate: It's a percentage of every purchase made by referrals.
• Drop Ship: It's the difference between the sale price (that you set) and the cost. 
2. Time frame:
• Affiliate: Slow. You need patience to build a website that redirects enough traffic to make good money. 
• Drop Ship: Quick. Every sale is profit for you. 
3. Costs: 
• Affiliate: Virtually zero outside of running a website and the marketing expenses. 
• Drop Ship: Besides running the website and the marketing expenses, there are fees to be paid to the company managing the system (assuming you use Oberlo, for instance). 

The affiliate model sounds like a good idea to start a web business.