- How to Make Millions With Your Home Based Business – Your Next Step
You may have done a terrible job with homework in school, but if you do a good job now, none of your past problems in that regard will matter anymore. Now you can see why choosing your market first was so important. No time to put the cart before the horse, although that’s a common mistake of new home business owners. Too many select a product and then sit around trying to decide who best to sell it to.
If you are doing a service oriented business, such as consulting, choosing a product is a bit different than if you’re marketing info products on-line. In the case of a consultant you are the product and you’re providing a service. Exactly what service will depend upon what the individual customer needs. You may find a niche developing and implementing business processes for contracting firms, or maybe you’re great at helping companies with their marketing strategy.
Your market could be mid to large sized corporations who need technical writing services due to cutbacks in their PR and communications departments. In this case the deliverable product will be dictated by the exact requirements of the department managers you’re working with and how you choose to meet those requirements.
If you’ll be primarily selling products, choosing your product mix isn’t the next step. You need to decide weather you want to sell your own products or sell as an affiliate. Here’s an example:
You could have chosen teens and young adults with acne as your target market. That would be a wise choice, considering the market for acne related products is estimated to be around $2.5 billion! You know that such a market fits the description of a hungry market. Appearance to young adults and teens is incredibly important. That is good for you as a marketer, but even better is that many of the people in this market want their problems solved NOW! That urgency is what really makes the market attractive for you.
Another important attribute of the acne market is the availability of products targeted at it. If you’ve watched TV for more than an hour in the last week, you’ve probably seen ads for 50 acne and skin related products.
Keeping with our acne example, you now have to start the product selection process. Do you want to sell products yourself, or get paid for referring customers to buy from others? In the first case you’d be the merchant, in the second, you’d be an affiliate marketer. Affiliate marketing is simply (if you’ve been involved in Internet marketing for more than 2 minutes, you probably already know this, but bear with me) referring customers to other company’s websites and getting paid a commission when they buy from that company. It’s very common and can be very lucrative.
You Being the Merchant –
Advantages – -More control over the products you sell
-More gross profit
-More control over how you market and sell the products
-The ability to implement your own affiliate program and have other people in addition to you selling your products.
-Unlimited growth potential dictated by your industry, product mix, marketing, and fulfillment capability.
Disadvantages -Customer service and support requirements
-Possible inventory, warehouse, and fulfillment (you can use a fulfillment or a drop shipper to eliminate these depending upon what products you’re selling).
-Payment processing and banking requirements
-Higher relative start up and business costs.
With affiliate marketing the advantages and disadvantages are roughly reversed. You have no customer service issues to worry about, but you’ll also make less gross profit on every sale for comparative products in the majority of cases. Affiliate marketing is attractive to many new marketers because the barriers to entry are relatively low. You need no inventory, payment processing, or customer service infrastructure. In fact you only need your computer. Later, you can scale up your efforts by working harder or outsourcing some of your processes.
Affiliate marketing isn’t all green eggs and ham, though. Probably the worst aspect of affiliate marketing is that you have little or no control over the products you’re marketing. A company can decide that their affiliate program no longer meets their needs and abruptly decide to cancel it. You could have just spent months fine tuning your advertising campaign and website, and spent a good bit of money doing so, only to be left with nothing to sell.
This has happened to me. A program that had earned me $4,000 last year was cancelled with 1 week notice near the end of 2007. Now $4,000 isn’t that big of a deal to some of the mega success stories in the affiliate marketing world, but it’s not chump change to me (Yet!). I was left scrambling around trying to fill the void, which I have been so far unable to do with the same level of success. So, product control is very important and should not be underestimated as a reason to consider being your own merchant. Most of the product swill still be supplied by someone else (except if you develop your own, more on that later), but you can usually find another supplier. When a merchant cuts their affiliate program, you have no such luxury.
So, with regard to the affiliate marketing / merchant debate, each approach has its advantages and disadvantages, but you need to decide which way you’re going before you decide before you decide your product mix.