Affiliate Marketing Vs Dropshipping: Which Is The BEST Business Model?

Affiliate marketing vs dropshipping… which is better?

If you've been looking for ways to make money online, without the stress of manufacturing and shipping products, then dropshipping and affiliate marketing are both great ways to do this!

We're putting affiliate marketing and dropshipping head to head to discover which one of these online business models comes out on top!

Affiliate Marketing vs Dropshipping

Although both business models are similar in the fact that they don't deal directly with product manufacture or shipping and fulfillment, they are very different in every other way.

Let’s take a closer look at affiliate marketing vs dropshipping. 

The Difference Between Affiliate Marketing and Dropshipping

Both dropshipping and affiliate marketing will allow you to make money by selling other people’s products.

The beauty of these business models is that they are perfect for digital nomads. You can keep your business thriving wherever you are in the world. All you need is a laptop and a good wifi connection and you are set to go.

Here are the main differences between affiliate marketing and dropshipping:

• With dropshipping, you are selling a product from your website, but with affiliate marketing, the customer is taken to another ecommerce website via your affiliate link
• When dropshipping, you will need to handle customer service yourself, but with affiliate marketing, the website selling the product will handle any customer service issues
• Dropshipping may enable you to have higher profit margins as you set your own prices, but as an affiliate marketer, you have no control over the price or the commission rate
• With dropshipping, you will receive payment as soon as the transaction is completed, but with affiliate marketing, you may have to wait 1-3 months to receive your commission

But let's get into more of the details!

What is Affiliate Marketing?

Affiliate marketing is a way for affiliate marketers (you) to make money online by recommending products and services from other businesses to your readers or audience. Did you know that 93% of customers read online reviews before making a purchase?

That’s. Huge.

By reviewing and recommending products to your audience, you can take a cut of the profit.

The process is very simple. If someone makes a purchase after clicking through your affiliate link, you will receive a percentage of the sale as an affiliate commission.

The great news is that anyone can become an affiliate marketer, and it’s surprisingly easy to get started!

After choosing a niche and setting up a website, you will need to find businesses you want to promote and sign up for their affiliate program.

If they have an affiliate program you can normally find a link to sign up in the footer of their website. Once you are signed up you can create affiliate links. These are tracked links that tell the business exactly where a purchase came from.

Most affiliate programs have an extended cookie period. If someone clicks your affiliate link and doesn't make a purchase straight away you can still earn a commission. If they return to the website and make a purchase within the cookie period (usually 7 – 30 days) you will still qualify for the commission!

Affiliate commissions are usually paid out after 30 days which allows time for any returns to be processed.

Affiliate Marketing Business Pros:

• It’s very easy to get started
• Low start-up costs, all you need is a blog
• No need to provide any customer support, the merchant will take care of that
• You can operate your business from anywhere in the world
• It can eventually be a great source of passive income
• You can add your affiliate links to your blog, YouTube, and even social media

Affiliate Marketing Business Cons:

Although there are some cons to starting an affiliate business, if you have the right knowledge before you get started you can work around these. Affiliate marketers have a world of opportunity to choose from.

It's often worth choosing a niche and building a site around higher-priced products that will result in higher commissions.

You can also choose a niche with low competition. This will give you a greater chance of your affiliate website being found in search results.

How to find affiliate programs to join

It’s pretty easy to find the best affiliate programs to join. You will need to research the types of products you want to recommend, and then find ecommerce stores that sell them.

Once you have found a store you want to promote, check in the footer of their website to see if they have a link to an affiliate program, or ‘partner’ program.

If they don’t clearly have an affiliate program linked on their main website you can always shoot a quick email to their customer service department, and if they have one someone should be able to point you in the right direction.

There are large affiliate networks you can join as well.

Affiliate networks are great because you only need to sign up with the network, and you will have access to hundreds and even thousands of affiliate programs.

Some of our favorite affiliate networks are:

• AWIN
• ShareASale
• Amazon Associates (not strictly a network but gives you access to all Amazon products)
• CJ Affiliate
• Rakuten Marketing
• Clickbank

But there are a lot more out there!

Where can I promote affiliate links?

You can promote your affiliate links almost anywhere online, but the affiliate program you join may have some restrictions.

Most people promote their affiliate partners on their website, but you can also promote your links on social media. Post links to Facebook, Twitter, YouTube, and even Instagram with the ‘swipe up’ feature.

If you don’t have a blog yet, head on over to our ultimate guide to starting a blog. This will get you set up in the right way so you can start making affiliate sales in no time!

So that's affiliate marketing in a nutshell. Let's turn our attention to dropshipping!

What is Dropshipping?

Dropshipping is an online business model that lets you to run an ecommerce business where you sell products without actually dealing with them yourself.

Here’s how it works:

• As a dropshipper, you run your own dropshipping store
• You choose the store inventory, set your own price, and sell the products on your own ecommerce store
  • A dropshipper marks up the price about 30% more than wholesale in order to make a decent profit
• The customer completes the transaction with you at retail price
• Once they have paid you for the product, you order it from the merchant at the wholesale price
• It is shipped directly to the customer who thinks it has come from you
• You make a tidy profit!

Dropshipping is a great business model for anyone who wants to run an ecommerce business on a lean budget. It's good if you don't have the cash available to invest in large amounts of inventory or to pay for warehouse storage.

Basically, dropshipping allows absolutely anyone to run an ecommerce business!

It’s also a great choice for those looking to test products on a market. See if you can sell someone else's product first, before investing a ton of money on inventory and storage upfront.

Dropshipping Pros:

• Dropshipping is low risk – only pay for a product once an order has been placed
• Low startup costs – all you need is a website
• You set the product price
• Higher profit margins
• Build your own brand
• Potential to expand and start to sell your own products in the future
• Retarget customers through advertising
• Offer a wider range of products to your customers

Dropshipping Cons:

Although there are some cons to being a dropshipping store owner, there are ways you can minimize any downsides and risks. Doing your research when it comes to choosing the right products to sell and how to them will save you in the long run.

With the dropshipping model, the marketing costs will be your greatest expense up front as you test ads to see what products sell the best.

How to find dropshipping suppliers

When choosing suppliers for your dropshipping business, find those that are reliable and provide good quality products. It's your brand at stake here, remember?!

Also, having a good supplier will mean you won’t have to spend so much time dealing with customer service issues. If the supplier is good, there shouldn’t be too many problems.

How to build a website for dropshipping

There are a few options when it comes to building your own website for dropshipping.

The first and easiest option is to use an ecommerce platform like Shopify.

Shopify lets you build an ecommerce store for a flat monthly fee and is a very popular option for dropshippers. This platform easily integrates with many automation tools like Oberlo, as well as email marketing tools.

The other option is building your own website using WordPress and WooCommerce.

This option can work out cheaper, but there is a little more work involved, and you will need to understand how everything on your site works. This is a great option for anyone who already uses and loves WordPress.

If you’re not 100% confident about how to start, then the best option is to take a course like  Instant Ecommerce. This will walk you through how to build a successful dropshipping website, step-by-step.

Listen to our podcast interview with the creators of the course to learn more.

Which is better?

Dropshipping vs affiliate marketing… it’s tricky to say which is better because it really depends on your personal situation and what you want from your online business.

For many people, the affiliate marketing route is the preferred option, since aside from creating content and SEO, it’s relatively hands-off.

You can get started in affiliate marketing without even having a website. This makes it a great option for anyone with a large social media following, as well as YouTubers who want to add another revenue stream to their business.

Affiliate marketing is one of the most low risk business models out there, making it an attractive choice for beginners. You don't even need money to get started affiliate marketing; just a lot of resourcefulness. You can start affiliate marketing with no money.

Dropshipping requires a different strategy that suits some people better. There is a little more work involved, mainly with customer service, but as you have seen, there are plenty of benefits too!

The dropshipping business model costs more money to get started, but once it's successful, it pays for itself quickly.

Which is more profitable?

Overall, dropshipping is typically the more profitable business model.

With dropshipping, you can set your own prices and decide your own profit margins. This can be much higher than the percentage of the sale you would get from affiliate marketing (usually anything between 3-10%).

With high-ticket dropshipping, you can expect to be making pretty good money in your first few months, as long as you are targeting the right keywords.

So overall, if it’s high profits you’re after, dropshipping is the way to go.

One exception to this though is digital products.

Online courses and SaaS (software as a service) products often offer very high affiliate commissions – anything from 10% to 50%. The problem here though is that these niches are very competitive.

Is Affiliate Marketing Profitable?

Affiliate marketing is definitely profitable, and it can be scaled, replicated, and duplicated too. 

The difference in profitability between affiliate marketing vs dropshipping really just depends on how much work you put into it.

Which is easier?

If you’re wondering which one is easier, the answer is probably affiliate marketing!

I say this because. once established, it’s a pretty hands-off business model.

Once you have built your website, created content targeting the right keywords, and done some work on your SEO, all you need to do is add in your affiliate links.

You can even hire a writer for your blog if you want a truly hands-off business.

Your traffic will start to grow as you add more and more content to your blog, and your earnings will gradually compound over time.

That being said, if you want to make your dropshipping business completely hands-off too, that’s totally possible!

There are tools and integrations you can use to automate almost every part of your dropshipping business.

Once you have done the hard work of finding suppliers and building your online store, you can relax a bit. However, you will still need to provide customer support unless you outsource this too.

Final Thoughts on Dropshipping Vs Affiliate Marketing

Both dropshipping and the affiliate marketing model are great business models that will allow you to make money online with very little upfront investment.

There is some work involved with both businesses, but once you have everything set up, you can reap the rewards. For each business, you will learn valuable marketing skills that will set you up for any type of digital business you want to try in the future.

Whether you choose dropshipping or affiliate marketing as your business model, you will have the benefits and freedom of being able to work from home. What could be better?

And if you're still undecided on what type of business to start, check out our guide for other online businesses to start on a budget!

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