When it comes to making money online, there are a lot of different options to choose from. In fact, it is surprising to see the trend of how people are looking to find ways of making money online. Once you input the term ‘make money online’, the internet will bombard many options that could be overwhelming. Apart from MLMs, two of the most popular methods you will find in your research are affiliate marketing and dropshipping/e-commerce. Both the methods are proven ways of achieving financial success online. So, what’s better Affiliate Marketing or Dropshipping?
In this blog post, we will compare Affiliate Marketing vs Drop shipping/E-commerce in detail and help you decide which one is right for you. You will find the definitions, differences, and vital pros and cons of Affiliate Marketing and Dropshipping. You will also find relevant information on e-commerce.
What is Affiliate Marketing?
Affiliate marketing is a performance-based marketing model in which a company rewards an affiliate for each successful sale that they drive. It is a process where you sell/promote other companies/people’s products to earn commissions.
The affiliate can be an individual or a company, and they promote the company’s products or services in exchange for a commission.
Affiliate Marketing is also known as ‘Referral Marketing’.
What is Dropshipping/E-commerce?
Dropshipping is a business model in which e-commerce entrepreneurs sell products without having to carry any inventory.
Dropshippers source their products from suppliers who ship the products directly to the customer on behalf of the e-commerce entrepreneur.
E-commerce is simply buying and selling goods and services online.
Dropshipping is also directly connected with Affiliate Marketing as many Dropshipping/E-commerce platforms offer affiliate programs to promote their platforms/products.
So, what’s the difference between Affiliate Marketing and Dropshipping/E-commerce?
There are lots of differences between Affiliate Marketing and Drop shipping/E-commerce. Let’s find them one by one:
Getting started –
Affiliate Marketing is easy to get started. There are no upfront costs and you can join the end number of affiliate programs that are completely free to join.
However, in order to scale your affiliate marketing business, you may have to spend some money on learning the process, building and hosting a website, and other marketing tools.
Dropshipping/E-commerce is another business segment that can be started with little to no cost. There are many dropshipping platforms that offer free memberships to help you start an e-commerce store.
But again, if you want to make dropshipping/e-commerce your professional business then you will have to spend some money on paid dropshipping courses online.
These courses are curated by some of the top-level and experienced drop shippers that charge one-time fees for their e-learning courses.
Learning involvement –
Affiliate Marketing has an ongoing learning curve. You need to learn the process of building a website, writing content, driving traffic, performing SEO (search engine optimization), etc.
All these factors are necessary to build a compelling and effective affiliate marketing business that generates profitable revenue every month.
Alternatively, you can also run your affiliate marketing campaign on social media channels, and by uploading YouTube videos free of cost to earn marginal profits.
Dropshipping/E-commerce also involves learning related to the store set-up, researching effective resources such as suppliers, retailers, etc. and more importantly finding the right products to sell.
Without proper learning, it could be risky to run your dropshipping/e-commerce business owing to the high competition and wrong selection of product niche.
Business model –
The Affiliate Marketing business is simple and straightforward. You promote the products and when someone clicks and buys the products using your affiliate links you earn a percentage of commission from your affiliate partner.
There is no involvement in storing/procuring any products and you are not accountable for the non-delivery or shipping errors.
You can easily track the clicks, sales, and conversion of your affiliate links through your affiliate networks/partner’s tools and resources.
Dropshipping/E-commerce is also simple. You sell the products with a higher margin and keep the difference between buying and selling price as your profits. The higher the margin, the higher will be your income.
But the business model does involve a processing cycle of order fulfillment, inventory management, and shipping.
It is necessary to get associated with a reputable and trustworthy dropshipping platform to ensure all the steps of fulfilling orders are completed on time and without any errors.
You can easily track the whole process of order fulfillment and delivery through your drop shipping/e-commerce partners tracking tools.
Marketing and Promotional aspects –
Affiliate Marketing can be done through various channels and sources. Almost all the affiliate networks and affiliate programs offer various promotional tools, links, etc. that can be displayed on different online channels.
You can share the banners, upload videos, write blog posts, and socialize the products/services on your social media profiles. You can also make use of your own website to write informative blog posts and run different campaigns to attract more customers.
This makes Affiliate Marketing a highly convertible business model.
Dropshipping/E-commerce is better done with an e-store in place. It is recommended to choose an e-commerce partner such as WooCommerce, Shopify, etc. to build your e-store.
You can also choose to run your Dropshipping business by selling products directly on other marketplaces such as Amazon, eBay, etc. but an e-store gives you the authority and a dedicated source of making consistent income.
Once your e-store is set up, you can run different promotional campaigns to promote your e-store on social media, and YouTube channels, and even share the products via email marketing method.
When it comes to making money, Affiliate Marketing has unlimited earning opportunities. This is because of the openness of doing business, multiple affiliate programs, and millions of products to promote.
There is hardly any start-up cost involved, and you can even boost your income capacity by getting associated with other paid sources such as CPC (Cost Per Click), YouTube videos, etc.
As an experienced affiliate marketer with established online authority, you can expect to make an income in 6-figures every month.
With Dropshipping/E-commerce, the profitability lies in the difference margin of your selling price. On average, a 40%-50% profit margin is desirable to generate good financial results.
Financial success also depends on your product niche and the performance of your product suppliers.
Overall, with all the factors in place, and your own experience as a Drop shipper you can expect to make 4-5 figure income every month.
The biggest difference between affiliate marketing and dropshipping/e-commerce is the amount of risk involved.
With affiliate marketing, you are not selling products and you are not responsible for shipping or inventory. You are simply promoting other people’s products and earning a commission on each sale. Another difference is the amount of money you can make. With affiliate marketing, you can make a lot of money if you are good at it.
Dropshipping/e-commerce, on the other hand, involves selling products and being responsible for shipping and inventory. However, dropshipping/e-commerce can be more profitable because you are selling products and you have more control over pricing.
The pros and cons of Affiliate Marketing
Free to start – It’s relatively easy to get started. Affiliate programs are free to join. You just have to be a professional affiliate marketer with a website to apply for affiliate programs and start promoting products.
Millions of products – With affiliate marketing, you can choose to share and promote millions of products. There are endless affiliate programs to join. Affiliate partners such as Amazon, eBay, Walmart, and Etsy are well-known and reputed online marketplaces that give you flexibility and liberty to choose your desired products to promote.
Low to no risk involved – Affiliate Marketing is a low to no-risk business segment. The only risk lies with your inconsistency to persist with this business model. You don’t need to create or sell any products yourself and you are not accountable for any mishandling or wrong delivery of products.
Great financial benefits – You can make a lot of money with affiliate marketing if you do it right. It’s a very passive income stream, meaning you can make money while you sleep. This is by far true as you just have to work on your website to drive organic traffic and observe your visitors converting into regular customers. There is potential to earn a living and your dream income with Affiliate Marketing.
Freedom & Flexibility – There is no obligation or restrictive hours to work on your Affiliate Marketing business. The business model is known to provide freedom to work as per your own schedule, time, and location. This gives you flexibility and comfort of working part-time or full-time from any part of the world.
No instant financial success – It can take a long time to build up enough traffic to your website to make significant amounts of money because you’re at the mercy of search engines like Google for ranking your content. There are no instant financial results unless you put in lots of hard work, and dedication to build a profit-making affiliate marketing website.
Learning cost – Although you can learn the process of Affiliate Marketing by watching many free videos or basic online courses but to achieve commendable financial success you will have to spend money on a comprehensive affiliate marketing course. Further money will be required to host your website and to make use of some necessary promotional tools such as SEO plugins, website themes, etc.
The pros and cons of Dropshipping/E-commerce
Easy to start – Dropshipping is again easy to get started. You can start your own business with very little money. Your effort is to find an appropriate and legit Dropshipping platform to learn and operate your business.
Wide range of products to sell – You can run multiple e-commerce stores selling different products online. There is a wide range of products available on different online platforms that you can research and sell through your e-commerce store. The best part is you don’t need to carry any inventory yourself. With the growing shift towards online shopping, you can choose to sell almost anything.
No procuring or shipping of products – Dropshipping/E-commerce is another business segment where you don’t have to procure or store the products physically. There are no shipping worries either as it is taken care of by your supplier.
Flexibility to run your business – You can run your business from anywhere in the world. The whole process is online and you can perform all the necessary activities pertaining to your e-store at your own time, and location.
Business dependency – You have less control over your business than if you were selling your own products. You are at the mercy of your dropshipping supplier. If your dropshipping supplier goes out of business, so does your business and there is always a risk of finding a good and trustworthy dropshipping supplier.
Fluctuating profits – The profit margin keeps fluctuating owing to the type of products and suppliers you work with. This can also limit your capacity to promote a wide range of products. High competition is another drawback that can hurt your profit margins.
Supplier’s impact on your business – There are many instances in dropshipping where customers complain of wrong delivery or late shipping of products. This is possible if your store has a high turnaround of visitors and your supplier lacks the capacity to deliver the goods on time. The stock shortage is another hurdle that can have a serious impact on your business.
Maintenance cost – While there are platforms that offer to create an online store free of cost, you may have to shell out some money in maintaining your store and expanding your product limits. This will be your running cost every month and may fluctuate depending on your Dropshipping platform and business profits.
Conclusion: So, what’s better Affiliate marketing or Dropshipping?
To be honest, it really depends on your goals and what you are looking for in a business model. Both the business models have their share of profits and risks involved. At the same time, both the business models can generate a considerable amount of money if done appropriately.
Dropshipping/e-commerce is a great way to make money online. It’s a business model in which you can sell products without having to carry any inventory. The biggest advantage of drop shipping/e-commerce is that it can be more profitable than affiliate marketing.
However, it’s often riskier than affiliate marketing. You have lots of dependencies, monitoring, tracking, and to some extent accountability for the mistakes done by your supplier. If you are ready to take risks and responsibilities for others then go ahead with Dropshipping.
On the other hand, affiliate marketing is a more stable and sustainable business model than dropshipping. Being a lazy lad myself, I hate monitoring, product researching, and setting up different stores to increase my earnings.
With affiliate marketing, you don’t need to worry about supplier issues, and you have more control over your business. The biggest advantage of affiliate marketing is that it’s relatively low risk. You are not selling products and you are not responsible for shipping or inventory.
You can make an equal amount of money or even higher as you can make with multiple e-commerce stores.
Affiliate Marketing is less risky and provides complete freedom over your business. If you’re looking for a passive income stream that can bring in steady earnings, affiliate marketing is a great option.
And if you are looking to learn and earn money by doing Affiliate Marketing with all the resources, a website, researching tools, and support then here is my no.1 recommendation.