Affiliate Marketing VS Dropshipping: Which One is Better?
Many online entrepreneurs work on affiliate marketing or dropshipping business models to generate a stable income stream.
Both are simple concepts and easy to learn as well. You don’t own a product in both, so there is little risk involved too.
While both are profitable, there are a few things that can make one more appealing than the other. For me, affiliate marketing is a clear winner. I’m going to explain how in this article.
In affiliate marketing, you earn a commission for every sale through your affiliate links. Whereas dropshipping is selling other’s products and charging your own amount for them.
Let’s see which one is better and why.
Which is Better Affiliate Marketing or Dropshipping?
Affiliate marketing and dropshipping both allow you to sell products that other people or companies own.
But, I think affiliate marketing is an easier and lower-risk option, especially for people with a low-to-no investment.
In dropshipping, not only you’ll have to spend more, but you’ll also have to put in more effort.
Moreover, affiliate marketing has less risk and lets you maximize your earnings over time. However, creating an affiliate website is important if you want to establish your trust in the industry.
As far as profitability is concerned, dropshipping can be a more lucrative option. You have more control over the product prices in dropshipping.
So, the margins can be higher as compared to affiliate marketing.
That said, since affiliate marketing doesn’t require as much marketing effort, initial investment, and poses a low risk, it’s a better option. Especially when you are a beginner.
I’ll be talking about both of them indetail below. You’ll be able to decide between the two by the end of this article. So, be sure to stick with me till the end.
What is the Difference Between Affiliate Marketing and Dropshipping?
To understand the difference between affiliate marketing and dropshipping, let’s talk about each of them separately.
What’s Affiliate Marketing?
Affiliate marketing, as the name suggests, is based on “Commissions”. This means an affiliate gets a fixed commission for a sale.
What affiliates do is, sign up for the affiliate program of a business they think they can promote the products of.
After signing up for a company, either you get instant approval and can start promoting their products or your profile goes through an approval stage.
Some companies have criteria based on which they decide whether an affiliate is suitable for their products/services or not.
These criteria may include a certain follower count or an established website, depending on the affiliate program.
Once you get the green signal, the company provides you with special links. These links help the company track the source of the sale.
For instance, if someone buys something after clicking on your affiliate link, you’ll get your affiliate commission in your affiliate account.
Some affiliate programs, like the Amazon Associate program, have a 24-hour cookie feature.
What this means is that when someone buys anything within the 24-hour window after clicking your affiliate link, you get the profit.
Again, it could be any product on the platform. For instance, if your link points them to “hiking boots” and they buy a “tennis racket”, you still get a commission.
But, there are two other ways affiliate marketers get paid. Let’s discuss them.
Pay Per Lead
The pay-per-lead affiliate business model is a relatively complex one. Basically, an affiliate gets paid when someone takes a certain action through their affiliate link.
Countless affiliate programs work on the pay-per-lead model. Some require that you get people to sign-up for their newsletter by entering their email addresses.
So, for every sign-up through your affiliate link, you get a certain commission.
Another instance of this would be when an affiliate gets people to go for the trial of a particular product.
So, if someone enters their details and starts a trial for the affiliate company’s product, the affiliate gets paid.
Pay Per Click
In the pay-per-click affiliate marketing model, the affiliate gets paid when they bring traffic to the merchant’s website.
Display advertisement platforms like AdSense and Ezoic are a couple of the most popular PPC affiliate programs.
The affiliate doesn’t have to bring any sales or leads; just a click on the ad does the job for them. Probably the easiest way to make a few bucks on a retainer.
Most Popular Affiliate Programs (Examples)
Amazon Associates is probably the most popular affiliate program out there. Amazon is a worldwide phenomenon and an eCommerce giant that consumers trust. This makes it an ideal choice for every affiliate marketer.
It’s relatively pain-free to sign up for Amazon Associates as it’s a one-time process. After the approval, you can promote any product on Amazon.
However, Amazon changes its policies frequently. So, the commission structure may not be the same always.
That said, it’s still a great idea to work with Amazon as it’s the most trusted retailer in the online world. So, it’s relatively easy to generate affiliate sales for its products.
CJ Affiliate is one of the popular programs out there. The platform hosts a multitude of brands and companies that affiliates can work with and generate affiliate income.
Although it’s fairly convenient to get your website approved on CJ Affiliate, you do need to apply to every product/company to promote it.
For instance, even if you have the green signal from CJ Affiliate, you’d need to apply to the brand you want to work with on the platform.
This can make things a little difficult and time-consuming for affiliates. That said, it’s still one of the most trusted and profitable platforms out there.
Other trustworthy affiliate platforms include:
Dropshipping is an eCommerce business model where a seller doesn’t own the products they sell. Instead, what they do is, place the order on behalf of the customer and have the product shipped to them.
So, there are no inventory costs. The products that you sell are with another business like AliExpress. As a dropshipper, you just source the products from a third-party platform and fulfill your orders.
How to Start a Dropshipping Business?
The first step after you finalize your business idea is contacting a supplier for the products you are going to sell.
Once you find a trustworthy supplier for your products, you’d need to create your dropshipping store/website.
Anything your store visitors purchase is shipped to them by your supplier. You just have to set the prices and market your products online.
Fortunately, there is no manual work from receiving an order and delivering it to the customer. Tools like Oberlo help automate the entire process.
You’ll just be integrating the software on your Shopify store, and it’ll take care of order processing.
Difference between Affiliate Marketing and Dropshipping
Affiliate marketing is earning a commission from the sale of a product at a set value. Whereas, dropshipping is selling others’ products and set your own prices for them.
While the profit margin may be higher in dropshipping, affiliate marketing is relatively easy and is a low-risk passive income source.
Why Affiliate Marketing is Better than Dropshipping?
There are a number of reasons why affiliate marketing is a more suitable option for online entrepreneurs.
While it can be a subjective decision, I’m putting forward some logical reasons why I think you should be doing affiliate marketing.
Low Starting Cost
Although some companies might require a website from you as an affiliate, a good majority of them don’t want any such investment.
A website is your own asset that you can use for generating multiple income streams anyway. And, there are multiple other methods to generate affiliate sales.
All you need to do in affiliate marketing is generate sales. The model is simple, and anyone can start instantly.
Probably the most attractive thing about affiliate marketing is that it brings cash on autopilot. While most business models demand consistent work, affiliate marketing provides a passive income source.
No Customer Support
While you need to deal with customers in other business models, affiliate marketing doesn’t require that.
After you’ve referred a customer to the retailer/merchant, you have nothing to worry about. The business that’s paying you the affiliate commissions handles customer queries.
Whereas that’s not the case with a dropshipping store. A dropshipping business has to handle customer queries promptly so that its reputation isn’t tarnished. Therefore, it requires more resources.
There is still a lot of Space
Although affiliate marketing is pretty easy to start, which attracts more affiliates,there is still a lot of space in this industry.
You can either create a niche blog where you talk about only a few specific products related to small industry. Or, you can create a branded blog where you talk about everything and try to generate affiliate sales.
That said, affiliate marketing is still a pretty competitiveindustry, and you need to do your research before jumping into it.
Choose a niche that has medium to low competition. Do proper keyword research before deciding on a niche for affiliate marketing.
You can take the help of effective free tools like Google Keyword Planner and Ubersuggest to get an idea.
On Ubersuggest, just enter a keyword and you’ll get a list of other ones with SEO difficulty (Difficulty to rank in the SERPs).
If there are enough keywords that you can rank, go with the niche.
On the other side, when you compare dropshipping with affiliate marketing, it requires more effort and resources.
For starters, you’d need to set aside a generous marketing budget to promote your products on different platforms.
Sure, you can do search engine optimization of your store and wait for organic sales. But, that would take time, especially when there is so much competition in this industry.
Secondly, you’d need to take care of customer support yourself or invest in it. That’s an added expense or a time-consumer.
Thirdly, the dropshipping industry is getting quite saturated now. It would be quite difficult to rank on Google and so, you’d need to invest in the paid advertisement as mentioned before.
So, if I were you, I’d prefer affiliate marketing as an online income source over dropshipping.
Is Affiliate or Dropshipping Easier?
When it comes to ease, affiliate marketing takes the lead there too. Given that you have a website and a proper strategy in place, once you produce your content, it’s basically a self-sustaining model.
However, you do have to put in the initial work to make sure everything goes in the right direction. Otherwise, you’d be compromising on your profitability.
So, you need to find a profitable niche and the right list of keywords, do effective SEO, and produce top-notch content.
Only then, you can expect the magic to work and put your trust in Google’s algorithm to put you at the top of the SERPs.
With that being said, it’s definitely the easier business model of the two. You don’t have to look for any suppliers, do extensive marketing, and handle customer support.
Can Affiliate Marketing Make you Rich?
Done right, affiliate marketing can make you quite rich. The number one reason for that is that you can scale your affiliate marketing business without having to do extra work.
Like any other business, your achievement will heavily depend on the resources you put into it, mostly in the form of energy and time.
Plus, the decisions you take also impact your results. For instance, what niche you decide to work on? How many resources are you willing to put into the SEO of your blog?
Or, are you going to compromise on the quality of the content? The right decisions can take your blog to the first page of Google.
The wrong ones will probably get you on the long list of unsuccessful bloggers.
But, don’t worry. Follow the strategies I discussed above to keep things moving in the right direction. Affiliate marketing can be a goldmine if done right.
How Much Money Can You Make as an Affiliate Marketer?
The short answer to this question would be: You can make as much money as you can handle with affiliate marketing.
However, there are a few things that you need to know about affiliate marketing. For starters, it’s not a get-rich-quick scheme.
You need to create great content that gets relevant traffic to your content.
And, once you establish your affiliate blog on Google, you can then shift to another one. You can even flip your affiliate blog on websites like Flippa.
Blog flipping is a business model that gets you tons of money instantly.
That said, a lot of bloggers don’t get past even a few hundred dollars even after putting their hearts into affiliate marketing.
Two reasons: First, they don’t invest their resources in the right direction. Second, they give up too early.
Another thing that can prevent bloggers to scale their income is the lack of investment. You see, you don’t need a generous investment to start affiliate marketing.
But, when you get the hang of it, smart investment can only lead to further growth and more profit.
Is Affiliate Marketing Too Competitive?
Affiliate marketing is one of the most lucrative online business models. But, just because it’s relatively easy doesn’t mean everybody can do it. It still needs impactful strategies and smart work.
That said, affiliate marketing is a huge industry. If you feel a particular niche/topic is saturated, you can always find another one that can be profitable.
The initial research you put in will help you get into a niche that still has space and can earn you big bucks.
Keyword research is probably the most important part of affiliate marketing for the same reason. You find keywords that are easier to rank, letting you attract traffic to your blog.
Tools like Google Keyword Planner and Ubersuggest can help you land on low-competition keywords for your blog.
The core concept of affiliate marketing and dropshipping is the same: You don’t need to have an inventory or a product of your own.
However, if you are thinking of choosing one of these business models, affiliate marketing should be a better option.
- Affiliate marketing is easier to start
- It requires relatively low investment
- It’s less saturated
- You don’t need to handle customer service
- It’s a passive income source
- It can make you rich
However, making sure you chose a low-competition niche and check all the boxes as far as SEO is concerned is essential.
And, of course, you need to produce content that’s not only helpful and SEO-friendly but also engages prospects.