Many people have asked the question about which is better, Affiliate Marketing or Dropshipping? I have done both Affiliate Marketing and Dropshipping, so in this article I will explain the differences and let you decide which option will be best for you because they both have their pluses and minuses and each option suits different kinds of people, depending on whether you want quick profits or long-term business.
So let’s dive straight in and see the differences between Affiliate Marketing and Dropshipping.
What is Dropshipping and Affiliate Marketing?
Dropshipping and Affiliate Marketing both have their own benefits where you can be the retailer or the referer. Both can be done from home through a website and either option can generate a lot of money if done correctly.
So what are the differences between Dropshipping and Affiliate Marketing?
With Dropshipping, you are basically the retailer but you have no physical products in stock and the actual products are most likely being kept in a warehouse ready for dispatch, with a lot of the warehouses being in China.
As a retailer, you would have a storefront, maybe an online shop where you will display your products, and when you receive an order, you will take payment from the customer at the recommended retail price and then place the order with the Dropship supplier.
So you will give the Dropship supplier the customer’s name, address, the ordered product information and you will make the payment, which will be at a discounted price.
The order will be sent out to your customer as if it was sent out directly from yourself and you should have received a tidy profit from the sale.
Affiliate Marketing is slightly different from Dropshipping as you do not have a storefront because you refer the potential customers to the retailer.
In most cases, the Affiliate Marketer will have a website/blog where they write articles about products or services and insert a link somewhere on their webpage directing the customer to the retailer’s page.
In this referral link, there will be a unique code so the retailer will know where the link came from.
Example: You build a website/blog about cruelty-free make-up, you have researched all about say, cruelty-free foundation and then you will write a blog post about a certain cruelty-free foundation product, you can then insert a link to a retailer selling this exact product. If someone reading your post decides to click on your link, they will be directed to the retailer sales page where they can purchase this item and when they do, you will receive a commission from the retailer.
This is beneficial to you because you do not have to take the customer’s details, you only have to refer the customer to the retailer, and then they do the order pressing, names, and addresses, taking payment details and dispatch, which leaves you to concentrate on your website and generating traffic.
Is Dropshipping or Affiliate Marketing More Profitable?
Both Dropshipping and Affiliate Marketing can be profitable and you can make money in different ways, some quicker and some slower, you can make short-term quick profits with Dropshipping but long-term Affiliate Marketing can be much more profitable and I will explain the reasons for this below ⇓
The good thing about Dropshipping products is that you can control your own price in which you want to sell, but obviously, you can not price your products too high otherwise your visitors will look elsewhere, so I always look to be getting between 20% and 25% profit on all products (after all outgoing expenses)
A great place to find a massive range of products and available from dropshipping companies will be AliExpress
So 20-25% is a great profit but if you are running an online store then really it is hard to sell this same product to the same customer over and over again, so you will always be looking for customers, but you can upsell and encourage the customer to buy related items.
That is the main problem regarding profit, you will have to keep promoting to find new customers, and you could be spending a lot of money on paid ads which will eat into your profits and eventually you could even make a loss.
Making a profit with Affiliate Marketing can take longer compared to Dropshipping but long-term it can make a lot more.
Affiliate programs can pay commissions from as little as 3% for a physical product up to a huge 100% for digital products but most affiliate programs pay no more than 10% which is still not too bad if you are looking into long-term profit.
I believe that the best, simplest and safest way to build a long-term profitable affiliate marketing business is to do a lot of SEO and by doing this, you are able to get tons and tons of free traffic to your website.
By doing SEO you have to write a lot of content, choose the highly targeted keywords, build a website/blog, study marketing, and get the search engines to notice you, which can take a minimum of 3 months.
But long-term thinking and after doing everything correctly, you can have so much traffic coming to your website that people come searching for you and you do not have to promote to them (So no paid traffic)
And even better, by being an Affiliate Marketer, you can promote membership offers and services who charge people monthly which means you receive a commission on a regular basis.
Of course, you can promote single products but still, the traffic will be coming to you because you know what you are writing about, and with targeted keywords in your content plus keeping google happy with their rules, you can have customers coming to you for many years to come.
This is hard to do with an Online Store because it’s just a shop and not a blog, it is hard to make a lot of content with an online store compared to a personal blog.
Affiliate Marketing or Dropshipping Pros and Cons
As with all opportunities, there is the good and there is the bad but what about Affiliate Marketing or Dropshipping? What are the Pros and Cons? I will break these down for you right now.
- Instant Payments- When people buy from your store they will pay you before you pay your suppliers, which means that you will not have to spend your own money to buy the product and this money can be paid into your PayPal account or your Bank Account.
- Quick Profits- The same as above, the customer will pay you for a product and then you will pay your supplier a wholesale price (Normally 25% Less)
- Your Own Online Store- You can have your own online store up and running quickly and easily on platforms such as Shopify, plus they manage the payments, issue invoices and have many cool apps.
- Great Profits- I was receiving 25% profits when I was Dropshipping but you can set your own profit margin, you can even buy very cheap on Aliexpress and then sell at a much higher price, it has been done before and many people are still doing it now.
- Processing Orders- It can be slightly annoying setting up orders with your suppliers, personally speaking, I made an online sell which generated 80 orders one evening and I had to manually process these orders on the supplier’s website which took me hours and hours (Hopefully there is an app for this now)
- Dealing With Complaints- With so many complaints from the customers it can be difficult, from poor quality goods, damaged items, delayed goods, a change of mind and more problems, you will be dealing with complaints many times.
- Refunds- This is a big problem, the customer orders a product, you then order it from the supplier but the customer wants a refund for some reason, so you then need to get a refund from the supplier and sort out product returns. It’s a bit embarrassing if the product was Dropshipped from China, so in most cases, you just have to take a loss and give a refund without trying to get a refund for yourself.
- Delayed Orders- Another big problem with dropshipping is the delayed orders because many suppliers would want to wait until they receive a minimum amount of orders before shipping, and this can sometimes take weeks which leads to even more complaints and inquiries in which you will have to respond to.
- Stressful- With the complaints, delayed orders, refunds, and the amount of time it takes to communicate with customers and suppliers make dropshipping very stressful and it takes someone with a strong mind to manage a dropshipping business.
- Hard To Promote- Because dropshipping is becoming so much more popular, many people are trying to make a living from this model but unfortunately, the market is becoming oversaturated which is making it hard to promote. I promoted my dropshipping business through Facebook and Instagram ads and it was cheap but now that there are more and more people advertising through Facebook and Instagram, the cost of advertising is too high to risk a good return on investment. It may be a better idea to look into Pinterest and Tik-Tok if you would like to build a dropshipping business but this is something that I have not looked into (BTW Pinterest is good for Affiliate Marketing, So Maybe it’s good for Dropshipping?)
Affiliate Marketing Pros:
- No Contact With Customers- The great thing about Affiliate Marketing compared to Dropshipping is that you never have to communicate with the customer because your referred company will do all of the work for you, you only need to send your website visitor to the product seller.
- Your Own Website- You get to build a website/blog and it is amazing to see your own website develop over time, a website built from nothing to a website with thousands and thousands of words and information
- Long-term Business- You can build a long-term business in Affiliate Marketing, you also build a brand and gain trust, visitors will see how you have grown and will continue to visit you for years to come.
- Residual Income- Affiliate Marketing is not just sending visitors to one-time products, there is also the chance to promote membership sites, service sites, training courses, the options are endless and if anyone who signs-up from your referee pays a monthly fee for a service, you will receive monthly commissions and this can amount to a great residual income and for a long time.
- Respect- You will gain respect from visitors to your website because you have the answers that they are looking for and you are more knowledgeable than them, they will look for you to gain advice and they will learn from you.
- Rewarding- To see your website development, to see traffic go to your site, to receive commissions month after month is very rewarding and it makes you want to do it more and more.
- Earn While You Learn- Becoming an Affiliate Marketer is something in which you have to keep updating yourself on what’s new, you will learn about new products, you will learn about new ways to promote, you will learn more SEO and Keyword Research, Social Networking, Influencing, market research, writing and even website development, plus you will still be making sales as you lean and you will always be learning new things.
- Enjoyable- It will become your hobby, you will become addicted to Affiliate Marketing and building your brand, you will enjoy it so much that you would not believe that you are getting paid for something in which you enjoy, and this is an amazing feeling!
Affiliate Marketing Cons:
- Time-Consuming- Becoming an Affiliate Marketer can be time-consuming mainly because you have to build trust with your customers and also you have to start from scratch, which could involve building a website, creating content, finding affiliate programs, researching the market, learning SEO and Keyword research. It all takes time, so you are firstly investing in your time, the rewards come after.
- Lots and Lots of Writing- If you enjoy writing, this could be a pro but some people do not like to write, and to make an Affiliate Marketing website requires lots of content, so a written product review should be a minimum of 1200 words for the search engines to rank you well. Some people can write 1200 words easily, especially if they know the product well, then some people could struggle to write as many words. But then you could always outsource the writing and a good place to find great article writers or anything related to websites would be Fiverr.com
- Google Updates- It can be annoying when you have an established website, you have lots of traffic but then Google decides to change their algorithm and you have to go through your website and make changes just to make google happy again.
- Learning SEO- This includes all the above, you have to learn SEO (Search Engine Optimisation) but once you have mastered SEO then it is a breeze.
- Waiting For Payments- Unlike Dropshipping, When you make a sell doing Affiliate Marketing, you normally have to wait for payment, depending on the company, you may get paid weekly, fortnightly, or monthly. These companies often have a minimum payment threshold, but could be as little as $20 before payment.
Affiliate Marketing Or Dropshipping, Which 1 Is Better?
As you can see from this article, both opportunities have their advantages plus disadvantages but with my personal experience working on both of these models I highly believe that Affiliate Marketing is the better option out of the 2 and for many reasons with the main reason being that you are building your own brand with Affiliate Marketing and you are the face of that brand, your customers will respect the knowledge that you have and will trust you more, compared to being a retailer and doing Dropshipping.
There is a lot of stress in Dropshipping, chasing up orders, dealing with complaints but with Affiliate Marketing you would not have to deal with this at all because you are directing customers to the retailer.
When I was Dropshipping, I would spend hours and hours dealing with suppliers chasing up on orders and then replying to my own customers updating them on their orders.
It is much less stressful in Affiliate Marketing and when I went from Dropshipping to Affiliate Marketing, I felt like a huge relief from me.
If you can cope with this pressure, then great, Dropshipping can work for you, but personally, Affiliate Marketing is best for me all day long and I still get a buzz out of every sale that I get as I know that it is done, I will get no complaints and not inquiries, but lots of commission.
Also, a lot of people like to research products before they purchase an item, so the chances are if you would run a storefront selling a certain product, people will often leave and research this product, so long-term it will be more profitable to be an Affiliate Marketer because the people research the product could come to your affiliate website and that will create sells for you.
Thank you for reading this article and I hope that I have helped you decide whether Affiliate Marketing or Dropshipping is best for you.
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Whatever you choose to do, I wish you all the best for your success.