Dropshipping and affiliate marketing are among the many models to make money online.
Here you get to sell products without having to manufacture or deliver them yourself, and you make a handsome profit in the process.
So which of these two is better?
Affiliate Marketing Vs. DropShipping
If you need to choose only one model, which of the two should you pick? We’ll be attempting to answer these questions and more in today’s article.
Affiliate marketing and Dropshipping will be going head to head, and perhaps when we’re done, you’d have decided which of the two you should pick.
Dropshipping is a low-risk e-commerce model. It involves selling products from other manufacturers or e-commerce websites for a profit.
So here, you don’t need a warehouse, you don’t need to manufacture, and you don’t need to concern yourself with shipping. All you need to do here is this; when a customer places an order with you, you get it to the supplier, pay them, and ship the goods to the buyer.
This doesn’t mean that you don’t do anything, though. You get to do your marketing and advert, build your brand in the process, and then pay attention to customer service.
Essentially you can run this business from anywhere you are in the world.
- Freedom of Expression
You get to set the price of the products which you’re selling.
Therefore, you can drop or raise the price as the market demands. With this, you can decide how high your margins can be.
You also get to decide what products to sell.
- Low Risk
Dropshipping is a low-risk business model.
You don’t pay from an inventory, nor do you pay for storage space, nor do you pay for shipping. And very importantly, your funds become available every week.
Unlike affiliate marketing, you might have to wait for a month or more. Or you might have to reach a certain threshold before you can get your money.
- You Get to Build your Brand and Business
Here you are sending the traffic to your business.
Therefore, you get to keep customer data which, of course, can be repurposed. You can upsell, and then, of course, you can have repeat customers.
And with the help of a good product or a good line of products, you can build your business.
- Low Start-up Costs
All you need is a product, a website, and of course, you do your marketing.
- It’s Easier to Scale
With a good line of products and the fact that you have your customer data, you can grow into a full-fledged business. Therefore, there’s room for independence.
- Handle Customer Support
You send the orders yourself, give information to the customer about their product status. e.tc. However, you can outsource this to virtual assistants easily via on freelance website.
Of course, this would raise to cost of your business.
- Little to no Control Over Shipping
You don’t get to decide when the products are shipped—usually, the supplier ships at their convenience.
All you get is the shipping order id, therefore if the product gets to the customers late, or the goods are damaged, there’s not very much you can do.
Perhaps except change suppliers.
- Niches can be Overcrowded.
Overcrowded niches lead to lower profit margins, especially if you’re not one of the first to get into that niche. Finding a profitable niche or an untapped niche can be very difficult.
Dropshipping doesn’t work for digital products. Therefore there’s a whole market this method leaves untapped.
In this business model, you promote someone else’s offer or product, and you get a commission when someone purchases the product.
You don’t have to handle any orders or deal with customer support here. It would be best to get people to buy the product and earn a commission.
This is one of the most popular online earning models.
- The entry Barrier is low.
The only cost you bear here is that of marketing. You don’t have to pay any fees to become an affiliate.
Administrate fees, shipping fees, and more; the product owners get to handle it. You don’t need much to start; you can start with a good following on social media.
- You Don’t Have to Deal with Customer Support.
All you do is drive leads to the seller. If there’s an issue where the customer needs to talk with someone, or the customer needs a refund, the product seller deals with it.
- It’s a Great Source of Passive Income
If correctly done, affiliate marketing can be a good source of passive income for a long time.
You can get to market many related and unrelated products as long as the content on your platform is appropriately tailored to marketing them.
- Your Choice is Limited
You don’t get to choose the price of the products. For some affiliate programs, you might not be able to choose the products you want to promote.
Promoting certain products can be difficult, primarily if you haven’t used them before or even seen them.
- You Get Paid on Commission
You only earn a commission per sale, which is usually lower than what is made from drop shipping. All sales are a one-time affair, and you don’t get to have customers’ data, so you are mainly at the mercy of the product seller.
- Payments can be Delayed.
You need to hit a financial threshold to get paid. Sometimes also merchants are known to delay payments. This is after you have already done the work for them.
- It is Easy To Recognize Affiliate Links
Just hovering your cursor over a link can reveal if it’s an affiliate link or not. Many people know that they can get better deals elsewhere instead of buying from affiliate links. That’s, though usually not the case. The marketer gets a commission, but the price is often the same.
Affiliate Marketing or Dropshipping Which Should You Choose?
This could be a challenging question to answer.
The one to choose will depend on several factors. For example, how much time are you willing to put in? How long can you wait before you start to make a profit?
What kind of product is it?
Affiliate marketing is hands-off mainly; as soon as you have your marketing taken care of, you can relax and let the commissions roll in.
And you don’t even need to create a website or a blog. If you have a large number of social media following, you can do this.
However, if you don’t mind the extra time you have to build the business and do your customer service, you might choose drop shipping.
Based on the amount of time you’d have to spend and the initial capital involved in starting, affiliate marketing is the winner here.
With dropshipping, though, you get to pick your prices. Therefore you get to make more profit. So by profit, dropshipping wins.
Don’t forget that even if you’re outsourcing the customer service, you will have to hire the person before the orders start coming in.
On your e-commerce website, you can also use affiliates to push your dropshipped products also. So, in the long run, I’d say drop shipping is better since you can leverage affiliates too.