Most people who want to
start an online business are left in confusion when it comes to dropshipping vs affiliate marketing. They have no idea which business model is best for them, and which one can make them the most money.
A few questions that they have include:
- Which is easier to grow and manage?
- Which business model is more profitable?
- Which can I launch the fastest?
- Which one has the best success rate?
In today’s blog post, I will discuss what you need to know about
dropshipping vs affiliate marketing, and how to determine which one is best for you.
What Is Dropshipping?
Dropshipping is when you sell products from a supplier on your own website. You sign up with a supplier to sell their products, and you get a
cut of the profit
when the product sells.
Here’s how it works:
When someone buys a supplier’s product from your website, you would then place an order for that product from the supplier. The supplier then ships the product to the customer for you.
This
alleviates the hassle of you shipping out any products, and storing any inventory in your house, warehouse, or storage facility.
Why Dropshipping?
Dropshipping is a business model that’s great for those looking to start a business where people are looking to buy goods instead of searching for information. It’s a
low-risk business as you can run it alongside your full-time job, and operate it until it becomes your main source of income.
You’re able to have high-profit margins, as you can buy a product for $3 and
sell it for $20.
Plus, you have your own website where you can control the website’s branding and have multiple attempts to attract a customer by offering discounts.
Cons Of Dropshipping
While dropshipping is a great choice for alot of people, there are some drawbacks to it. With dropshipping, you will be in charge of
managing customer support. If there’s a complaint, a refund request, or a question about how to operate the product, YOU will have to handle these matters.
Another drawback of dropshipping is that sometimes a product may instantly become out of stock days before you sell it. So you have to
constantly monitor inventory.
This can be a problem if you sell a product and it’s out of stock on the supplier’s website.
You would then have to issue a refund to a customer, which results in complaints, loss of a customer, and no profits for you.
Plus, if you sell
thousands of products on your website, you’d have to monitor any products that are out of stock so that you don’t accidentally sell something that a supplier doesn’t have.
What Is Affiliate Marketing?
Affiliate marketing is a business model where you get paid for recommending and selling someone else’s product. It starts with you signing up to be an “affiliate” for a company’s product, and you get paid a commission every time you make a sale.
You never own or hold the product with affiliate marketing. It’s a high-profit, low-cost business model that you can begin
literally within 5 minutes.
All you’d have to do is sign up to an
affiliate network or sign up to be an affiliate for a particular product, get your affiliate link, and start promoting your link (in a smart way) across the internet.
Why Affiliate Marketing?
In affiliate marketing, there’s no cost to becoming an affiliate. As I just stated, you can sign up to be an affiliate for a product in less than 5 minutes, and you’re in business. You can sign up for affiliate networks like
Clickbank or
Amazon Associates and start promoting products instantly.
Alot of affiliates choose to go with the free marketing option to promote their affiliate link, while some affiliates choose to utilize paid advertising. If you use
paid advertising to drive traffic to your affiliate link, this is the only marketing cost that you will incur.
Affiliate marketing is a
great passive income business model. It’s pretty much “set and forget” once you get your operation started. You can operate your business from anywhere in the world, and it can be run on 100% autopilot.
Management of the business is minimal, and your main job will be to
drive traffic and create content to get more people exposed to your affiliate link. You don’t have to create a product or store any inventory, as the company that owns the product is responsible for these tasks.
Also, you don’t have to worry about customer support. If a customer has a product question, they will have to
contact the vendor of the product – not you. All you will be doing is recommending a product and sending people to the product’s sales page.
After that, you earn money for each sale you make, and you get to go on with your life.
Drawbacks Of Affiliate Marketing
When considering dropshipping vs affiliate marketing, there are some
drawbacks to affiliate marketing that you should be aware of. For starters, you’re only paid a percentage of every sale.
So if you promote a product that’s $30 and you earn a 10% commission on every sale that’s made, that means you’ll only earn $3 on every sale. This can become a problem as you’ll need to
make alot of sales to sustain a decent income with a particular affiliate offer.
Also, you can’t change the price of a product if someone feels that it’s too high. So even if you
earn $300 commission on a sale, usually it means the product price is much higher – usually around $900.
Another thing you should be aware of is that people can ignore your affiliate link. If someone decides that they don’t want to click on your affiliate link, they can go to the merchant’s home page and purchase the product through their link.
This could mean that you
miss out on your commission and that the merchant earns 100% of the profit on your effort.
You should also know that you can’t control the product you’re promoting. You can’t change its price, description, look, sales page, sales process, etc. So as an affiliate marketer, you’re limited in some ways.
And some affiliate programs require that you
market a product in a certain way. The marketing tools you receive are sometimes the only marketing tools that you can use to promote the product.
Dropshipping Vs Affiliate Marketing Similarities
While there exist some differences between dropshipping and affiliate marketing, they do have some things in common. Such as:
- You don’t have to store inventory or ship anything out
- Both are low-risk business models
- You can make high profits
- You can get started immediately
- You have to do some marketing to make sales
- Both have low startup costs
But What About Profitability?
You can earn great profits in both dropshipping and affiliate marketing. In each business model, there exist opportunities for very high profits.
In affiliate marketing, you can promote products that sell for $5,000 – $10,000 and make a nice living selling a small number of units. If you
earn a 10% commission on each sale, that’s $500 – $1,000 that you make per sale.
In dropshipping, if the cost to dropship the product is $10, you can sell it for $50 and earn a nice $40 profit. That’s a very high-profit margin that people make every day on sites like
Ebay and Shopify.
Final Thoughts On Dropshipping Vs Affiliate Marketing
As you can see, both of these business models offer some benefits to you when it comes to launching your own home business. I’ve run both businesses, and have found that affiliate marketing gives you a
dream lifestyle business that’s hands-off and highly-profitable.
In dropshipping, if you get alot of sales, you have to sit and place orders with the supplier
all day – or hire someone to do it for you. This is an expense in the form of time and money and is something that you have to consider if you choose this business model.
With affiliate marketing, if you get alot of sales, you don’t have to do anything. Orders are
automatically processed,
and you’re free to do whatever you like with your day. You can choose to do more marketing, or take the day off.
It’s inexpensive, potentially high profit, and very easy to start.
If you’re interested in learning how to start an affiliate marketing business,
check out this free video that shows you how to do so now.
