Thinking of starting an online business but not sure which model to follow? There is a lot of “noise” on the web about the various ways to make money online, and this crucial decision can be confusing!
We are here to help! First, let's explore the similarities between two popular choices – dropshipping vs. affiliate marketing. Then later, we'll go over the pros and cons of each model.
If you've been following us for a while, you'll know that we love dropshipping but read on for a balanced view of the two to decide what is best for YOU – for your budget, risk appetite, and industry experience. Let's read on!
At first, dropshipping and affiliate marketing look pretty similar:
- They both offer a low barrier to entry, with neither model requiring you to hold physical inventory.
- Both are relatively low-risk business models.
- Both businesses have low startup costs.
- Both have high earning potential. (If treated correctly)
- Both are easy to start working on immediately.
- Both require similar skill sets, such as creating ads, driving traffic to a landing page, and other marketing skills.
The two models are, however, quite different in their approach.
The main difference between dropshipping and affiliate marketing is that with dropshipping, you're in control of the backend and customers buy products on your own online store, while with affiliate marketing, you send visitors to other online stores and receive part of the revenue.
So let's jump straight into learning more about what they involve!
Plus, in the end, we will have a great summary for you that will help you make a decision. Let's begin:
What is dropshipping?
You've probably read the basics about dropshipping but let me summarize:
- Dropshipping is a fulfillment method where a store doesn't keep the products it sells in stock. Instead, when a store sells a product using the dropshipping model, it purchases the item from a third party, shipping it directly to the customer.
- When someone places an order on your dropshipping store, you then place an order with your supplier. This process is usually automated using a third-party app like DSers or these 14 DSers alternatives.
- Your dropshipping supplier will handle the rest. They will package the product and send the order straight to your customer.
- The customer receives the package straight from your dropshipping supplier, and you, the store owner, would not have touched the product in the process!
If you are interested in learning more about dropshipping, I suggest this article:
Now that you know the basics of the dropshipping model, let's analyze what is so good about it!
The pros of dropshipping
There are many, so let's dive right in!
Here are the advantages of dropshipping that I will cover below:
- You can quickly test products without buying inventory in bulk.
- No high startup costs.
- You don’t have to produce, store, and ship products.
- You can open a dropshipping store pretty quickly.
- It's highly scalable.
If that sounds great, then let's begin:
1. Quickly test products without buying inventory in bulk
One of the key advantages of dropshipping is that you don't have to purchase hundreds of thousands of the same product before you can sell it in your online store. Instead, you can literally purchase the product one by one as someone places an order.
Sound good, right?
This can create other problems (more below!), but it's great to test a product before committing to a large bulk order that may not sell.
If you can't sell the product, then you can quickly move on to other products without worrying about having leftover stock in your warehouse (or wherever you store the products).
But do know when to stop dropshipping! We mean that if your product is selling well and you have found a market that is working for you, ordering the product in bulk will increase profitability.
You can read more about this here if you are interested in learning more.
2. No high startup costs in comparison to retail stores
This one ties in well with the point above about not needing to purchase products in bulk to start selling products on your online store.
It's relatively cheap to start a dropshipping store, mainly because you don't need to own the inventory! Lack of inventory also creates savings on things like warehouse fees.
If you are unsure of the costs you will incur when starting a dropshipping business, I suggest reading this article, which covers all the costs required to start a dropshipping business.
However, do keep in mind that dropshipping is a real business and not a way to get rich tomorrow!
3. You don't have to produce, store, and ship products
The great thing about dropshipping is that your supplier handles everything! They take care of the manufacturing, storing, and shipping. Then, all you need to do is add the product to the store and take care of the marketing of the product.
But of course, this all comes with its own disadvantages. For example, if you aren't physically working with the product, you may not be aware of product quality.
That's why it's always important to order a sample. (More information about that here)
4. You can open a dropshipping store pretty quickly
Many people start dropshipping because it is easy to get started and virtually start selling that same day!
But why is it easy?
If you compare it, for example, to launching a regular “offline” retail store, you're looking at investing ahead of opening the store. With dropshipping, you only pay for products when someone places an order on your online store!
And although we would never recommend launching a store in a hurry, you can literally open a Shopify store in a few minutes and have everything set up in a few hours! So instead, take your time to focus on ways to make your product and store appear unique.
For example, take a look at Notebook Therapy's store – a beautiful pastel color palette to attract their young audience and an extremely well laid out, simple website with lots of white space.
You can read more about setting yourself apart here.
5. Highly scalable
You can sell to the whole world if you want to!
But do you know how?
Because a dropshipping supplier can ship to anywhere in the world!
All you need to do is check with the supplier before you start advertising to a new country, to be sure.
I'd also recommend finding local dropshipping suppliers in each country that you sell to.
This will result in a better customer experience, particularly when it comes to shipping times. You can find more reasons to start dropshipping from local dropshipping suppliers here.
If you are wondering which countries you should target as a dropshipper, take a look at this article. You'll learn more in that article about the best and worse countries to target when dropshipping.
Turning your store into a legitimate brand will also help you scale. You are building an asset – your brand! And who knows, a year from now, if you decide to move to a different niche and if your store is profitable, you may be able to sell it.
If you are interested in learning how to start a branded dropshipping store from the start, I suggest you check out these articles below.
- 7+ Amazing Tips to Brand your Dropshipping Store
- Dropshipping Branding: What is it and Why Should You Care
Ok, so we've covered all the good things, but what is the downside of dropshipping?
Many “gurus” who describe dropshipping as an “easy way to get rich” with a “laptop lifestyle” conveniently forget to mention the cons of dropshipping.
The cons of dropshipping
Dropshipping is a fantastic model, but it certainly isn't a “get rich quick scheme” – that's why it's also great to cover the disadvantages:
- Most dropshippers have the wrong mindset.
- Almost no control.
- Sometimes you can’t combine products for an order.
- Potential quality control issues.
- There's a chance of stock shortages.
- Less profit in comparison to buying in bulk.
- Refunds and customer service can be complicated.
- It's highly competitive.
But don't worry now if that sounds like a big list to you, I'll also give you a few tips to deal with each disadvantage.
So, let's begin with the first one – having the right mindset:
1. The dropshipping mindset
When discussing the pros of dropshipping, you would have noticed that I did not highlight the benefits that the “gurus” sell:
- Dropshipping is a way to get rich fast (oh, and buy my course first!)
- Don't like 9-5 or having a boss? Dropshipping is for you!
- You can work from anywhere. Start dropshipping now, and you will have the same laptop lifestyle as I do!
Of course, these are advantages, for sure, when you are getting sales, but it isn't all golden rainbows. That is why I highlight mindset – it needs to be right.
If you're interested in learning more about how to have the right mindset for dropshipping, check out these six tips here.
Let's discuss the rest of the cons of dropshipping (which are often possible to overcome) and how to deal with each one:
2. Almost no control
The only thing you control is the price of the products you sell and the type of products you're selling in your store. So, for example, you don't have control over:
- Shipping times. This applies mainly to those who dropship from China. The only thing you can do to improve this is to try and find a better shipping method.
- Package design. With most dropshipping suppliers, you can't control their package design because you are not involved in their process after the sale.
- You can't put anything extra in your package for your customers. To make it personal, some online store owners add a little thank you note to the package or perhaps even a special discount code for the future.
This also means that if your customer has a complaint about something in your supply chain (order processing, refunds, delivery speed, and so on), you can't address it quickly because it is not your supply chain!
How do we deal with this lack of control?
If you're dropshipping and not making any profits yet, then please don't worry about this because there is nothing that you can change about this if you're, for example, dropshipping with AliExpress.
You'll learn about alternatives like CJdropshipping that will help you create a better purchasing experience for your customers than AliExpress!
And that's what you want, right?
If you're making some profit with a product, you could look at ordering the product in bulk and taking care of the rest yourself. Or you could do it via a fulfillment center (like Amazon FBA).
This way, you're in charge of the package design if you want to add anything extra to the package, and you will certainly get faster shipping times than when you're dropshipping from China.
Another plus is that you don't have to worry about customers ordering multiple products and needing to send multiple packages (more on that below).
3. Sometimes you can't combine products for an order
This occurs mainly when you're dropshipping with AliExpress, but it could also happen if you have a different platform where you're in contact with multiple different dropshipping suppliers.
If a customer orders multiple products and has multiple dropshipping suppliers for these different products, you can't combine these products into one package.
Here's an example of how it will look like then:
This means that your customers will receive multiple packages and might complain that their order is not complete after receiving their first package.
There is also the problem of you having to pay shipping fees multiple times.
Each different package that needs to be sent to your customer requires you to pay shipping fees!
How do you deal with this?
For example, if you're using AliExpress, then use fewer AliExpress suppliers, so it's more likely that your customer will receive their order in one package.
A second thing you can do is add a question to your FAQ page. (More information about that here)
And don't forget to offer great customer service.
Plus, don't forget to check out this article here, which goes over everything you need to know if you're going to dropship with multiple suppliers.
4. Potential quality control issues
You're dropshipping. You will never see the product.
If you never see the product, there could be issues with the product quality, and you will not know about it until it's too late.
This worries new dropshippers who fear waking up to tons of emails from customers complaining about product quality.
How do you deal with potential quality issues?
Where possible, we would always recommend that you order a sample from your dropshipping supplier.
This way, you will be able to check the product quality yourself and even use the opportunity to create your own product images and videos.
Product reviews on AliExpress will also be a good indicator. Again, you can learn more about this here.
5. Stock shortages
As you read above, you don't have control over many things when you're dropshipping.
The same goes for your dropshipping supplier's stock levels.
It could happen that your product is suddenly selling really well and that your dropshipping supplier can't keep up.
Luckily this one is easy to solve!
How do you deal with stock shortages?
I advise always contacting your dropshipping supplier, checking how much stock they have and how quickly they can add new inventory.
If your dropshipping supplier runs out of stock, you can easily switch to another dropshipping supplier with the same products.
This is done easily on AliExpress, where you simply search for the product, and you'll probably find 10-20 different AliExpress sellers selling the same product, perhaps with some tweaks.
You could even take care of this before your dropshipping supplier runs out (see it as a backup plan).
Just message a couple of dropshipping suppliers and ask them the same questions as you asked your current supplier for that product.
You could even order samples from these suppliers, so you're 100% sure that when your current dropshipping supplier is running out of inventory, you can still fulfill your orders with quality products!
6. Less profit
The hidden “cost” of dropshipping is the lack of bulk pricing. As a result, you will probably initially pay more for each item you sell than you could have if you had ordered in bulk, leading to less profit.
Unlike a regular wholesaler that would sell you their merchandise in bulk, a dropshipping supplier sells you a single unit every time you place an order.
Because they sell a single unit each time, they are responsible for storing the products, ensuring the products, and other associated costs like paying staff to retrieve, package, and process single items.
Wholesalers already operate on very low-profit margins and rely heavily upon large volume purchases to make a decent profit.
When these additional costs are added, the wholesaler really has no option but to increase the price of individual items, thereby reducing the dropshipper's profit margin.
How do you deal with this?
This may sound obvious, but the answer is to sell more!
For example, selling ten products for $10 profit = $100 profit, but if you sell 100 products for the same price, then you're looking at $1000 profit. The downside is that you will have more work to do and a greater chance that the order doesn't go as expected.
That's why some people go for high-ticket dropshipping products instead of lower-priced items.
If you're interested in learning more about dropshipping high-ticket products, then check out this article here. Also, don't forget to check out this article to learn how to correctly price your products in your dropshipping store!
Suppose you're getting consistent sales from a product or more products. In that case, it might be wise to import them in bulk from, for example, Alibaba, where low minimum order quantities are available.
Just keep in mind that even though your cost per product is cheaper because you are buying in bulk and the supplier doesn't take care of sending it to your customer, you will still have extra costs to add later.
These costs can include shipping, warehousing, and possibly even importing.
You can learn more about the top fulfillment services and companies right here. Then, investigate the cost implications of importing in bulk and sending the product out yourself or letting a fulfillment service take care of that. It will definitely be worth it.
Just imagine how this will improve your whole package and delivery service:
- Your delivery time could be 1-3 business days instead of 1-3 weeks.
- You could add your company business card (your store) to your package.
- You could brand your packaging with, for example, Packhelp.
- You'd need to work on a strategy for refunds.
7. Refunds can be complicated
If you picked your dropshipping suppliers correctly, you should have fewer problems here, but it could still happen.
If you're dropshipping from AliExpress, then the shipping time might take 2-3 weeks before the product(s) arrives at your customer's destination. That and the fact that you won't have control over the product quality increases the chance of refunds.
How to deal with this con of dropshipping?
The best way to handle refunds and returns when dropshipping is to assess if it's cheaper to let your customers keep the product and send a new product than to manage a return. Otherwise, let your customer send it back to your supplier.
If you want to learn more about handling this, then I suggest reading our other article Dropshipping Returns & Refunds: Everything You Need to Know!
You can also check out this return policy template here.
7. Customer service can be difficult
As I said above, you don't have control over the supply chain. If your customer has a complaint, then you can't easily fix it.
If your customer has a question and can't answer it, you need to discuss it with your dropshipping supplier. This might take some time.
How do you deal with this?
To be as brief as possible:
Give amazing customer service!
Customer service is important to keep your customers loyal to your dropshipping store. It will almost certainly lessen refund requests. Always try to be as polite and understanding as possible when you reply to a customer with questions or demands.
You can also make your customer service less work by doing things like creating a FAQ page.
If you want to learn more about this, then I suggest reading Customer Service for Dropshipping Stores – Complete Guide! to get you started.
8. Highly competitive
Most people fail with their dropshipping stores because they are not unique.
So many people are learning about dropshipping and starting dropshipping stores right now.
For example, just type “Dropshipping” into Google Trends:
Do you see how popular dropshipping is? Everyone wants a piece of it because so many of these “gurus” advertise it as an easy way to earn money online. (Source)
But do you know what the sad thing is?
Most of them don't put any effort into their dropshipping store.
They open their store, import some products without changing anything, and start advertising.
This means that many dropshippers are selling the same products with the same information they got, possibly even from the same dropshipping supplier!
Of course, having the same product is not a bad thing, but having the same images, descriptions, and so on will certainly not help you!
And what do you think those people will then tell everyone?
Don't do dropshipping; dropshipping is saturated!
But, as you can read in this in-depth article here, that's not the case.
How do you deal with this?
Simple. Be better than them! And don't try to copy everything to save some time.
Put some effort and time into your dropshipping store because you're starting an authentic business! You can learn more about this here.
Right, we've covered dropshipping and the pros and cons of this model. Now, what about affiliate marketing? What does this business model involve?
But, if you're interested now in starting with dropshipping, then don't forget to check out this article here later.
What is affiliate marketing?
Affiliate marketing is the model for promoting someone else's products, but you are not making the final sale. Here's a great infographic to make it more clear:
With this business model, your goal is to refer customers via your website or social media pages to another business you feel has value.
The process is very simple and straightforward. If someone purchases after clicking your affiliate link, you will receive a percentage of the sale as an affiliate commission.
According to Statista, affiliate marketing spending in the U.S. alone is expected to reach $8.2 billion by 2022, more than triple what it was ten years earlier.
After choosing a niche and setting up a website or blog, you will need to find businesses to promote and sign up for their affiliate program.
The affiliate may promote one or multiple affiliate products, and they may create an entire site dedicated to selling cool products in a particular niche.
How do I get started as an affiliate marketer?
If the business you are looking to promote has an affiliate program, you can normally find a link to sign up to in their website's footer:
Once you are signed up, you can create affiliate links. These are tracked links that tell the business exactly where a purchase came from.
Most affiliate programs have an extended cookie period. So if someone clicks your affiliate link and doesn't make a purchase straight away, you can still earn a commission.
Affiliate commissions are usually paid out after 30 days which allows time for any returns to be processed.
How do I make money as an affiliate marketer?
You can promote your affiliate links almost anywhere online, depending on the affiliate program's rules.
Most people promote their affiliate partners on their website or blog, but you can also promote your links on social media. Post links to Facebook, Twitter, YouTube, and even Instagram with the ‘swipe up' feature.
You will make money from recommending products and services from other businesses to your readers or audience. For example, did you know that 93% of customers read online reviews before making a purchase?
That's worth noting!
Successful affiliate marketers work hard to develop a persona for themselves and provide valuable content, often before selling to their audience. What you are aiming for is that if people trust you, they will trust your recommendation.
For example, because of Tim Ferriss's reputation as the author of the “4-Hour Body” and popular blog writer and podcaster, he is an affiliate of the many products that he recommends.
Like Tim, you'll start to review products in your chosen niche and work hard at building an email list.
Next, you can use live webinars to educate your audience and make sales, and when you are more experienced, you'll grow your business with pay-per-click (PPC) advertising.
More than 15,000 advertisers rely on affiliate marketing for part of their revenue today.
According to a Forrester report commissioned by Rakuten, 81% of advertisers and 84% of publishers use affiliate marketing.
And over half of the affiliate publishers surveyed in the same report stated that affiliate marketing accounted for more than 20% of their annual revenue.
Where do I find the best affiliate programs?
You will need to research the types of products you want to recommend and then find ecommerce stores that sell them.
Once you have found a store you want to promote, check their website's footer to link to an affiliate program or ‘partner' program.
Some use their own affiliate program like Tapfiliate, but you could also investigate the large affiliate networks.
Once you've signed up to the network, you will have access to hundreds and even thousands of affiliate programs which can be confusing!
I'd encourage you to consider the following when selecting the best affiliate network:
- Commission rate
- Product/service selection: does the network represent brands that your audience is interested in?
- What approvals are required by the network for you to gain access?
- Other fees. Some affiliate networks charge fees for training or setup.
- Cookie duration. This may vary drastically from platform to platform. For example, Amazon's cookie duration is 24 hours while Avangate is 120 days.
Now that you know what to be aware of, let's explore some of the top affiliate marketing networks:
We all know this one!
Considered one of the world's largest affiliate networks, Amazon Affiliates provides links to almost any product imaginable at an approximate commission rate of 5% with a 24-hour cookie duration.
2. CJ Affiliate
Another giant and one of the oldest Affiliate Networks, CJ Affiliate, works with thousands of brands, including big names like Lowe's, Barnes and Noble, Priceline, and Overstock.
Overall, their approval process is pretty fast, and you won't need to pay any fees to apply. Each product is ranked based on earnings per click (EPC).
Digital goods also provide great affiliate opportunities. For example, Avangate Affiliate Network connects publishers with digital goods merchants like Malwarebytes.
But there are a lot more out there! Be sure to read the fine print. Not all affiliate networks are legit, and managing multiple networks can become a headache. Above all, your affiliate links need to be carefully researched so that they appeal to your specific audience.
If you're interested in a big list of affiliate programs, then be sure to check out this great article here.
As with dropshipping, let's understand the pros and cons of the affiliate marketing model:
The pros of affiliate marketing
All in all, the whole affiliate marketing game is about earning a satisfying cut of sales. Of course, like everything, there are pros and cons to this model.
Let's explore what they are to ensure you get out the starting blocks with knowledge.
Here are the advantages of affiliate marketing that I will cover below:
- You have the possibility of earning passive income.
- Brand credibility is already established.
- You don't have to deal with customer support.
- Affiliate marketing does not require much startup capital.
- Independence and flexibility.
- Your income is directly proportionate to your performance as a marketer.
If that sounds interesting to you, then let's begin:
1. Passive income
I'm sure you've heard the expression, “make money while you sleep”!
Successful affiliate marketers experience continuous returns on their one-off marketing efforts because customers purchase the product over the following days and weeks.
As a result, you receive money for your work long after you've finished it.
So even when you're not in front of your computer or sleeping, your marketing skills will be earning you consistent income.
Wouldn't we all love to open our laptops to results like this in the morning?
2. Brand credibility is already established
A time-consuming, often expensive, and critical step in the marketing process is creating brand awareness and customer loyalty and trust.
For beginner affiliate marketers, it is a great advantage that your merchant has already covered this step.
When you, for example, send a customer to Amazon, you benefit from promoting a recognized and trusted brand.
In 2023, too many people are burnt by dodgy, scammy websites. Just as ecommerce sites need to build trust through the use of a professional landing page, product, and checkout process, affiliate marketers also need to position themselves as trusted voices in their niche.
3. No customer support necessary
Affiliate marketers are not responsible for a sale's administration – for customer support or customer satisfaction.
Your job is simply to sell – to link the seller with the consumer. The seller deals with consumer complaints like shipping, order changes, or queries after you have received your commission.
Affiliate marketing does not require much startup capital and can be started quickly and at a low cost – with no worries about product sourcing or supplier relationships.
5. Independence and flexibility
Affiliate marketers love the fact that they have autonomy over how they spend their time, changing direction, and of course, the number of hours they put in. So the idea of zero staff to manage certainly is appealing.
Your income is directly proportionate to your performance as a marketer. Therefore, honing your reviewing skills and writing engaging campaigns will translate directly to increased revenue.
As with any business model, there are always cons to be aware of, and affiliate marketing is no exception. So let's go through them:
The cons of affiliate marketing
Affiliate marketing looks great so far, right?
Well, as you may know, everything in life has its advantages and disadvantages, so let's continue with covering the cons of affiliate marketing.
I'll cover these points below:
- Lack of marketing skill.
- You are entirely dependent on your merchant’s rules and payment conditions.
- Just as dropshipping, it's competitive.
- The sale is not recurring.
- There is no revenue guarantee.
- Not everyone is suited to this isolated working lifestyle.
- Quantity approach.
- It’s possible to hack affiliate links.
Are you ready for the first one? Let's begin:
1. Lack of marketing skill
Learning how to run paid traffic is more complex and expensive than the “gurus” let on. So before spending a cent, it is worth upskilling yourself in this area.
These articles will give you a good start:
- Facebook Ads for Ecommerce Stores: A Beginner's Guide
- 12 Reasons Why You Need Google Ads For Your Ecommerce Store
Yes, they are for ecommerce, but you can use the same tactics if you're going to become an affiliate marketer.
But don't forget that there are free methods to gain traction; for example, you can start a blog, a YouTube channel, and more.
2. Affiliate marketing programs have rules
As an affiliate marketer, you depend entirely on your merchant's rules and payment conditions.
Although you can offer suggestions for improvements to the conditions, you may need to change direction to a supplier with a more profitable commission arrangement.
3. Highly competitive
Because, as discussed, the barrier to entry into affiliate marketing is low, anyone, literally anyone, can become an affiliate marketer. (This is the same as with dropshipping)
In specific niches, the competition is fierce, and you may realize you are out of your depth or simply just not making enough commission.
But this could be motivating! Imagine dominating as the expert voice within a particular niche!
4. The sale is not recurring
After a purchase resulting from a recommendation by a marketer, the buyer will more than likely purchase directly from the vendor when purchasing a second time.
Some SaaS affiliate marketing programs (software offered to consumers through the internet) provide recurring licenses and fixed recurring commissions. Examples of these include website hosting plans, online course subscriptions, subscription boxes, and so on.
The affiliate partners to SurferSEO, for example, receive a 25% recurring monthly commission for as long as their referral is a customer.
5. There is no revenue guarantee
While free from constraints, the affiliate marketer may take a while to experience a healthy paycheck.
Marketing skills are required to know where to place your efforts, and there is, of course, an element of risk as it is difficult to predict how much money you will make.
6. The freelance lifestyle
Not everyone is suited to this isolated working lifestyle. Those who feed off other peoples' energy may feel lonely and lacking in energy and focus. Shared workspaces are a great way around this and a way to increase your network too!
7. Quantity approach
Some affiliate marketers have given the industry a bad name.
They engage in black hat marketing techniques to drive traffic to their website or blog. Unfortunately, with this practice, not only will your website be at risk, the chances of destroying your vendor's relationship are great too.
Thankfully this doesn't happen too often, but there are cases where a dishonest affiliate marketer hijacks affiliate links.
And, of course, it's impossible to get it back. (You can read more about this here)
Ok, so there you have it – the pros and cons of both dropshipping and affiliate marketing. Let's take a look at what skills are needed to make it using both models.
What skills do you need for Dropshipping and Affiliate Marketing?
You'll need specific skill sets to become both a dropshipper and an affiliate marketer, and there is quite a substantial overlap.
The good news is that there is a wealth of online information to help you develop the skills required. This table gives you an indication of some of the skills required:
A critical skill to both models is the ability to generate traffic, using methods such as:
- Search Engine Optimisation (SEO)
- Social media advertising or organic social reach
- Paid advertising
- Guest posts linking to your site
- and many, many more.
My suggestion for a beginner is to concentrate on mastering one or two traffic generation methods, focusing on at least one free traffic source.
Must-have skills for Affiliate Marketers
You also need to be able to:
Create content – your audience needs to read something that really engages them and ultimately leads them to click on your link. This requires knowledge of:
- Video production (think Youtube).
- Copywriting/Sales writing for a blog or landing page.
- And other forms of content, for example, podcasts or social posts.
Build your persona and your email list – all ecommerce businesses benefit from building an email list for remarketing, especially affiliate marketing.
The costs are low compared to paid advertising, and the opportunity to build relationships with customers in your niche is golden!
Must-have skills for Dropshipping
The skills required for dropshipping have some crossover to affiliate marketing.
Generating traffic to your ecommerce or dropshipping store is critical, and conversion is a key skill – your customers will be assessing your brand for trustworthiness.
If you're clever, you'll retain customer details to follow up and sell to them repeatedly via email or other communication means.
Sourcing the right product and the right price via a reliable supplier relationship is a recipe for success. You will have to work out a price that is profitable to yourself and appealing to your customer.
One of the downsides of dropshipping is that many niches are overcrowded (although this can be an issue in affiliate marketing too). This can make price competition high, forcing your profits downwards. So yet another skill required is intelligent niche selection.
As you can see, there is a strong overlap between the skills needed in both dropshipping and affiliate marketing.
Can you combine dropshipping and affiliate marketing?
Once your affiliate marketing business is established, it could be worth creating further revenue by bringing dropshipping into the mix. Because, of course, you would have a better grip on the art of marketing online by this time.
By the time you're ready to expand into dropshipping, you would probably also have a good feel for products that seem to work well in your niche. You would have learned to spot opportunities, and it would be crazy not to seize them.
And of course, if you have a mature dropshipping store, you may want to consider adding affiliate marketing into the mix.
This could be particularly smart if your products are seasonal. And again, spending time promoting your affiliate partners on your social pages and becoming an expert “voice” in your niche can yield excellent profits.
Your decision, therefore, does not need to be deciding between dropshipping and affiliate marketing, but when you feel ready, you can combine the two.
So, what is the difference between dropshipping and affiliate marketing?
We've been on a long journey discussing dropshipping vs. affiliate marketing…
So, let's first go over the biggest difference between dropshipping and affiliate marketing:
The biggest difference between dropshipping and affiliate marketing is that you will be setting product prices, engaging in customer service, and possibly managing suppliers with dropshipping.
For affiliate marketing, it's expected that the customer will remain anonymous to you and that you will have no involvement in price setting.
And to make sure that you do not forget anything, let's summarise the main differences below:
- Dropshippers market their own brand, whereas affiliate marketers market someone else's brand.
- With dropshipping, you make a profit on your selling price minus the wholesale price. In contrast, with affiliate marketing, you make a commission on the product you sell, which is usually paid monthly.
- Dropshippers need to provide excellent customer support, whereas affiliate marketers are not responsible for customer support.
- Dropshipping stores can be well branded and sold, whereas while the affiliate website can grow over time, the affiliate marketer is dependent on other brands.
Compare other business models
Not sure yet if affiliate marketing or dropshipping is the right fit for you? Check out our other comparison articles below:
And to compare more business models, visit the comparison hub!
Apart from the critical requirement to have the skills necessary to successfully drive traffic to your store or blog both when dropshipping and acting as an affiliate, there is a positive, growing trend to building customer relationships by selling less and adding more value.
As you would have seen, both dropshipping and affiliate marketing have their challenges. This is why affiliate marketing is usually seen as an alternative to dropshipping and vice versa!
Hopefully, after reading this, you can better understand which challenges you would rather deal with.
They are both viable business models, and I think it is best to focus on what you are best at. If you have a large audience, affiliate marketing would be easy to get started with.
However, if you want to sell your own products, dropshipping would be the clear-cut winner.
Contrary to what the “gurus” say, neither model leads us down an easy road to immediate success. Know that you will have to put a lot of effort into both of them to be profitable – just as you would in any other business.
Good luck with your decision, and don't forget to let us know in the comments below which one you're going with! (Or are you going for both at the same time?)