In this article, “Difference Between Affiliate Marketing And Dropshipping,” we will not only show the differences between the two marketing models, but also their similarities. As this will help you to decide which model affiliate marketing or dropshipping is right for you.
What Is Affiliate Marketing?
It is a marketing strategy that allows you to market the product or service of a given company for commission.
How Does It Work?
Before you start promoting the product or service of a said company, you are given a promotional link with your identification features attached.
When you promote this link, either by way of social media, content writing, email marketing, and someone clicks on your link and lands on the company’s website and buys a product, you are paid a percentage of the sale. That is how it works in a nutshell.
What Is Dropshipping?
It is a retail method. A business model that allows you to sell products from suppliers on your own website.
How Does It Work?
In a nutshell this is how it works. In dropshipping, you don’t carry an inventory. So when a customer comes to your websites and buys a product, you will pay the supplier and then the supplier will ship the product to your customer on your behalf, after you pay supplier.
Here again is the dropshipping model in three simple steps:
- Your customer purchases product in your e-commerce store
- The order is sent directly to the supplier to be processed
- The supplier ships the product to your customer
If you are looking to make great money in an online business, then both affiliate marketing and dropshipping are vehicles that you can use to help you realize your dreams. The reason is that both business models are profitable and flourishing.
For example, the affiliate marketing industry is said to be worth well over $12 billion. And the global dropshipping market size is set to reach $372.47 billion by 2025. It is expected to grow by 23.7 percent. Hence, if you know what you are doing and you put your heart into it, you can truly make good money in either model.
What Are The Similarities Between The Two?
Working from the comfort of home, is the desire of most people, as this allows them to be their own boss. Hence, if working from home is something you desire, then both the dropshipping and affiliate marketing models give you the opportunity to do just so. Both can be done from the comfort of home.
Both Are Not A Get Rich Quick Scheme
Contrary to what some might have led you to believe, affiliate marketing and the dropshipping models are not a get-rich-quick scheme. In view of that, if you are coming in with the mentality, that you are going to strike it rich quickly, either as a dropshipper or affiliate marketer, my advice to you, is forget it.
It is a wishful thinking, because both are long termed projects, that require work and effort, and not get rich-schemes as some might have suggested.
Both Models Require You Choose A Niche
Another similarity between affiliate marketing and the dropshipping model is that both require that you choose a niche. Choosing a niche is vital for both models.
Your success as either a dropshipper or affiliate marketer hinges on selecting a niche. And make sure that you choose as a niche something you are passionate about, interest you or you love to do.
If for example, you love pets, then you should seriously consider the pet niche. Of course the pet industry is huge and broad, so you might want to narrow it. Focusing on just a segment of the pet market. For example pet is too broad, so you might focus on a segment of it such as dog collar, dog chain etc.
Also, important, is that your products must be relevant to your chosen niche, otherwise, you will fail to succeed.
Affiliate Marketing And Dropshipping Require Website
Some have suggested that you can do affiliate marketing without a website. That might be true to certain extent. However, you doing business without your own website, will affect your chances of success in the long run
Having your own website, others will view you as a professional and they could trust you. Also, as a requirement for being an affiliate, some companies require you to have your own website, before you can be approved to be an affiliate.
Having your own website allows you to do so many things. You can sell your products from your website, put content on your websites, such as product reviews, and have them ranked bringing you traffic and sales.
As a result, both models require that you have your own website.
And having a website for your program, either as an affiliate marketer or dropshipper is not something to sweat about. Why? You have platforms that will help you build your website, without having any technical knowledge.
No Carrying Of Inventory For Both Models
It was mentioned that with both models, affiliate marketing and dropshipping, there is no carrying of inventory and shipping involved. We saw how this worked in dropshipping. How does this work in affiliate marketing?
As an affiliate, the company that you partner with, will give you a unique link. It is unique in that it will contain information that identifies you.
This link allows you to promote the product of the company. If someone clicks on your given link and lands on the company’s website and makes a purchase, you are compensated by the company.
Once the sale is made, the company, not you, handles everything from packaging, shipping and handling customer complaints. This is similar to the dropshipping model. So both models do not require carrying inventory and shipping.
Both Require A Measure Of Business Knowledge
Another similarity between dropshipping and affiliate marketing is that both require a measure of business knowledge. This of course goes contrary to the prevailing idea expressed by many that you won’t need much business knowledge to start a dropshipping or affiliate marketing business.
This is far from the truth. I strongly feel that both models require the acquisition of the right business knowledge, the proper training and the necessary skills, either as a dropshipper or as an affiliate marketer. Without the proper education and training, your business will not succeed. This is one of the many reasons why online businesses fail.
Both Require You Possess Certain Qualities
Both business models, require that the entrepreneur possess certain qualities, such as being disciplined, industrious, focused, determined, devoted, flexible, goal oriented and patient. These are all necessary for the success of either models.
Both Dropshipping And Affiliate Marketing Require Traffic
Both models like any other business require traffic. Traffic is the life blood of any business. This is so, because without any traffic to your business, it will not survive and you will not make money.
In view of this, you have to know, whether you are a dropshipper or affiliate marketer, how to drive traffic to your website, either by way of social media, email marketing or organic traffic, if you are to be successful either as a dropshipper or affiliate marketer.
Both Models Require That you Do Your Due Diligence
In both models, you have to do your due diligence, especially when it comes to choosing either an affiliate program to partner with, or a supplier to drop ship your product to the customer.
Why is this important? It is important because, you want to choose a supplier that you can trust and is reliable. He has a good track record and is reputable.
If you choose a supplier that is not reliable, this will ruin your reputation and destroy your chances of success.
This can also be true of choosing an affiliate program with a bad reputation.
Therefore, as was mentioned it is vital you do your due diligence either as a dropshipper or affiliate marketer.
In Both Models Expect High Competition
In both models, you can expect high level and intense competition. This is so because of the ease of entry, since very little is required in starting either business.
However, in spite of the competitive nature of both models, you can still make money, if you focus as discussed somewhere in this blog, not on the broad market, but on a segment of the market. By so doing, you will lessen the level of competition.
Further, as a dropshipper, you can reduce the level of competition by having an exclusive deal with your supplier. Without such an exclusive deal, the supplier might be selling the same exact products to a number of other dropshippers, thus creating a highly competitive business environment.
Know Your Competitors
Both models do require that you know who your competitors are. This is very critical, why? Your success as an affiliate marketer or a dropshipper also hinges on knowing who your competitors are, what they are doing and how they are doing it successfully.
The goal is to see why they are successful, and learn from their success.
AS mentioned, the business environment for both the dropshipping and affiliate marketing models, are very competitive. Hence, as an entrepreneur, you have to know who the competition is, and learn everything from them, so that you can be a step ahead of them.
Can Sell Low-ticket And High-Ticket Items
Both models will allow you to sell either a low-ticket or high-ticket items. With the low-ticket model, you have to sell in large quantities, if you are to make it. The reason is that the price is low. This model is very common.
On the other hand, the high-ticket model can be very profitable. Why? Because the price for just one item can be high, and selling just one or few items can make you lots of money compared to the low cost model.
Differences- Dropshipping And Affiliate Marketing
We have briefly examined the similarities, between the two models. Now, we are going to focus our attention on the differences between affiliate marketing and dropshipping.
With affiliate marketing, if you know what you are doing, you don’t have to be working constantly in order to make money.
You can do the work today, and reap the benefits of your efforts over and over again. For example, you select your niche, create a niche website, write quality content around your keywords and this might have your website ranked in search engines. This could bring you lots of traffic and sales over and over without you having to do nothing else, but to simply update, from time to time your content.
Indeed, affiliate marketing allows you to make money passively, even when you are asleep.
However, with dropshipping, you have to be involved with the daily management of the business activities, and the stress that comes with it.
Another Difference- Dropshipping You Can Set The Price
With dropshipping, you have the ability to determine, the price you can charge, based of course on certain factors, such as your expenses, your competitors and the market demand.
On the other hand, this is not the case with affiliate marketing. You have no control over price setting. You as an affiliate cannot adjust, change or determine the price. This is handled by the company, that you are affiliated with. Your responsibility is to simply promote the product.
As stated with dropshipping, you have the responsibility of providing customer support. However, with affiliate marketing it is the company who handles any customer issues and complaints, that might arise,
The affiliate therefore avoids the stress and headaches of dealing with customers complaints.
Another Difference- Dropshipping You Are Paid Immediately
Another difference between dropshipping and affiliate marketing is the fact that dropshipping allows you to be paid immediately.
For example, if someone buys a product from your e-commerce store, they will pay you the retail price of the product. Since you bought the product at the wholesale price from the supplier, and you sold it at retail, all you do is you pay the supplier what he is owned, and what is left is yours to keep.
Here is a numerical example. Wholesale price is $12.00, retail price is $24.00. You subtract the $12.00 from the $24.00, You send the supplier his money, the balance is yours to keep.
This is instant payment to you. You receive immediate payment, as soon as the transaction is completed.
However, this is not the case with affiliate marketing. With this model, you have to wait before you can get paid. The reason for the delay, is that some companies require that affiliates accumulate x number of money before funds can be released.
Further, there might be the possibility that you might not get paid at all, especially if you have partnered with an affiliate company that is not trust worthy.
Dropshipping Is Hands On Operation
In comparison with affiliate marketing, the dropshipping model is difficult and more work involved. It is hands on operation.
On the other hand, as mentioned in previous paragraphs, affiliate marketing can be hands -off operation, if you know what to do.
You can do the work today, and not have to worry about the day- to- day grind of running a business, and still get paid over and over for work done today.
Another Difference Is Start -Up Cost
In addition to the other differences we have outlined in this article, another difference between the two is the start -up cost. The dropshipping business model cost more money to start than affiliate marketing, which you can actually start without any money.
This does not mean that you do not have to spend any money in running the business. If you want to be successful, you have to spend money. What I am saying is that you can start it with $0. So it is less expensive to start in comparison to dropshipping.
How Much Can You Make In Both Models?
Dropshipping allows you to make more money. Why is this the case? As stated earlier you have the ability, to set your own price. You can buy a product for $2.00 and turn around and sell it for $20.99, and keep the balance after deducting marketing expenses. So with this model, you can decide your profit margin
Conversely, with affiliate marketing, you are paid on a commission rate, which could be anywhere between 5%-30% of the sales.
As indicated the dropshipping model, allows you to make more money than affiliate marketing. However, let me quickly add that, this is not always the case. Why? Because, there are some affiliate programs that sell high ticket items, and therefore pay high commission. You can make more money with such companies, if you partner with them.
The draw back is that, these high ticket programs are very competitive. And some of these high-end programs might not accept your application because of lack of experience.
Which Model Is Best For You
Unfortunately, I cannot tell you which model is best for you. You will have to make the determination as to which is best.
The reason is that you know yourself more than I do. You hopefully know what your strengths, weaknesses, goals, likes and dislikes are.
Hence, you alone can decide what is best for you. The intent of this blog, “Difference Between Affiliate Marketing And Dropshipping,” is simply to provide you with the facts, which you can use to help you decide as to what model is best for you.
All I could say, is that regardless of which model you choose, both can make you lots of money if you know what you are doing.
Conclusion
In this article,”Difference Between Affiliate Marketing And Dropshipping” we spelled out not only the differences between the two models but also the similarities.
It was mentioned that affiliate marketing and dropshipping are similar in these ways:
- Both models gives you the opportunity to work from home
- Both are not a get-rich-quick scheme
- In both models you have to choose a niche
- Have your own website
- You don’t have to carry inventory
- Affiliate marketing and dropshipping require a measure of business knowledge
- You must possess certain qualities
- Both models require traffic
- Business environment in both is highly competitive etc.
The differences we sighted were:
- Dropshipping can be hands on operation, whiles affiliate marketing, you can do the work today and relax
- Affiliate marketing allows you to make money passively, in dropshipping you have to be actively involved
- In dropshipping, we stated that you can set your own price, but this is not the case with affiliate marketing
- With affiliate marketing it was said that you have to wait to be paid, in dropshipping you get paid immediately
- In terms of cost to start, with dropshipping you can expect to pay more than affiliate marketing, which can be started with no money
- We mentioned that you can earn more with dropshipping than with affiliate marketing, because you set your own price, with the dropshipping model.
Finally, we said that you have to determine which model is best for you. But regardless of which model you choose, you can still make lots of money with either model if you know what you are doing.
Let me please make a request of you. If you feel that I need to make improvement in any area of this blog, please leave me a comment.
Also, if you found this article to be beneficial and helpful, I will appreciate it if you can share it with others.
Sincerely,
Sten