Affiliate Marketing vs. Dropshipping

Affiliate marketing or Dropshipping? Which makes a killing?

  • November 10, 2020
  • Business
  • Shahram

In this day and age, there are several unearthed ways of making money online. In this article, we’ll focus on two of the most profitable methods; affiliate marketing and drop shipping. You may be wondering which of these two business models has the most potential of ‘killing profits’. Well, first, it is best to understand what affiliate marketing and drop shipping are and how they work. 

Let us first define the two. 

What is affiliate marketing? Affiliate marketing is making use of affiliation to gain commission on products produced, or services delivered, by others. Companies eye influence as a method to effectively advertise and increase the reach to consumers, hence making use of the advertising model to market the products or services in exchange for a commission per sale. The affiliate uses his channels to promote, leading the buyer to the company through a link or a purchase code. The company then would account for a percentage of the sale as the affiliate’s commission. 

What is dropshipping? Dropshipping is selling products that you source from someone else. In most of the drop-shipping arrangements, the manufacturer will send the product directly to your customer after you have sold that product to them online. Unlike affiliate marketing, in this business model, all customer data is direct and visible to you. Payments are also upfront for every purchase. You then would order the product from the manufacturer at a lesser price and provide them the customers’ shipping details.

In both business models, the risk and investment to make are low. You advertise and sell products / services that substantially do not belong to you. It works best online as the only chore you are assigned to do is promote and sell them on your website or blog. The manufacturing and logistics are out of your plate too.  

When do you earn? In affiliate marketing, initially, you and the company will set the percentage or fix the amount of commission on each successful referral you make. Meanwhile, in drop shipping, your profit is the added value you set per item’s wholesale price. Earnings come quicker in dropshipping than affiliate marketing. While drop-shipping, customers pay you directly. In affiliate marketing, commission release depends on the company’s pay-out schedule.  

What do you need to start? You will need to have a platform to use where you could advertise or sell the products or services to attract potential customers. It could be your social media accounts, blogs, vlogs, or a webshop. I’ve previously published an article on how to create a webshop, do check it out. Unlike affiliate marketing, when you dropship, customer service must be managed by you. You technically are the owner of the shop where you sell your products. Hence, you are the one responsible for resolving every issue your customer would have. While in affiliate marketing, in any questions or concerns, you could point them to the company’s customer support. 

What are the advantages? You can make money while you sleep. You read that right. It sounds like a dream, but it is possible. Your affiliate links and your webshop are accessible 24/7 to your potential market online, giving you a high opportunity to earn. However, your work should focus on building the quality of your website or webshop. Both these business models offer flexibility, but it is best not to forget how your sales rely on the hard work you put into advertising and promoting the products.  

How about the disadvantages?  Income may be huge but is not steady and may not be stable. It is a fact, especially when you just started. It may also require you to allocate some money for ads to effectively and widely promote at first.  In affiliate marketing, the commission conditions may change too. You will have to rely on the company’s terms and conditions as you have no control of their affiliate offers. 

These business models could be key for you to jumpstart to entrepreneurship or a way for you to start earning a passive income. You could test the waters and see if you could press on the ups and downs of affiliate marketing or drop-shipping. Killing it does not come overnight. In whatever business method, hard work remains vital.  

If you want to learn more about affiliate programs and drop-shipping, how they work, and how you can find one or more that is suitable for you and your business, have a try at my companion course and see the Growth strategies section in chapter 2.

Write to me here. I would love to hear your reflections and views. Should you wish to get alerts on the latest updates from my publications and also other useful information and tips, join here. And if you want to get to know how you can use the content I create and share, Start Here.

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