If you have been on the hunt for ways to generate some additional income online without worrying about manufacturing and shipping your own products, then you’ve come to the right place. Dropshipping and affiliate marketing are both excellent ways to do this, and we’re here to discuss the differences between these two business models.
We’ll take a look at what exactly dropshipping and affiliate marketing is, and how they compare to one another. If that interests you, then be sure to keep on reading.
The Differences
Both affiliate marketing and dropshipping are ways for you to make money by selling somebody else’s products. The great thing about these business models is that they’re excellent for digitally-adept entrepreneurs. You’re able to keep your business thriving no matter where you are in the world – all you need is a good internet connection and a decent laptop, and you’ll be ready to go.
Here are some rapid-fire differences between dropshipping and affiliate marketing:
- Dropshipping requires you to handle customer service yourself, while customer service in affiliate marketing is handled by the website which sells the product.
- With dropshipping, you’ll sell a product from your website, but as an affiliate marketer, customers are directed to a different e-commerce website through your affiliate link.
- You’ll receive payment as soon as the transaction is completed when dropshipping, but it can be a matter of months before you see a payment from affiliate marketing.
- Dropshipping has the potential for higher profit margins, since you set your own prices, while you won’t be able to control your profits as an affiliate marketer.
A Brief Overview of Dropshipping
Dropshipping is an online business model which allows you to operate your own e-commerce business without having to stock any product. You run your own dropshipping store, where you sell the product and where customers complete transactions with you at retail price.
After you’ve been paid for a product, you’ll order it from the merchant at the wholesale price, where it is then directly shipped to the customer who thinks that it has actually come from you. This allows you to make a good profit!
Dropshipping makes for a fantastic business model for anybody who wants to run an e-commerce business but is working on a tight budget. It’s great for folks who don’t have cash readily available to invest in bulk inventory volumes or to pay for warehouse storage. In essence, dropshipping allows absolutely anyone to run an e-commerce business.
Pros
- Low risk – you’ll only pay for a product after an order has been placed
- You can choose your product prices
- Low startup costs – you only need a website
- Build your own brand
- Higher profit margins
- Potential for expansion
Cons
- Customer service is important
- Dropshipping market is highly saturated
Finding Dropshipping Suppliers
When you are deciding on which suppliers to use for your dropshipping business, you’ll want to find companies that are reliable and that offer high-quality products. Remember, it’s your brand that’s at stake here, even though you’re using somebody else’s products to build that brand.
Additionally, when you work with a good supplier, you won’t need to spend as much time sorting out issues with customer service. If you’re using a good supplier, you really won’t run into many problems with regards to the quality of ‘your’ products.
Affiliate Marketing – What is it?
Affiliate marketing is a business model that allows you to earn money online by marketing services and products offered by other businesses to your audience. In fact, 93% of customers read online reviews before making a purchase – if you couldn’t tell, that’s huge.
By recommending and reviewing products to your audience, you’re able to take a cut of the profit simply by getting people to click your affiliate links. It’s a very simple process – if somebody purchases a product after clicking through your affiliate link, you’ll receive a percentage of that sale as a commission.
The best part is that literally anyone has the ability to become an affiliate marketer, and doing so is incredibly simple. After you pick a niche and set up a website (a completely optional step), you’ll need to find a business or businesses that you want to promote and sign up for their affiliate program.
If a company does have an affiliate program, you’ll usually be able to find a link to it in the footer of their website.
Pros
- Low startup costs – all you need is a blog
- Very easy to get started
- Can become an excellent source of passive income
- You can run your business from anywhere on the planet
- No customer support required
Cons
- Some companies pay low commissions
- You cannot control your profits
Finding Affiliate Programs
There are harder things to do than find a good affiliate program to join. You’ll have to do some research on the kinds of products that you want to market, after which you’ll need to find e-commerce stores to sell those products.
After you have found a store that you are willing to promote, be sure to check their website to see if they’ve got an affiliate program link for you to use. Some companies call their affiliate program their partner program, so be on the lookout for that as well.
If a business does not clearly have an affiliate program linked on their main site, don’t hesitate to send them a brief email explaining that you’d like to partner with them. Someone from the customer service department will be able to point you in the right direction.
Which is Better?
This is a difficult question to answer because it really comes down to your personal circumstances and what you desire from your online business.
Affiliate marketing is generally the preferred option for most people, because it’s pretty hands-off, save for SEO and content creation. It’s also very easy to get started with and you don’t even need a website to do so.
On the other hand, dropshipping calls for a different approach that some will find preferable in comparison to affiliate marketing. There is a bit more effort involved, particularly with customer services, but it does have the added benefit of allowing you to determine your profits.