You might hear about affiliate marketing vs. drop shipping if you search about passive income opportunities. Whether you choose affiliate marketing or drop shipping, you can earn money online without any problem with product inventory.
But there are tons of ideas out there constantly standing behind each of them. So, what is the truth? Is it more beneficial to have an affiliate marketing industry or market goods on eCommerce shops?
Here is a guide to compare affiliate marketing and drop shipping.
Affiliate Marketing Overview
Affiliate marketing is the most well-known method of earning passive revenue. Many organizers work with affiliate plans as side tricks to total more income streams.
Generally speaking, affiliate marketing involves selling someone else’s products on your website, blog, or social media account and making money from each sale commission.
Each affiliate marketer has an affiliate link that can tag and track with UTM. A potential customer clicks on this link and enters the product page to buy and the cookie stores on their browser.
The cookie can save everywhere from 7 to 45 days, and if the user shop in that time, you receive a commission. Here, we assume that the customer does not remove their cookies before purchasing.
Now, we want to talk about all the pros and cons of affiliate marketing.
Affiliate Marketing Pros
- Need low money to start (even free)
- A passive income in the long term
- No consumer support required
- Various affiliate programs to take from
- Low-risk startup
- No product making or warehouse
- No purchase processing
Affiliate Marketing Cons
- Need much time if you do not own a blog or website yet
- Not so good for short-term profit
- Absence of product pricing and quality check
- Fixed fee
- Payment deferrals
- Fluctuating incomes due to cookie deletion
- Irregular payments due to affiliate link removal
- One-time procurements
- No entrance to buyer data for retargeting
Drop shipping Overview
Drop shipping is an online sales guide that involves marketing goods on your online shop and then ordering them on your supplier’s website.
Typically, a drop shipper does not need a warehouse or inventory storehouse as he should not buy anything in advance.
The difference between drop shipping and normal retail (besides acting only online) is around buying and stocking methods.
Usual retail stores (online or brick-and-mortar) order their products in the majority in advance and save them. But if you choose drop shipping, you do not have to buy anything in advance. In this way, you need to send the product listing you require to sell and begin marketing your store to attract buyers. Then, as soon as someone buys the product, you put an order on your supplier’s website.
Like all other business types, drop shipping also holds its pros and cons.
Drop shipping Pros
- Need low money to start it
- No need for a storehouse
- No physical touch with the product
- High money-making potential
- Repeat or recurring clients
- High control across your business
- You fix your profit and value margins
- Chance of building a brand
- Low-risk marketing model
Drop shipping Cons
- Usually, you ought to handle customer support
- Low control across stock quality
- Problems trading with manufacturers
- Can not control shipping and potential delays
- Needs an online shop or eCommerce website
- Orders placing and processing orders
- Oversaturated niches
Affiliate Marketing vs. Drop shipping: Features Comparison
Comparison Table of Dropshipping vs Affiliate Marketing
|How it Works||No need to store inventory or ship products. Just make a profit on arbitrage||Refer a customer to a different company and take a percentage as commission|
|Business Model||Make profit of your selling price minus the wholesale price||Make profit from the monthly commission on the product you sell|
|Business Management||The customers pay to you to buy the product that is not in your inventory and you have to pay to the manufacturer||automatically direct the customer to the merchant’s website by each click on your site.|
|Ease of Use||You have to support customers||You are not responsible for anything|
|Commission||As you earn by arbitrage, you can choose your own amount||A fixed commission|
|Growth Prospect||Naturally grow over time with a strong foundation||While the affiliate website will grow but the affiliate marketer will be dependent|
We quickly reviewed all the pros and cons of affiliate marketing and drop shipping, and now it is time to study each feature separately.
- Products sold
The central difference between affiliate marketing and drop shipping is about products sold situation.
While the drop shipping goods are not yours (they are usually warehoused and shipped out by your supplier or drop shipping administrator), you are still trading them on your eCommerce shop.
On the other side, affiliate marketers do not technically trade anything – the sale happens on the product website.
They develop a service or goods link on their blog, podcast, or influencer form, and they receive a commission from each sale.
- Time to launch
You can launch an easy and quick affiliate marketing when you have blog articles on your website which place well on search engines and an assured following.
Now, you have to sign up for a few affiliate programs around your niche, make your affiliate link, and put it on keywords everywhere on your pieces that make the most basic traffic.
Or, if you have a large following on social media and dabble into influencer marketing, you might drive affiliate sales just with a simple post.
But, if you have none of those items but still like to begin making money online as soon as feasible, then you need a period to start blogging, SEO and social media. In this example, affiliate marketing is time-consuming.
- Involvement and ease
In the beginning, you need active involvement in both affiliate marketing and drop shipping. But, usually drop shipping can be quicker and more comfortable to start with just low funds.
So, if you can make a primary Shopify account and have some funds for advertisements, you can immediately start trading. Of course, you should have an acceptable product and have completed your study about that niche.
On the other side, affiliate marketing needs composing blog posts or product reports, so you need more time in the beginning.
But, affiliate marketing can grow more than a passive income when you make solid organic traffic.
- Earning potential
We think of drop shipping as great earning potential because we can arrange our pricing and profit margins.
If you develop high-ticket goods affiliate links, you can make a lot of money from an affiliate marketing industry, too, but in this way, you have more limited control over your profits.
In short, in drop shipping, you earn like this:
selling price – wholesale price = profits
But in affiliate marketing, it is different:
percentage x selling price = profits
If you want to start an online business but can not choose between affiliate marketing or drop shipping, I suggest reading the above text. There, we introduced each of these marketing strategies and its pros and cons. Then we compared them to some most important features.