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Dropshipping vs Affiliate Marketing - Which is Easier?

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Dropshipping vs Affiliate Marketing - Which is Easier?

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Black Pearl Matrix

The two models share some similarities:

As much as both business models have low financial risk, dropshipping manages to be a safer venture than affiliate marketing.

The vast majority of entrepreneurs working with e-commerce work with dropshipping or as affiliates. For those who don’t know what dropshipping is or how to work with dropshipping, we explain: dropshipping is a business model in which the manufacturer (that is, a third party) is in charge of producing, storing and sending the products on the store’s own account. Within this model, then, the entrepreneur determines the sales prices and is responsible for all the marketing material for the store.

In affiliate marketing, things work in a similar way, since inventory management and product shipping are the responsibility of the brand responsible for the affiliate program. There is, however, one crucial difference: as a merchant, you cannot change the value of the product, as you only receive a commission for each sale made.

In this article, you'll see:

1. Similarities between dropshipping and affiliate marketing

2. How to work with dropshipping

3. Make a living with dropshipping: some benefits

4. Making a living with dropshipping: some disadvantages

5. Benefits of an Affiliate Program

6. How the affiliate program works: some negative points

7. Affiliate marketing is profitable

8. How to Make Money with Dropshipping? First steps

It is clear that the popularity of both business models is already more than proven in the world of e-commerce. But which, after all, is the most profitable?

1. Similarities Between Dropshipping and Affiliate Marketing

It’s always best to try to find commonalities before weighing the pros and cons of one or more business models.

So, let's see what affiliate marketing and dropshipping have in common:

• Both business models eliminate the need for physical inventory;

• Dropshipping companies, like the best affiliate programs, are low-risk financial ventures;

• Both business models allow for a quick start, which can accelerate sales and revenue;

• Both require good marketing skills and a lot of creativity to manage marketing strategies and generate traffic.

Now that we’ve outlined what they have in common, it’s time to look at dropshipping first and affiliate marketing second.

2. How to Work With Dropshipping

As a business model, dropshipping allows any retailer to sell the most varied products (and eliminates, as we said, the need for physical inventory.

This means that when they receive orders from customers, dropshipping companies only need to contact the supplier and pass on the order. From then on, the process of producing and sending the order is the responsibility of the supplier.

This is exactly why dropshipping is such a positive model for budding entrepreneurs and even retailers looking to test the popularity of a new product.

3. Make a Living With Dropshipping: Some Benefits

3.1 It is a low financial risk model

As much as both business models have low financial risk, dropshipping manages to be a safer venture than affiliate marketing. Also, while it’s true that affiliate programs also eliminate the need for physical inventory, the payment method for the two models is quite different.

What happens in many affiliate marketing ventures is that there are a minimum number of sales; a goal to be achieved before you can collect the money you’ve earned. This does not happen with companies that do dropshipping, as they receive the total amount of the purchase weekly.

If you still had doubts about how to make money with dropshipping, now you have a concrete answer.

3.2 Dropshipping is a good business with high profit margins

Profit is undoubtedly one of the decisive factors for entrepreneurs seeking a new business model. For this reason, it’s important to note that affiliate marketing commissions are often relatively low, especially when compared to dropshipping profits.

With dropshipping, you can advertise a product for $25.00 that actually costs $5.00, and keep a sizable profit even after discounting your marketing dollars.

With affiliates, however, the situation is different. As much as commissions are calculated as a percentage of the product’s value, the final value does not take into account the cost that you, the entrepreneur, had with marketing strategies on websites and social networks. This means that, in practice, your final profit will be much lower than that of a dropshipping store.

Selling with dropshipping is building your own brand. In this way, opting for dropshipping is also choosing to invest in your own business and decide what you want to sell, to whom you want to sell and how you want to advertise these items. A few months or even a year from now, you may have made so much profit that you decide the best thing to do is sell the brand to someone else and move in a new direction.

The above scenario sounds tempting but unfortunately it is impossible in affiliate marketing. The biggest problem with affiliate programs is that you are ultimately making money to sell someone else’s product (and brand). As much as you can create videos on YouTube as part of your sales strategy, for example, it is impossible to sell a channel on the platform, which considerably reduces your profit margins.

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3.3 Controlling the brand and advertising means controlling profits

Dropshipping sites are able to expand their sales possibilities with segmentation strategies, which redirect exclusive ads to target audience segments and consolidate new sources of profit; Affiliate programs, however, are sending traffic to another website, which means they don’t have much control over the purchase process.

With the dropshipping model, it is possible to control not only the generated traffic, but also the optimization of the website pages, the content of the product pages and even the store template.

In other words: the greater your control over the brand, the greater your chances of profit.

4. Make a Living With Dropshipping: Some Disadvantages

4.1 You need to manage customer service

Having full control of an e-commerce doesn’t just mean controlling profits and marketing strategies; you have to manage important and even complicated tasks, such as customer service channels. In a click-through affiliate program, the number of worries is considerably less: after all, all you have to do is sell the product.

But, before giving up on dropshipping, it might be a good idea to consider apps like Zendesk, which integrates with the Shopify platform and is one of the darlings of large companies and online stores.

If you don’t like Zendesk, there’s still another option: outsource your customer service. You can hire a virtual services or assistant by phone, email, SMS, WhatsApp and much more.

That way, you’ll have more free time to invest in new marketing strategies and content optimization.

Attention! Outsourcing can be an excellent ally, but it is important to establish basic service guidelines and provide answers to the most frequent questions.

5. Benefits of an Affiliate Program

5.1 You pay nothing to join the affiliates

Many people are so concerned about knowing what an affiliate program is that they end up not weighing the pros and cons of the situation.

One of the strongest points of affiliate marketing is that the costs to start selling within this business model are generally quite low, as there are few mandatory fees.

However, merchants who opt for the best affiliate programs need to be aware that they will be responsible for the costs of website hosting and marketing strategies.

When it comes to selling with affiliate marketing, it might be a good idea to take a look at CJ Affiliate and ClickBank affiliate programs.

Affiliate marketing is an excellent source of passive income. We have already roughly answered the question “how to earn with affiliate marketing”; however, it is worth returning to the subject to remember that affiliate programs can be excellent ways for entrepreneurs who need or want to generate passive income.

Of course, you’ll have to do some math until you figure out the exact type of content that will drive sales; however, once completed, the maintenance work for these ads is relatively low. In affiliate marketing, after all, your only concern is marketing.

You don’t have to worry about creating a new product; you don’t have to lose sleep over lead times and the manufacturing process for that new item.

All you have to worry about is creating the perfect ad.

Affiliates do not need to manage customer service. If we look at how affiliate marketing works, we will see that affiliates are only responsible for directing potential customers to the brand responsible for the affiliate program.

It is a simple process and therefore without major worries. The entire customer service process, as well as exchanges and returns, is the responsibility of the brand.

All you need to do then is redirect customers to the store’s website.

6. How the Affiliate Program Works: Some Negative Points

Affiliates only earn a percentage of each sale made. Even the best affiliate program is stuck with an unavoidable drawback: the fact that payments are made based on a commission or a percentage of the total product value. This means that even if you invest US$ 100.00 in marketing strategies, you can end up making only US$ 50.00 in sales, generating a considerable loss.

When we discussed what an affiliate program is at the beginning of this post, we highlighted the fact that affiliate commissions can often be considerably less than dropshipping profits. The calculation is simple: no matter how much you earn one hundred, two hundred or three hundred dollars in commission, it is very likely that the total value of the product is much higher.

Unlike dropshipping, after all, affiliate programs don’t allow for custom pricing, and that means you could miss out on a sale due to a lack of negotiation or simply not winning over potential customers who find the advertised amount too high for you.

6.1 Commission payments can be deferred

In the battle of affiliate marketing versus dropshipping, the loser is often the affiliate who will have to face real challenges in managing their income.

The sad reality is that, often, the brands present in the affiliate market end up being brands without great credibility in the market, which can lead to a delay in the payment of commissions.

Of course, there are extremely trusted brands in the world of affiliate marketing; however, there are also those who are bankrupt or who have not had a good sales semester, and all this is reflected in the relationship with affiliates. And it’s important to remember that if the brand really goes bankrupt, affiliates will lose all the money they’ve invested up to that point – an uncertain reality, which is not present in the routine of dropshipping companies.

6.2 Is it possible to bypass the affiliate link to make the purchase

If you don’t use an app to shorten the URL of your products, just hover your mouse over the displayed icon to find out that it’s a link coming from affiliate marketing – and many of them will end up thinking that it might be more expensive to buy for that one. link than buy directly with the store.

It’s true that in many situations and for many people, affiliate marketing pays off; however, the vast majority of potential customers from the most diverse niches simply do not know that affiliates only receive a small commission for each sale made. And when those customers decide to manually access the brand’s website and ignore your link, the store keeps 100% of the purchase price… And you end up losing money.

Unfortunately, many people are suspicious of affiliate marketing because they believe it is all a scam; A waste of time and money. We know this isn’t true, but still, there’s no denying that dropshipping sites can convey a sense of trust and credibility that affiliate links simply cannot.

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7. Affiliate Marketing Is Profitable

Affiliates do not control products or prices

When we define what an affiliate program is, we are mindful of the fact that it is a business model over which you, the merchant, have very little control.

In fact, you won’t be able to control the look, description or even the price of the product you’re advertising, and the same goes for the follow-up process after purchase.

As much as this is a positive scenario for some affiliates, the truth is that even the best affiliate programs simply do not work for all entrepreneurs – particularly those who want to exert greater control over what they are advertising and are not willing to restrict their marketing strategies. . It is worth remembering that, in click-through affiliate programs, affiliates work in accordance with confidentiality conditions that may interfere with the final result of the advertisements.

Despite the many differences, both affiliate marketing and dropshipping sites are excellent channels for generating relevant traffic and excellent marketing campaigns.

We have highlighted some of the downsides of affiliate marketing, but the truth is that it is possible to make money with this business model. By the way, if you already work as an affiliate and are satisfied with the results you are generating, even better! Keep optimizing your marketing strategies and consider including an online store on your website to further increase profits.

Including an online store can be an important step in affiliate marketing. If you work with the Amazon Associates program, for example, you can start including some dropshipping items in your own online store.

Remember: you already have a loyal target audience. Why not take advantage and try to profit a little more? There is room for growth in even the best affiliate program.

It is also worth remembering that setting up a virtual store is not a seven-headed bug. You will only need to focus on the product descriptions and of course choose the items you want to sell. Don’t forget to pay special attention to order management, marketing strategies and customer service channels.

Now that you know everything about affiliate marketing, you also know that it’s a tricky business model with little chance for big revenue.

As working with affiliate marketing also means depending on another brand to generate profits, the end result is not always entirely positive. For this reason, it might be a good idea to add an online store to your affiliate site. This way, you can continue to invest in affiliate programs and at the same time increase your chances of profit.

If you’re still a little reticent about the possibility of dropshipping, our best advice is: give it a try. After all, it doesn’t hurt to try.

You don’t need to create a huge online store with dozens of products. Choose one or the other and test the waters, calmly.

8. How to Make Money with Dropshipping? First steps

We talk a lot, a lot about this business model, but we still haven’t clarified how to work with dropshipping.

The reason for this is simple: with apps like DSers, opening a dropshipping store is fast and may even be free. Just create a Shopify account and start choosing the products available in the app.

You can start selling with dropshipping today!

We Finally Have a Winner: Dropshipping

Yes, my dears, it is possible to make a living from dropshipping. In fact, there are people out there making $800,000 (a great answer for anyone wondering how to make money with dropshipping).

It is true that affiliate marketing is an excellent business model, full of possibilities and success stories; In addition, click-through affiliate programs have numerous advantages.

However, the disadvantages of this business model are serious and can generate huge losses.

But that doesn’t mean you have to abandon your investments as an affiliate: it might be a good idea to include an online store on your website and start investigating how to work with dropshipping.

A dropshipping store, when combined with affiliate marketing, can bring in a steady stream of revenue.

The reasons for this are several:

• In an online store, you can set product prices, which are usually higher than affiliate commissions.

• A dropshipping merchant’s profits are often considerably higher than an affiliate’s profits.

• The chances of creating a really successful campaign are huge (not to mention the possibility of creating viral content).

• You can use your experience to create the best affiliate program in your niche;

• The traffic flow of a virtual store is constant, mainly after customer loyalty.

• The value of dropshipping products is usually low, which increases the store’s profit margin.

• You will have much more time to manage and optimize your store and advertising strategies.

• A virtual store means own brand and greater profit possibilities with new marketing strategies.

• You can launch a product with confidence that it will sell well.

FAQ – Frequently Asked Questions About Dropshipping vs Affiliate Marketing

1. Which to start with, affiliate or dropshipping?

When it comes to profitability, you generally make more money with dropshipping than with affiliate marketing. This is because, with the virtual store model, you can determine your profit margins, and it is possible to obtain a higher margin, above 40%.

2. How much can an affiliate earn?

However, we cannot price how much a digital affiliate earns, but on average around U$ 2,000.00 to U$ 5,000.00 per month when he is already working effectively with total dedication and dominating the entire flow of sales and traffic.

3. Is it difficult to be an affiliate?

It is a business with low initial cost. A lot of people think that to start their own business, they need a big investment. To be an Affiliate, on the other hand, you don't have to invest a lot! Just register for a program of this business model and start selling through your unique link.

4. Which niche sells the most in dropshipping?

If you want to get started in the world of online sales, but don't have a hefty initial budget, knowing what sells most in dropshipping is a great alternative. In the first place, are the accessories, having a very high profit margin.

Conclusion

In short, if you are looking for a great business model that requires low effort to run, affiliate marketing might be your best option.

Alternatively, if you want to build an online business with your own brand and online store, dropshipping is an ideal choice.

Regardless of which you choose, dropshipping or affiliate marketing, both require hard work and dedication to succeed.

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