Affiliate Marketing vs. Dropshipping
The vast majority of online entrepreneurs have at least tried their luck with affiliate marketing or dropshipping in the past. But what is the difference between the two and how can you choose the one that best suits your expectations?
In this post, we’re looking at whether you should pick dropshipping or affiliate marketing as the monetization method of your website.
Dropshipping vs. Affiliate Marketing
Both of these two have some things in common, and we’ll start with the similarities before describing each model and detail and showcasing their pros and cons.
With either affiliate marketing or dropshipping, you have a variety of income opportunities, you can set them up and launch them with as little effort as possible, and you have little to no responsibility regarding the inventory and shipping processes.
You are, however, fully responsible for promoting the site and products that you will either sell or intermediate. On the upside, they are both low-risk business models, and you don’t have to spend a fortune to get two sites based on either of these monetization methods up and running.
Dropshipping
The standard dropshipping business model allows you to have control over how much the products that you have on your site cost. This means that if the genuine value of a product is around $25, there isn’t anything stopping you from pricing it at $40.
You then forward the order to the person directly selling the products, you pay $25, but the customer that has ordered from you will pay you $40. So, in a nutshell, you’ll have a profit of $15.
Dropshipping pros
One of the most important perks of dropshipping is that you’re basically paid instantly. The fact that you can increase the price or offer discounts is another advantage, and so is the fact that you can employ a variety of marketing methods, including newsletters, all of which for the purpose of intermediating your sales.
Dropshipping cons
Dropshipping calls for far more responsibility than affiliate marketing, especially when it comes to customer support. You have to have at least one individual hired for the job because the individual who has ordered from your site will want to get in touch with you, not the vendor you’re placing the order to.
Fortunately, these days it’s quite easy to outsource communication with buyers thanks to platforms such as Upwork or Freelancer. You just have to hire a VA for the job, but then again, you wouldn’t need this if you were to use the affiliate marketing model.
Finally, the most significant disadvantage of dropshipping is that you have little to no control over the way the products are shipped, when this happens, and even the state they end up at your customers’ doorstep.
If there are any difficulties whatsoever with the shipping, you will be the one getting the bad reviews, not the product vendor. This can be a pressing issue, especially for a new dropshipping business.
Affiliate marketing
With affiliate marketing, you have less control when it comes to the product prices and the amount of money you will make through commissions. You’ll get a percentage of the sale, but there are several different affiliate marketing models available.
In essence, all you’ll have to do is to use an affiliate link (or banner or any other such tool) to promote a product that you’re referring to in an article.
Affiliate marketing pros
It doesn’t cost anything to become the affiliate of any network or program, and even Amazon Associates automatically approves websites (although they are checked by an individual later on, when they start earning commissions).
In addition to all of that, you don’t have to bother with any customer service as the network you’re using is in charge of keeping in touch with any buyers who might or might not have experienced a problem.
You don’t have any influence over the way the products are shipped, but in this case, your website users aren’t buying them through your site, so you aren’t going to be the one receiving bad reviews.
Affiliate marketing cons
You depend on the affiliate network in order to make your income, which might just as well be something that not all online entrepreneurs feel comfortable with. For instance, in April 2020, Amazon Associates slashed their commissions, and they hurt thousands of websites across the world. The affiliates had no way of combating this decision.
Depending on the network of your choice, you might or might not be paid on time. For example, payment through bank transfer in Amazon Associates is available when you’ve reached at least $100 in commissions.
Finally, you can always get kicked out of the affiliate program, which can happen either because you’ve broken some rules or simply because an employee of that company has decided that your website isn’t offering any useful info to prospective buyers.
This has happened in the past with a lot of affiliate marketers, and while they might choose a different network to continue working the same way, they might lose a significant portion of their income.
Another drawback of the affiliate marketing model is that you have zero control over the products or how much they cost. Plus, some programs are known for removing products from their sites either because they’ve gotten negative reviews or because they’re trying to save URLs, so they replace it with a different product.
For example, if you’ve recommended a microphone using an affiliate link, that product page could be replaced with another, of a T-shirt.
Conclusion
To pick the right model for your business, you need to judiciously analyze both the advantages and disadvantages. Since it’s not a good idea to put all your eggs in one basket, we would suggest having at least one dropshipping site and one affiliate marketing website, along with several other sources of income.
Finally, you should read more on the topic, so go on some marketing forums or check out the affiliate marketing vs dropshipping Reddit thread, when you have some time.
Want to learn more about affiliate marketing, dropshipping, and SEO? We offer consultancy online and offline and have plans for everyone. Get in touch today.
Craig Campbell
I am a Glasgow based SEO expert who has been doing SEO for 22 years.
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