Affiliate Marketing vs Dropshipping: Which Is Better?

If you clicked on this article right now, then you’re probably researching affiliate marketing and dropshipping. There are so many business models out there where you can try and earn some money online, there is eBay, Amazon, there is eCommerce, dropshipping, CPA marketing, affiliate marketing, and the list goes on and on.

However, in this post, I am going to focus on affiliate marketing and dropshipping. I will explain each business model, and give you a few tips as to which one is better for beginners so that you can decide on your own.

So, if you’re ready, let’s dive into it: Starting with affiliate marketing.

Disclaimer: This article may contain affiliate links where I may receive a small commission at no extra cost to you if you decide to purchase a paid plan. For more information read my Disclosure.

What is Affiliate Marketing and How Does It Make You Money?

In this business model, your goal is to refer customers/clients to another business. If they purchase their products/services, you make a commission on the sale. The way that these businesses track your sales is with something called a hop link (affiliate link). When a customer clicks on this hop-link and then purchases an item, you get credited for the sale with a commission.

You might also like: How To Make a Full Time Income With Affiliate Marketing

Let’s Dive Deeper Into Affiliate Marketing:

Well, I have kinda love affiliate marketing because I think it is the most simple and linear business model out there. Okay, let me explain. As stated earlier, all affiliate marketing is, is that you’re taking somebody’s product that they’ve already created, and most of the time it is a digital product, however, the beauty of affiliate marketing is that, you can advertise both digital and physical products.

I recommend you deal with digital products and softwares when it comes to affiliate marketing, this is because they are very easy to create and relatively inexpensive. Because of that, you can charge quite a lot of money potentially for that product. And the profit margin can be very very high.

The only caveat with affiliate marketing is that it is quite difficult to find good quality affiliate marketing products. You can find them, but you have to vet them- you have to buy them, go through them and make sure the products are off good quality. I mean you just have to do a couple of research, buy some products, invest some time and money and then once you do, you can go ahead and sell them. It’s smart to have some basic knowledge about the products you’re promoting.

What Skills Do You Need To Become an Affiliate Marketer?

The beauty of affiliate marketing is, you only have to learn how to become a great marketer -that’s all. You have to learn how to become a great digital marketer and attract the right audience to your product. For example, if you’re selling weight-loss products, you have to attract people that are interested in losing weight. If you go sell a weight loss product to people that want to learn how to learn money, then you can see that there will be a huge disconnect between you, the product and the audience.

Online marketing is all about congruency. You need to think about who you are attracting, and the products you are selling. You need to make sure that you’re selling your product to the right audience. So, if you can do this well, and attract people, and recommend the right products, then people will buy from you. When people buy the products you’re promoting, you’d earn a commission. In places like Clickbank which is one of the best affiliate platforms, you could earn commissions from 50% to 80%.

How Do You Get Started With Affiliate Marketing:

So, you can potentially make a lot of money with affiliate marketing, all you do is:

• Find a platform such as ClickBank, Amazon Affiliate, Rakuten Marketing, ShareASale, and many others. Then you choose a good product you could promote. I personally like Clickfunnels affiliate program since they pay out recurring comissions.

• Next, you create a sales funnel using platforms such as Clickfunnels, which gives your potential costumers a lot of value. You do this by building a magnetic persona. This means that you attract people towards you and give them lots of value, so when you recommend your affiliate product they’re more likely to make a purchase.

• Last, you create an email subscription service where your clients can submit their emails to get content from you. And with the emails you get, you can build an email list which will make it easy for you to advertise new products to your potential customers. I use GetResponse in my business, they make it super easy to setup an email list and autoresponder. It’s also very simple to integrate GetResponse with Clickfunnels.

What Are the Pros And Cons Of Affiliate Marketing:

Pros:

1. You Can Scale Your Business

That is the beauty of affiliate marketing, I mean you can scale the business. So, once you understand how to build your sales funnel, once you understand what works, and how to turn $1 into $3 or $5 in $15, then all you have to do is scale your lead flow. You have to scale the number of people that are seeing your stuff and then you put them into your sales funnel, and the more people that you get into your sales funnel, then the more money you make.

2. It Can Be A One Man Show

I mean you do not need any employees when doing affiliate marketing. You can do it all by yourself, there is no admin work because once you’ve created your sales funnel, all you need to do is focus on your lead generation and everything pretty much takes care of itself.

3. There Is No Cap

With affiliate marketing, you are your own boss. No one tells you how much you can earn, and you do not need to climb up a corporate ladder to increase your salary. The sky is the limit, you can earn as much or as little as you want. It’s really up to you.

4.Low Cost to Start

With affiliate marketing, you do not need a lot of cash to start. You do not need to buy inventory, there is not a lot of start-up cost as compared to other businesses. However, you have to know that you’d pay for some software, traffic and also product testing. So, it is not that free but there are free ways to start, however, eventually, you’d have to invest.

Cons:

1. It Requires Work

Just like any other business, affiliate marketing requires your time and focus. It is just like running any other business and as we are on an entrepreneurial journey, there are things we are going to face. Compared to dropshipping, you’ll require a lot of time to get started with affiliate marketing.

2. There Are Tons Of Info Out There

I mean there are numerous courses out there from people who claim to be “affiliate gurus” and a lot of people get information overload. With all the videos, training, courses and webinars, you can get paralyzed and not even take any action at all. If you want to me to recommend you an affiliate marketing course that has worked for me, then it would be the Partner With Anthony program. I’ve taken this course myself and like many others, I’ve made good money from it. It’s one of those courses where you earn while you learn. Click the link above if you’re interested!

Related content: 7 Major Benefits Of Affiliate Marketing

What is Dropshipping and How Does It Make You Money?

Dropshipping is when you set up an online store using sites like Wix or Shopify, then you go to sites like Aliexpress and find low-cost items to list in your online store with a mark-up price. You then run Facebook ads to the products in your store promoting them. When a customer buys an item in your store, you then go to Aliexpress and order the item for them. You keep the difference in profit.

So, with dropshipping, the way it works is that you have to find products that you want to sell, and you have to go after those products in a lead generation way and get them to show up on search results, either on Bing, Google or Yahoo. Or you could use paid advertising.

What Skills Do I Need To Become a Dropshipper:

With dropshipping, you need to have the skill of targeting winning products that people will want to buy. You also have to do tons of research on these products and also make sure the retailer sends these products to your customers. You also have to have the skill of copywriting to persuade people to buy your products. I mean you cannot copy and paste a product description from AliExpress this is because most of the time they aren’t even in English.

You also need to know how to create videos. You want to create a high converting videos for the product you want to sell. Your videos has to capture your audience’s attention in the first 5 seconds. However, once you’ve created your product description you can convert those to videos.

The final skill you need is to know how to use paid advertising to promote your product. Lots, of people, lose thousands of dollars through advertisement, so, if you do not master this skill, you’ll probably lose some money too. So, knowing how to advertise to a targeted audience is crucial. You could learn this skill inside FunnelFlix.

How Do I Start With Dropshipping?

• Know what you want to sell and do research on the product you want to sell.

• Set up a store on Shopify or Wix and install all the plugins you will need to make the store look trustworthy.

• Go to AliExpress and set up an account. Find a reliable retailer with 4 star or more reviews who sells the products you want to dropship

• Start a targeted Facebook, Instagram Ad campaign to generate traffic to your site, and start making money.

What Are the Pros And Cons Of Dropshipping:

Pros:

1. It is Easy To Get Started Fast

With dropshipping, you do not have to get a business loan to get started, it’s relatively cheap. You can get started in a day if you have the right resources. However fast you want to move, you can get started creating your business and finding products to sell.

2. No Inventory Needed Upfront

The way dropshipping works, is that when someone places an order on your site, you purchase the product on AliExpress and have it sent to them. You do not need to have any inventory in your garage or house.

3. You Can Start Testing Products

I mean you do not have to purchase thousand of products at a time, and then realize no one likes them. You can start testing out the product with no risk for you of having all that cost and inventory, and seeing what people are gravitating towards the most by running ads and setting them up on your site.

Cons:

1. The Profit Margins Are Small

Dropshipping is eCommerce, and eCommerce works around commodities. So, let’s say you sell iPhones in your store, the price of iPhones doesn’t fluctuate that much. So, whether I buy this on an Apple Store or Amazon, the price of an iPhone X is roughly the same. It can only fluctuate a few dollars. And that few dollars are the profit margins you can play online as a dropshipper. I mean you can’t increase the price of your iPhone by $100 or $50 otherwise people aren’t gonna buy from you. So, with dropshipping, per product, your profit margins are very small.

So, dropshipping isn’t a profit game, it is a volume game. This means you have to sell a lot of products to make a lot of profit.

2. You Need To Get Infront Of People With Your Ads

So, with dropshipping, you must spend a lot of money on paid advertisements, and usually, it is either on the search engine or through social media influencers. But if you have the budget for advertising, this shouldn’t be a big deal.

3. A lot Of Admin Work

Think about it, after someone purchases a product from your store, you have to go and buy that or tell your supplier to send the product to the person’s address. So, imagine you get hundreds of sales daily, you’ll have to fulfill all these orders. So, there is money flows you have to manage because you’re getting money from people that are buying it from your store. However, you also have to purchase that on the backend and your suppliers will do all the dropshipping. You also need to handle customer support and refunds.

Which Do I Prefer? Affiliate Marketing or Dropshipping

Well, I think dropshipping is a bit complex. I mean with dropshipping you have to have some money upfront, and also need to be very good at paid advertising, and you need a paid advertising budget, else you can’t even do it at all.

Now compared to affiliate marketing, I think affiliate marketing is the most straight-forward type of business. I mean there are a few areas of affiliate marketing that are complicated, You cannot stay behind your keyboard and send emails all day and expect to become a great affiliate marketer. No, you can’t do that.

One big thing about affiliate marketing is that you need to create some value for your audience. I mean a lot of the affiliate marketers out there that are failing are doing push marketing, instead of pull marketing. With pull marketing, you create content that will benefit the audience and then they will want to work with you, instead of just shoving the product in their face.

Also, with dropshipping, your profit margins are medium to low. This is because you’re going to need to buy the product, and also cover the shipping cost if necessary. However, with affiliate marketing, you do not need to pay for any product. All you have to do is to recommend the product.

Furthermore, with affiliate marketing, you can promote the product using free traffic such as Google search traffic, YouTube, your blog, Quora, and social media. Whereas with dropshipping the main source of traffic is paid advertisement. And yes, you can use paid ads for affiliate marketing, but free traffic also converts better.

Besides, affiliate marketing is more passive, because what you’re doing essentially is creating different blogs and you try to rank them on Google, you do Quora, YouTube videos, and the more traffic you generate, the more money you make. You can make dropshipping passive, however, once you establish your online store and it is making at least $20,000 to $50,000, then you can start hiring VAs to fulfill your orders, and you’ll also need people to run your Facebook Ads.

Final Words

If you’re starting out with less money, then I highly recommend you go for affiliate marketing. But if you have the money you can try dropshipping too. But generally, I think both businesses are great, however, affiliate marketing is less complicated and more straightforward.

But before I end this article, whether you’re starting with dropshipping or affiliate marketing, I highly recommend you find a good course. There are tons of courses out there with no value, however, with sites like Udemy, you can find great courses which wouldn’t cost much. You can also try YouTube videos however, some videos do not teach you what you need to learn to become a super affiliate or great dropshipper.

I know Anthony Morrison has a good course on affiliate marketing, I have take it myself. He teaches people (including me) how to setup an online affiliate business from scratch. It’s basically a step-by-step tutorial to get started with affiliate marketing.

When it comes to dropshipping I know Kevin David has a good course on the topic. Feel free to check it out through the link above.