Affiliate Marketing Vs. Dropshipping Comparison: Which are the differences, which is better and why?
And how can you combine affiliate marketing and dropshipping in order to maximize profits?
These are some of the most asked questions that people who want to start, or are already struggling while trying to generate income online, ask.
And these are completely reasonable questions because people are different and what suits some people might not suit others.
And that’s why I wrote this comparison between dropshipping and affiliate marketing, in order to help you avoid the mistake that I personally made due to the confusion I had when I first started looking for a way to make money online.
I will show you the major points of similarity and difference between the two methods and when is one better than the other.
And Either way, I will recommend to you the best place to learn any of the two methods from the best training programs in both industries.
Bonus: I will show you how to maximize your profits by combining affiliate marketing with dropshipping together the RIGHT WAY. Check the dedicated section just before the conclusion section at the end of this article.
But first, let’s make sure that everyone has the answer to this question:
What Is The Difference between Dropshipping and Affiliate Marketing?
Dropshipping is an e-commerce model where the dropshippers (you) sell items that they still don’t own, and when they get paid by a customer, they pay the original merchant his price and ask them to ship the items to the end customer directly. But in front of the customer, the dropshipper is the seller and is the responsible for the customer support.
While affiliate marketing is a marketing model where the affiliates promote other’s products to people who need them and get paid a commission on every sale that comes through them. But they (affiliates) are not responsible for shipping, customer support, returns, …etc. as the actual product owner is the seller in front of the customer, and not the affiliate.
Most important is to understand that affiliate marketing is a legitimate marketing model, and dropshipping is a legitimate model as well, when done ethically.
And now, since you know the difference between the two, it is time to answer the main question:
What Is Better: Dropshipping or Affiliate Marketing?
Neither of the two is better. Every model has its own advantages over the other, and each one suits a different kind of people based on their character, skills, time and the initial investment they can put in.
Affiliate Marketing allows you to start on a much lower budget than dropshipping, but it might take more time to bring results.
And dropshipping can be faster in bringing results and scaling, but requires more time to put on daily basis, which makes it less passive than affiliate marketing, and drop shipping brings more stress with it.
How does that answer help you?
If the answer above doesn’t help you decide which direction to go, then the following breakdown of every main element should help you decide in which direction to go.
Affiliate Marketing vs. Dropshipping: Detailed Comparison
There are many different factors that affect your decision in choosing what method to follow, here are the main ones:
1 – How Do You Drive Traffic to Your Affiliate or Dropshipping Business?
While you can succeed with both methods, affiliate marketing and dropshipping, using almost any source of traffic, whether paid or organic, but sometimes, some method is better when done using a certain kind of traffic.
For example, when you are doing affiliate marketing for physical products, your margins are relatively slim and the paid ads might not bring you a good profit, if any, especially if you are promoting low ticket products.
While if you rely on organic traffic, especially SEO by writing product reviews as an affiliate and other types of educational articles, then you can get super targeted traffic for each article that you write for a long period of time.
You can still make money affiliate marketing using paid traffic methods, but you need to target high ticket products with high commissions, whether physical or digital products.
But in general, organic traffic, especially through search engine optimization, is better for affiliate marketing.
However, with dropshipping, you can rely on SEO to drive traffic to your online store, and SEO has a high ROI compared to paid advertising.
But since you have higher margins with dropshipping, then you can use the paid ads in order to drive more targeted traffic and make more profit in total even at a lower ROI.
So, in general, free traffic (mainly seo) is better for affiliate marketing and paid traffic is better for dropshipping.
Therefore, it depends on your experience with the traffic methods, your budget, your patience and your ability to manage stress.
The free traffic takes longer time to bring results, while paid traffic creates more stress.
2 – Initial Investment
As I explained in the previously, since the best way to do affiliate marketing is through the free, organic traffic, then this model requires less money to start with.
Yes, you need to pay for the training and for the web hosting and tools, but with dropshipping, you need to pay for these as well, in addition to paying for the paid traffic.
In addition to that, you can start affiliate marketing almost for FREE thanks to the top platform that teaches affiliate marketing, Wealthy Affiliate, which offers a free starter membership that you can join today.
So, affiliate marketing is a better choice than dropshipping if you are starting on a low budget.
3 – Running Cost
With affiliate marketing through the free traffic, you can just pay for the domain name and web hosting and have your business running for years after you establish it well.
While with dropshipping through paid ads, you need to continuously pay for ads and for fulfilling the orders.
However, it becomes easier after you start making profit as you will pay from the money you receive. It becomes more of a cash flow management thing.
4 – Time Before You Start Making Money
Since you are reliant on SEO mainly with affiliate marketing, it takes longer time to start seeing revenue.
While with dropshipping through the paid ads, such as Facebook ads, you could start seeing results faster when you learn it the right way through a proper training like my top rated dropshipping with Shopify course.
5 – Time To Put Continuously
With affiliate marketing through seo, every piece of content you write properly is going to bring you targeted traffic and potential sales and commissions for a long time after you write it, and the more content you write, the more consistent traffic you get over time.
And what is even nicer, if you stop writing for some reason, your blog will keep getting traffic for probably years and it will keep making you money.
While with the paid ads for dropshipping, the moment you stop the ads your sales will drop significantly.
In addition to that, you need to do many more tasks on daily basis when managing a dropshipping business, as you will see in the next point, which makes it require more time to put on regular basis compared to affiliate marketing.
6 – Which One Is More Passive
Affiliate marketing is the most passive online business model compared to other methods, including dropshipping. The main reason for that is that your main job is to promote the products to people, but after they purchase, your role ends.
While with dropshipping, in addition to customizing your online store and editing the product pages, you need to put the work even after the customer places the order by doing the following:
- Fulfilling the orders once they are placed (At least within 24-48 hours)
- Tracking the shipping & delivery until the ordered items arrive to the buyer’s address.
- Deal with all the customer support stuff including:
- Sending the tracking information to the customer
- Answering specific questions about the products
- Dealing with complaints, returns and refunds
- Managing the paid ads continuously
- Testing more products on regular basis to find winning ones
As you can see, affiliate marketing requires fewer activities to be done from your side, which makes it more passive than dropshipping as you can leave your business for a couple of days or weeks without a significant effect on revenue.
While you can’t leave your dropshipping business for more than few days in row as you need to fulfill the orders as soon as they come in so that your customers receive their items as soon as possible.
And although you can hire others to do some stuff for you, but still, you need to manage your employees and mostly, you need to tackle the paid ads thing by yourself.
7 – Best for Beginners: Drop Shipping or Affiliate Marketing?
Affiliate marketing is better for beginners as it requires them to do fewer number of activities and allows them to start at a lower budget and requires a lower running cost to maintain.
Even if they have money to invest in paid traffic, there are still many skills that need to be learned before they become profitable such as:
- Researching the market and the products
- Testing the products and find the winning ones
- Dealing the different kinds of paid traffic sources and campaigns
- Collecting data and analyzing the results
- Scaling the profitable campaigns
- Dealing with suppliers
- Customer support, returns and refund requests
- And many other skills
And these together might cause a lot of confusion and stress on the newbie dropshippers, which will cause them lose lots of money quickly if they don’t learn well from someone with experience like what Frank Hatchett teaches in his eCom Elites training course.
Therefore, affiliate marketing is more suitable for beginners in my opinion.
8 – More Money
While affiliate marketing has a higher ROI when done with SEO, dropshipping can still make you more net profit if spend more on ads provided that you do it properly, and you need to optimize your sales funnels well.
And with paid ads, you can scale faster than it is with SEO.
This makes Dropshipping look like a more lucrative model than affiliate marketing when done effectively, at least on the short run.
However, remember that the moment you stop spending on ads for any reason, your dropshipping store sales will drop significantly, while with affiliate marketing through blogging and SEO, you keep reaping the rewards of your established business without spending on ads, and you can even stop writing content for a while and keep making money.
To conclude on this point, Dropshipping can make you more money now through spending more on ads, but affiliate marketing can make you more money on the long run without paying for ads.
9 – Control Over Price & Margins
With affiliate marketing, you get only a percentage of the margins, while with dropshipping, you get the whole margin for yourself.
And with a dropshipping business, you can price the products you sell at as you like, while with affiliate marketing, the product owner decides on the price, which means that dropshipping can make you more money per sale for the same item that you promote through an affiliate marketing business.
However, with affiliate marketing, you can promote digital products such as ebooks, courses and software memberships, which pay out high commissions, and sometimes, recurring ones.
In addition, remember that with dropshipping, you still need to pay for the ads, transactions fees and for some other management costs if you were to hire some people to help you.
In general, it depends on what you promote or sell.
With physical products, dropshipping could be more profitable, but with digital products and software programs, affiliate marketing could also be more profitable.
10 – Selecting Products
Both methods allow you to choose between millions of products online.
For example, with affiliate marketing, you can promote almost anything that is listed on the main online marketplaces such as: Amazon, eBay, AliExpress, Walmart.
And the same applies to dropshipping, where you can sell almost any physical product on AliExpress for example.
However, the main advantage for affiliate marketing is that you can promote digital products or software programs and get commissions on the sales you bring.
While with dropshipping, you can’t dropship digital products.
You can resell some PLR (Private Label Rights) products as your own and make money with them if you have the re-selling rights, but there are not many PLR products to choose from and in general, these are usually of low quality.
Therefore, both methods are good for physical products, but affiliate marketing is much better with physical products.
11 – Finding Suppliers
With both methods, you need to find good suppliers that sell what you want to promote as an affiliate or sell as a drop shipper as selling or promoting low quality products from unreliable suppliers will negatively affect your brand reputation.
However, it becomes more crucial with dropshipping to find the most reliable suppliers as in front of the customers, you are the seller and you will be responsible for all the customer support, complaints, returns and refund requests.
12 – The Risk Of Not Getting Paid
With dropshipping, if your customer wasn’t satisfied with the received item, then you need to refund them and this means that you lost the money spent on the ad that brought that sale, in addition to the time you lost doing the order fulfillment, tracking, responding to the customer and the refunding the money.
But if the customer was satisfied and didn’t request a refund, then you get your money in full.
And doing affiliate marketing, if a customer returns an item that you promoted as an affiliate and requests a refund, then you don’t get paid the commission you got in the first place. And that’s fair.
However, there’s a small issue with affiliate marketing that most of the affiliate programs, in their T&C Agreements, they mention that they have the full right to disqualify you for commissions for any reason, even if you brought them customers who bought and didn’t request refunds.
This means that you might get hundreds or even, thousands of dollars in a month promoting one product, and finally, the product seller decides that you don’t qualify for the commission and you can’t do anything about it.
But this is not a big issue as it rarely happens. And anyway, you can protect yourself by promoting many different products through your business and not build your whole business around one product.
In addition, if any product owner decides to stop paying you and kick you out of their affiliate program, you can find another alternative product to promote and make money with it as an affiliate.
13 – Long Term
With affiliate marketing through blogging as taught at Wealthy Affiliate training platform, you can make money as an affiliate for a long time (even years) from each article or product review that you wrote.
While with dropshipping with paid ads, you stop making most of the money the moment you turn off the ads, unless you build a very strong relationship with your customers and you build a brand through selling quality products and providing the best customer support.
However, with affiliate marketing, when you send people to someone else’s website and they buy from them, they join the merchant’s email list, which means that now the product owner will own that customer for a long period of time and keep promote to them directly.
You can also collect emails on your affiliate website, but the list you build might not be as effective as the one that the product owner has.
While with dropshipping, you own the list of the customers who bought from your store, and if they had a good experience with your store, then you can promote to them again and again and again through email.
So, the above 13 areas provide you with the main differences between both business models, affiliate marketing and dropshipping, which will help you choose between the two what is better for you.
Should You Start with an Affiliate Marketing or a Dropshipping Business?
Each one of the two methods has its own advantages over the other, and each method fits a certain category of people.
I would say that for beginners with not enough experience in online marketing in general, affiliate marketing might be a better option as it requires a lower investment, and you can virtually start it for free at Wealthy Affiliate, it imposes less stress and requires you to do fewer number of tasks.
While for advanced people, you can decide based on the time, money and effort you can put into managing your business.
Affiliate marketing can build a more sustainable business on the long run, and it is more passive than dropshipping as it requires less amount of time on consistent basis, but it requires more patience.
However, dropshipping requires more money at the beginning, and it requires more time and effort on continuous basis, but it can bring results faster and can be scaled to a higher level faster than affiliate marketing.
But remember, dropshipping imposes more stress dealing with the paid ads and providing customer support.
Which one to choose is up to you. Check the conclusion section at the end on resources to learn both methods.
Combining Dropshipping and Affiliate Marketing for More PROFITS?
You can combine the two models, dropshipping and affiliate marketing, right from the beginning, or even if you already have an established business in one of the two methods in order to make the most out of your efforts.
Here’s how you combine dropshipping and affiliate marketing together:
- If you have an online dropshipping store, then you can start creating blog posts and recommend products as an affiliate through those posts. Also, you can promote affiliate products through email marketing to people who already purchased from your store and joined your email list.
- If you have an affiliate marketing website, then you can see what products get the more sales through your website, find good suppliers for those products at low prices, and start selling them as a dropshipper and enjoy a higher margin than the commission you get as an affiliate.
You can do this by creating a dropshipping store on the same website use on for your affiliate marketing business through using a dedicated plugin like woocommerce for example.
Or you can create a complete store on a different domain name using Shopify, list the product you want to sell there, and start sending people from the affiliate website to the dropshipping store instead of selling them to the affiliate product.
Conclusion – Who Is The Winner?
Both are great methods of making money online.
Affiliate marketing through blogging and free traffic is better in terms of being more passive on the short and long run, and it causes less stress and requires a lower investment, but you need to be more patient before you start getting results.
You can learn affiliate marketing through the best training in the industry at Wealthy Affiliate (Free membership is available to try it!)
While dropshipping can start bringing the results and can be scaled faster than affiliate marketing, but it requires lots of work on continuous basis and it requires a higher investment in order to pay for ads until you become profitable, and it creates more stress dealing with suppliers and customers.
You can get the best training on dropshipping with Shopify through my Frank Hatchett’s eCom Elites review. (Low cost training course but the best in the industry)
Important Note: My advice, if you go through the dropshipping model, is to learn it from someone professional like the one mentioned in the previous paragraph and NOT from YouTube nor from Udemy as I lost lots of money listening to those people until I discovered that many of them they know nothing about what they teach.
I hope that you enjoyed my comparison between affiliate marketing and dropshipping and I hope that it would help you decide which method to choose, and remember, you can always combine both together as I explained in a previous section above.
If you still have any doubts or questions, please, let me know in the comments section below, and I will be answering you asap 🙂
And if you found it useful or you know someone who could benefit from this article, please, share it with them so they could benefit as well.