Drop Shipping VS Affiliate Marketing: How To Figure Out What Is Best For You
I’ve been asked several times before what the major differences between drop shipping and affiliate marketing are. Having ran both types of businesses and being currently active in both I feel that I am more than qualified to answer this question.
Experience certainly helps as there is quite a bit of information that you should know about each type of business.
When we look at affiliate marketing vs drop shipping it’ll become clear that both have similar positives and negatives. These two businesses types also have some wide differences as well.
So we’ll look at drop shipping vs affiliate marketing to see which one is better for you.
What Is Drop Shipping?
Drop shipping is a method of building a business in which you order products in various quantities and sell them on various platforms. Many people opt to create their own brand this way.
There are numerous online platforms to sell on including, Amazon, eBay, Jet.com, Etsy and of course your very own website. Of course, ultimately everyone should own their own website and never fully depend on third party platforms but third party platforms can certainly help give you a start.
With drop shipping you ultimately own all of the products you buy.
What Is Affiliate Marketing?
Affiliate marketing is simply promoting someone else’s products or services and earning a commission anytime you generate sales.
You do not own the products so you’re limited to where and how you can promote. I.e. you cannot list products on Amazon, eBay and so on. However, there is no customer service in affiliate marketing because you do not own the products and the company you’re promoting handles these things.
If you’re interested in affiliate marketing I have entire systems dedicated to teaching this.
Now let me break down the pros of each of these business models.
Pros Of Drop Shipping
You own the products and brand. This means that you’re able to build a brand that people can only buy from you. Unlike affiliate marketing where people can sometimes get around going through your affiliate links. This is also why I think it’s a good idea to build a brand and create your own unique products over just ordering resalable products.
It’s a viable business model that can be built from home. Since you can build a business website easily and list your products on various other third party platforms (again: Amazon, eBay, Etsy etc…) it’s not super-expensive to get started in like building a retail shop in a physical location is.
Work your own hours (usually). You can set this business model up to work your own hours. This is critical if you’re already working another job and you need to work in your off time. The reason I say you can usually work in your own hours is because there are times where you might need to fulfil orders in times you’re not expecting it. I have taught people this business model that simply order products and work on packaging and shipping them while they sit on the couch, watching TV.
Easy to understand business model. Most people understand the process of buying and selling. It’s at the heart of every society. When you have a tangible good that someone wants/needs they’ll simple buy it from you to fulfill that want/need. Some people I’ve taught to run a dropship business have had better success at this model than affiliate marketing because they grasp the concepts easier.
Feels “more real” than certain other ways to make money. I’ve had numerous people tell me that drop shipping felt like more of a real business than affiliate marketing or even digital product creation. Again, as I mentioned above for many it’s an easier to understand business model that other methods because it’s more familiar.
Sometimes much faster to see results. Because you have the ability to list on 3rd party platforms and bank sales on someone else’s traffic it’s sometimes easier to see faster profits in drop shipping than affiliate marketing. Though I will throw out some caution here because most people fail to account for their expenses that it took to get those sales rolling in.
Can easily run advertisements. Because you are selling physical products you’re able to run Google Adwords or Bing Ad Campaigns for your website unless you’re in a prohibited market.
Pros Of Affiliate Marketing
Just like drop shipping affiliate marketing has numerous pros and benefits. Let’s take a closer look together and this will allow you to better compare affiliate marketing vs drop shipping.
Low entry cost. Affiliate marketing is a cheap business model to start with. For about $20 you can start up a website and start putting out content. This still holds true today. When I first started in affiliate marketing I started at a minimum cost and was able to generate quite a bit of money before I ever thought about buying anything extra for my business.
Easy learning curve. Though this business model is not as familiar as simple buying and selling, it’s easy to understand. The basic premise is build a website in a niche, write or pay someone to write good content for you, recommend products to your readers, build your audience and make commissioned sales.
Work at home. Just like drop shipping this business model allows you to work at home and work your own hours. Unlike drop shipping, you’ll have nothing to ship so there are not the unexpected shipping issues you might have there.
The ability to work at home and at my own pace was great for me when I first started in affiliate marketing. When I first started I was still working a fulltime job as a drugstore manager and usually worked well above 45 hours per week.
No customer service. This is a huge draw to many in affiliate marketing. Because you do not own the products there is no customer service to handle. The company you’re promoting for takes care of all the heavy lifting here.
Cons Of Drop Shipping
Medium level expenses to get started. Depending on what market you get into, the costs to start can be a lot higher than affiliate marketing. You’ll need to buy products and some companies won’t let you start with a small MOQ (minimum order quantity). Because of this, it’s not uncommon to have startup costs of more than $500-$1000.
It’s also usually more expensive at first because even if you accept a company’s MOQ you’re going to pay more money for their lowest tier than if you were to order more units. Many times a company will charge you a lot more if you order 100 units as opposed to 10,000 units. There is nothing wrong with this but it’s just something to be on the lookout for.
Sourcing products. Some people hate this part of drop shipping or growing their brand. You’re going to want to carefully source your products to find a great price so you’ll be able to make money in your industry. You don’t need to be the cheapest, but you need to be able to compete.
Research times can be high. I personally spend a lot of time in research. I want to find my potential competitors weaknesses and strengths and then try to produce something better. If I really feel like I can’t do something better, I usually skip the product. Having a better product than your competitor gives you an uncanny value proposition that is hard to compete against.
But because of the extensive research, it’s hard to just dive in. In fact, many products I have sourced have taken me months before releasing. I actually see this as a great thing, though many would see this as a con.
Actually takes work. This is probably not a true con but I am going to put this in here anyway because people have a tendency to believe that everything that involves making money online means that “If you build it”, sales just magically pour in. Far from it. Everything you do to build a business online or offline takes work and effort, including drop shipping.
Be ready to have some drive and determination for success. I can’t teach you drive, you’ve got to want it.
Shipping and customer interactivity. You will need to handle shipping and customer service issues in drop shipping. It’s not bad; it’s just what needs to be done. If a customer has a problem, you’ll need to handle that too. If you hate handling your own products, customer service and shipping then this is not the model for you.
Outreach. Now that you’re creating a brand you will need to find your audience, share your products with people and let the world know who you are. It’s time consuming and not really all that uncommon compared to what you’re going to need to do in affiliate marketing. However, I think sometimes it’s easy to forget that once you get everything built you need to “go knock on some doors” so to speak to generate some attention.
Cons Of Affiliate Marketing
Slow sales at first. This can drive some people nuts because in this day and age people expect immediate results. The problem is that nothing is immediate.
Affiliate marketing can be a little slower to see your first sales than drop shipping but usually the first few sales actually pay off your expenses unlike drop shipping.
Takes work to continue growth. Once you start seeing sales, you’re going to need to continue working at getting more. Sure you can switch nearly everything on autopilot but over time sales will dip or never increase if you fail to continue growing your audience.
Can have a lot of writing or content creation. Because affiliate marketing is more about creating content to connect and recommend things to your audience you’ll probably need to do some writing. If you hate writing, it can be outsourced easily but it will add to your expenses. I usually teach people to learn to write or create content on their own first before outsourcing it so they can teach their ghostwriter or content creator exactly what they want. If you’re not familiar I actually show you how to outsource writing that actually looks professional with this technique.
Finding your audience. Just like drop shipping you can’t just sit around once you have things built. You’re going to need to build an audience of people that want to hear from you and love the products that you recommend. Obviously, the larger you can grow your audience the more money you’re likely going to make.
This can be mundane and boring so you need to attack it with vigor. Think of every action you take as a building block to your business and it makes every action 100% worth it.
Again, this may not really be a con because I think to build any business this is a must!
Harder to run ads. Most of the ad networks are not affiliate friendly. It’s not a horrible thing but it does give an advantage if you own your own products. Since affiliate marketing doesn’t allow you to own the products it makes it harder, but not impossible to run ads.
Drop Shipping Vs Affiliate Marketing – A Final Look
Hopefully I have painted a realistic picture for you about running a drop shipping business or an affiliate marketing business.
Most people only give you one part of the equation but I wanted to make sure you realize that no matter what route you choose you’ll have work to do. However, do not let work scare you, because everything worthwhile takes work and practice.