More and more people are delving into affiliate marketing and dropshipping. They are attractive popular markets that are growing rapidly and where a lot of money can be made.
What are the major pros and cons of both? Which revenue model suits you best? Would you like answers to all these questions?
Then read on below and discover all the differences!
What exactly does affiliate marketing mean?
In affiliate marketing involves promoting products. Not your own products, but products from other companies. For this, you can place a link that refers the customer to the website of the company where that product is for sale. When a customer buys the product through your affiliate link, you get a commission.
As an affiliate marketer, you work as a co-seller of a company. You recommend products and by means of an affiliate link, you send the potential customer to the seller of the product. Actual commissions can vary considerably in amount.
A merchant is a person who manages the affiliate marketing of a company. He or she gives you the affiliate link. Every affiliate marketer receives their own unique link. This allows you to keep track of who has sold something and whether a commission is paid.
Affiliate links can in principle be placed anywhere, but they must, of course, be visible and in a place where potential customers can come. This can vary from social media accounts to email lists and from YouTube channels to blogs.
As an affiliate marketer you cannot be completely passive otherwise potential customers will never click on the link. Advertise your channels, create good content and make sure that the affiliate links are of products that suit you. Viewers or readers trust you and the products you use and recommend.
What exactly does dropshipping mean?
Dropshipping is a particular sales method. A customer places an order with a seller. That seller places this order with a wholesaler or supplier and provides the customer’s shipping information. That wholesaler then delivers the product directly to the customer.
The seller acts as a sort of intermediary. With this dropshipping technique, the seller has no products in stock and no direct contact with the products he or she sells.
In this form of retailing, the seller does not need a physical store with a warehouse with a stock of products and staff. This saves a lot of costs. In addition, the seller also makes a profit on the difference between the wholesale price and the price at which the product is sold in the webshop.
The sales and shipping costs are still deducted from this. As a seller, you are fully responsible for the sales and marketing of the products. Furthermore, you have little control over the quality of the product and the shipment.
What are the Similarities Between Dropshipping and Affiliate Marketing?
There are a number of similarities between dropshipping and affiliate marketing. Here are these agreements:
- Both methods involve promoting and selling products online.
- With both models you do not have to deal directly with the products sold.
- You don’t need large start-up capital or large investment for both business models.
- You don’t need a space or physical store with affiliate marketing and dropshipping.
- You don’t have to pack and send products yourself with both methods.
- As an affiliate marketer and dropshipping seller you can get started right away. You only need a laptop and internet to get started.
- With both models you have a lot of freedom. You can set your own working hours and you can work anywhere in the world.
- Both models allow you to build and grow a business.
What are the differences between dropshipping and affiliate marketing?
When you are going to make a choice between dropshipping and affiliate marketing, it is important to know what the major differences are. Here are these differences:
Starting as an affiliate marketer is a bit easier than starting a dropshipping seller. After all, all you need to do is sign up for affiliate programs. Starting as a seller of dropshipping products is also easily accessible, but you must first find the right suppliers and start a webshop.
2. Responsibility and Service
A big difference between dropshipping and affiliate marketing is in the responsibility and service you have to offer as a seller. With dropshipping, you have to process orders daily and forward them to the wholesaler or supplier.
In addition, with dropshipping, you are responsible for returns and customer service. You lose more time with this and you have a greater responsibility. When customers are not satisfied, you have to speak to them and handle it properly. As an affiliate marketer, you have nothing to do with this.
So you generally have more freedom and less responsibility. If you sell more products at dropshipping, then you immediately have work, this is not the case with affiliate marketing.
The income you get as a seller differs greatly between dropshipping and affiliate marketing. As a seller of dropshipping products, you make a profit from the difference between the price of the purchase price at the wholesaler and the price at which you sell it yourself. You can also lose any return costs and webshop costs.
As an affiliate marketer, you earn commissions through affiliate links. These commissions can vary greatly, but they are usually between 3% and 70% of the sale price. In addition, with dropshipping you get paid immediately by the customer, then you pay the supplier. As an affiliate marketer, it can take a while before you get paid commissions. This can be, for example, per month, but also, for example, only when you have reached a certain threshold amount.
With dropshipping, you as a seller have much more control over what exactly you sell. This way you can determine the price of the product yourself, while in affiliate marketing this is decided by the company. In addition, you can schedule promotional periods yourself, so you can respond to certain trends or holidays and target audiences on Facebook.
Affiliate Marketing Benefits
Here are the benefits of affiliate marketing:
- You can constantly make money with affiliate marketing, even in your sleep. As an affiliate you are not constantly actively selling. You post a link and that’s it. Of course you do have to put in the work and time in the marketing and content that you have to create around the affiliate link, but the money you earn from that link goes on constantly. As an affiliate marketer you have a lot of freedom because of this. Not tied to fixed working hours. You can work whenever and wherever you want.
- You can work for several companies at the same time. As an affiliate marketer you can sell on a large scale. As a seller of a physical store or a webshop, you only sell the products of that specific company. Affiliate marketing allows you to promote multiple products from various companies at the same time by posting multiple links and receiving multiple commissions.
- As an affiliate marketer you can easily start. You sign up to an affiliate program and you can start right away. You do not need years of experience in business or retail for this. All you need is a laptop and internet. It is useful if you already have a blog or Youtube channel and you can place the links directly on it. Affiliate marketing requires little. You don’t need huge startup capital or a physical space to store or sell products.
- With affiliate marketing there is room to grow. The more customers who use your affiliate links, the more commissions you get. If you are in an affiliate program, the popularity will be noticed and you will receive links that will earn you bigger commissions. In traditional revenue models, more sales means more work. This is not the case with affiliate marketing. If a lot of people buy products through your link, it doesn’t change the amount of work you have to put into it.
Learn Affiliate Marketing from someone who is already very successful with this like Jacko Meijaard. He has been doing this for over 10 years and earns more than 10,000 euros a month with this. Not right of course 😉 But absolutely possible!
Disadvantages of affiliate marketing
Here are the disadvantages of affiliate marketing:
- Since anyone can sign up for an affiliate program, that means you have a lot of competition. When a business model is so accessible, you have to deal with many people who have the same idea and become your competition.
- You can only earn a lot of commissions if your website or channel is well visited. This means that you only become successful when you have a lot of visitors or viewers. This allows affiliate links to do very well for content creators or influencers who already have a lot of followers or viewers. This means that as a beginner, you have to put a lot of time and effort into generating content and getting people to visit your website. This means that you have to advertise your own platforms a lot.
- The commission may be forfeited if customers cancel or return an order. Many people shop online, but this also means that a lot is canceled or returned. As a result, you immediately receive no commission, even if a customer has purchased a product via your link.
Here are the advantages of dropshipping:
- You can easily start a dropshipping business. You do not need years of experience in retail for this. Learn the basics of dropshipping and all you need is a laptop and internet. It also requires little of you. You don’t need a warehouse to store products. You also don’t need staff to help you. You don’t have to worry about storage or shipping. It also means that you don’t have to be in the store from 9am to 5pm every day and spend all day doing that. This means you can start your own dropshipping business today.
- Dropshipping makes it easy to grow your business. As you scale up, you don’t need to change the business model too much. You will have to put in more work in sales and marketing, but the day-to-day activities will remain about the same. Costs won’t skyrocket as you scale up. This makes it easy to grow your business quickly. In addition, this also means that you can continue to do everything yourself and not have to hire a lot more staff to get everything done. You can of course put together a second person or a small team at some point.
- Dropshipping doesn’t require a lot of startup capital. If you want to start a dropshipping company as a starting entrepreneur, you can get started with minimal resources. With just a laptop and an internet you can build an entire company. In addition, you do not have to make huge investments. Even as your business grows, your costs will remain fairly low when compared to traditional business expenses.
- A dropshipping company is flexible. You are your own boss and you can make your own rules. You can easily work from home with your laptop and determine your own working hours. In addition, dropshipping is also flexible, as it gives you a lot of leeway to make decisions that work best for you. You can easily offer new products whenever you want. Are you going on vacation? Then you can do everything automatically.
- Dropshipping is easy to manage. You don’t have many obligations with a dropshipping company. When you have found the right products and wholesale, you are only responsible for the online webshop and the marketing of the products.
Disadvantages of dropshipping
Here are the disadvantages of dropshipping:
- The customer’s right of return can be a risk factor. The seller has to pay the shipping costs if the customer wants to return the product. In addition, the product cannot always be returned without any problems. This can differ between wholesalers and manufacturers.
- The seller is responsible for marketing and selling the product, but has little control over product quality, warehousing, inventory management, or shipping.
- As a seller, you also immediately work as customer service. If customers have questions, comments or complaints about products, you must speak to them and offer solutions. This can sometimes be difficult if you are not responsible for the quality and shipping of the products.
- Dropshipping has also figured prominently in internet scams. For example, customers don’t get the product as it was advertised or they don’t even receive the product.
Conclusion affiliate marketing vs dropshipping
Now that you know everything about dropshipping and affiliate marketing, it’s time to decide which revenue model suits you best. You know all about the differences between the two methods and as you have read, there are various advantages and disadvantages for both methods.
It is wise to compare these pros and cons and see what outweighs each other. Which model appeals to you the most? Remember that you cannot build a successful business in a few days. It has to be a model that you want to put years of energy into.
What are things that you consider important? Where would you like to invest your time? For example, one may prefer affiliate marketing because it generally gives more freedom. The other chooses dropshipping because they prefer to be closer to the customer.
Everyone has different priorities and preferences, so make your choice based on that. Choose the model that you fully support and that you feel like working on every day. This also increases the chance that it will grow quickly and become successful. And most importantly, keep building consistently every day and never, ever give up! Despite the fact that there are sometimes lesser days or weeks in between, but that’s just part of it. keep going!