Dropshipping Vs Affiliate Marketing : Which One Is Profitable?
Posted: Jan 05, 2021
Dropshipping Vs Affiliate Marketing. These two have been the finest yet the most confusing eCommerce business model for all the new beginners. Both require you to make a sale, and both let you earn big money.
But in order to generate a sale, you are required to understand what are the differences as well as similarities, between Dropshipping Vs Affiliate Marketing.
In the past, we have written an ultimate guide on Learn How to Start a Dropshipping Business from Scratch, and have been actively posting on Affiliate Marketing
Now with the following article, we are all set to draw a clear difference between Dropshipping Vs Affiliate Marketing to find out which one is more profitable.What is Dropshipping Business?
A Dropshipping Business is an online selling business model where the seller (you) don’t have to pre-purchase a product and keep it in stock. Rather they receive an order, pass it to the supplier, who then directly delivers it to the customer.
Here, the seller (you) can set your price of the product and sell it through different marketing techniques.What is Affiliate Marketing?
Affiliate Marketing is a marketing model of eCommerce where they encourage online marketers (you) to promote their product in return for incentive-based on sales, clicks, impressions, etc. Here, the prices and the commission rate are set by the seller.
Every affiliate program has a different set of rules and methods of running the program and the online marketer (you) must follow them in order to get the incentive.Similarities Between Dropshipping & Affiliate Marketing
Now just before we start the differentiation between Dropshipping Vs Affiliate Marketing, let us have a look at the similarities that make these two eCommerce business models so identical.
- Both are great ways to start an online business without a need to worry about inventory and shipping.
- Both affiliate and dropshipping business models are low-risk models.
- They both are easy to get started with.
- Both businesses have low startup costs.
- Need intermediate level marketing skills to grow your business.
- Dropshipping business models allow you to get a pay-off for every sale that you make. Unlike affiliates where you would need to reach a threshold before getting any return.
- You set-up your margins, which allows you to price your product at your desired selling price. The control of sales is completely in your hand. Whereas in affiliate you earn only a fixed percentage of the products you sell.
- With Dropshipping you create your own brand and market the product as your own. On the other hand with affiliate marketing, you promote someone else's brand.
- In the dropshipping business, you can sell your current business to get started with another niche, whereas some affiliates don’t allow you to sell off your current affiliate marketing.
- The main and the only common con of the dropshipping business that you may face is the customer support that you will have to provide for your customers. As a brand, you would need to make sure of customer satisfaction and customer experience. But you can easily outsource the work at an affordable price.
- You do not need to pay any fees to become an affiliate associate. You can start affiliate marketing with just a minimum cost hosting and domain. If you market your site, surely you would be required to pay for the ads but affiliates, in general, won’t cost you much.
- If you are already running a business or are looking to start a side hustle, an affiliate can be your go-to. It requires no day-to-day efforts, no worry of shipping issues, or anything further than sending a targeted audience to make a sale.
- As said you need not have to worry about various customer support either. All the issues related to the product, shipping, and customer experience would be handled by the eCommerce itself.
- You have no control over the product pricing, and earn only when you make a sale. If someone decides to check the product on your site and skip through your link directly to the site, you won’t earn any commission.
- Every affiliate program has a threshold or a checkpoint where you need to reach first in order to get paid for your efforts. And due to some reason, if you aren't able to reach the point, you will not be able to receive your payment.
With the above comparison, we can easily draw out that both are among the best eCommerce business models, but Dropshipping business is More Profitable than Affiliate Marketing.
You will need to put in extra effort and time in order to grow your dropshipping business than affiliate. But at the sametime, the returns are directly based on your efforts. The more effort you put, the more return you get.
Moreover, here’s why Dropshipping is much more profitable than Affiliate.
- You can set the price of your product on your own, which is surely more than a commission.
- Through dropshipping, you create your own brand rather than promoting yourselves.
- You can have an affiliate program for your dropshipping business to gain traffic and sales.
- The products available for dropshipping are at a very low cost, which allows you to provide products at an affordable price (which results in more sales) still securing a good profit margin.
Chetan Menaria is Partnership & Collaboration Manager at PixelPhant, an eCommerce & fashion photo editing service provider. PixelPhant edit product images to make them look professional & eCommerce ready.