Dropshipping is not easier than affiliate marketing because it involves complex processes such as product selection, supplier negotiation, and customer relationship management. As a dropshipper, you must develop an e-commerce platform, using services like Shopify or WooCommerce, to showcase and sell your curated product range. In affiliate marketing, you focus solely on product promotion through channels like social media, blogs, and email marketing, using tools such as ClickBank or Amazon Associates for product selection.
You also face intense competition from thousands of other dropshippers. Citing data from Grand View Research, Dropshipping Hustle reported that the number of e-commerce businesses fulfilling orders through dropshipping is between 3.2 and 6.4 million. The market’s 2022 value is also at $225 million, with a growth rate of 23.4% from 2023 to 2030. Google Trends says that in January 2023, searches for the term dropshipping saw a 156% increase from 2022. Many use popular platforms like AliExpress and Oberlo for product sourcing.
In this article, we'll discuss the similarities and difference between affiliate marketing and dropshipping. We'll cover which between the two requires the least business know-how and the hardest part about each business model. At the end of the article, you'll learn about the easier business model with the best payouts in 2024.
What Is Dropshipping?
Dropshipping is a retail business model and type of e-commerce that allows a person to take customer orders without owning any inventory. Instead, dropshippers rely on a third-party supplier for order fulfillment. Research suggests that the global dropshipping market will reach $243.42 billion in 2023. Dropshipping doesn't require a ton of investment capital. You only need to have enough money to test a few products. Then, when you find a winner, you can scale using paid ads or organic content like viral videos on TikTok.
Unlike affiliate marketers, dropshippers could find it easier to build brand loyalty because dropshippers have more control over their business. In affiliate marketing, the business is owned by the brand or merchant who makes and sells the services or products promoted by affiliates. But dropshippers would have to worry about order fulfillment, unlike affiliate marketers.
What Is Affiliate Marketing?
Affiliate marketing is a digital marketing strategy that compensates people to partner with a business and refer a product or service they sell online. An affiliate is paid a commission for every action a person takes on their affiliate link, such as a click, download, or sign-up.
Affiliates don't own inventory or deal with customer service issues, making it easier than drop shipping. Affiliate marketing also requires less investment and effort compared to drop shipping. An affiliate's only job is to advertise offers and get the sale. But in 2024, the model has lower profit margins than other online business models if you don't know how to get attention from the right people. The key is to secure a loyal audience. Then, build trust with your ideal buyer so they'll act on your offers.
What Are the Similarities Between Affiliate Marketing & Dropshipping?
The similarities between affiliate marketing and dropshipping are that both are online business models with low-cost and low-barrier entry. They're marketing-based models that don't require you to own physical products but are incredibly competitive. Both require attention to be profitable. So, you need to know how to drive a ton of eyeballs to your product or offer. Other similarities between affiliate marketing business and dropshipping include the following:
Similarities
Dropshipping
Affiliate Marketing
Involve Selling Products
Dropshipping is a kind of retail business where a person sells products on their website but doesn't own or house inventory. Instead, a dropshipper is like a mediator between a potential customer and a supplier. They send customer orders to a wholesaler who takes care of all of the order fulfillment. Research and markets report that in 2024, dropshipping made up 6.4% of the ecommerce market.
Affiliate marketing is an online advertising strategy that promotes another business's products or services. It's like word-of-mouth marketing. An affiliate makes money for every action taken on their affiliate link (a purchase, signup, new lead, etc.). They don't need to own inventory or worry about customer service. Instead, their only job is to drive traffic to the affiliate product and offers they advertise online.
Need Relevant Skills
Dropshippers should be skilled in copywriting and ad creatives. They need excellent communication and problem-solving skills. Understand cognitive principles like buyer preferences and internal logic that motivate people to make a purchase. A dropshipper requires basic knowledge of web design, accounting/inventory management, and digital marketing. The idea is to know as much as you can about the business model. Study market trends with tools like Google Trends, Facebook Audience Insights, and social media algorithms. Then, learn how to stay one step ahead of the curve.
Affiliate marketers should be good at writing UGC and video creation. Have a basic understanding of SEO and software like Ahrefs or SEMRush. Learn how backlink strategies or how to optimize for the best conversions. Know what methods get the most attention online. Then, develop the best marketing strategy for your offer. Studies indicate that the average conversion rate of affiliate marketing is between 0.5% to 1%.
Need to Spend Time on Market Research and Brand Building
Dropshippers should expect to spend at least 10-15 hours every week promoting their store online. Brand differentiation and quality customer service can take up a considerable amount of your time. You need to deliver the best shopping and user experience possible. One option you could try is a/b testing to see how to improve site navigation or which type of ad campaign gives the best results.
As a beginner affiliate marketer, spend at least 1-5 hours per day creating content on multiple platforms to build trust and improve customer acquisition.
Require Initial Investment
The initial investment costs for dropshipping are around $1000-$5000. This budget will allow you to pay for expenses associated with building your store, testing products, and running paid ads.
Aspiring affiliate marketers can begin with minimal investment, often under $100. You can use free platforms like WordPress for blogging or YouTube for video content creation. For example, you can write a blog that will cost around $50/year to maintain. But if you want to leverage paid ads to broaden your reach and get in front of people fast, you should have a budget of at least $1,000. Affiliates pay less dollars but need to invest more time to build an online audience and earn passive income.
Making Money Takes Time
Dropshippers can start earning within the first month by strategically choosing trending products, perhaps identified using market analysis tools like Google Trends or SEMrush. However, it takes the average dropshipper a minimum of 3-12 months to earn a profit. Factors that affect how long it takes to make money with dropshipping include niche, level of competition, level of marketing skill, strategy, and product quality. You can try dropshipping automation strategies to speed up your processes.
It can take 6-36+ months to make money with affiliate marketing. Getting attention on the Internet is hard, and it takes time to build trust with an audience. The time it takes to make money with the business model includes the niche and products you promote and the level of competition in your market.
Risk Vs. Reward:
Dropshipping has minimal risk. But you still need to spend money to buy and test products. Then, you need to run paid ads to assess the profit potential of each item. As a dropshipper, you can test and fail with numerous products before you land a winner. But costs will run you around $100-$500 per product. If they don't sell, you'll be out of pocket for your invested money.
There is zero risk involved with affiliate marketing. You can start the business model for free. Your only job is to get attention on the Internet. But once you have a loyal audience, you can monetize your website, social media profile, or YouTube channel with affiliate links and make money.
High earning potential
The average dropshipper earns 10%-30% for every sale. The key is to sell winning products that offer 2.5X profit margins (after you factor in the costs for the item, shipping, and supplier fees). Average price points for dropship items are around $30-$120. Dropshippers who sell high-ticket products like furniture or electronics can make the same profit margins for fewer sales. Data suggests that only 1.5% of all dropshipping businesses have an MRR of over $50,000, and only 10% of dropshippers are profitable.
The average affiliate marketer earns a 5%-50% affiliate commission for every sale (dependent on the affiliate network). Affiliates can make a profit of $100-$10,000+/month or $30K-$50K+ annually after they factor in expenses such as paid ads, domain costs, and hosting fees. 2024 statistics show that the annual income of an affiliate marketer ranges from $141,000 to $300,000, with an average of $65,000.
What Is the Main Difference Between Affiliate Marketing and Dropshipping?
The main difference between dropshipping and affiliate marketing is the financial structure of the business model. Dropshipping is a profit-based business. You make money by selling things people want to buy in your dropshipping store. Dropshippers control the price tag and the products they sell. But as a dropshipper, you deal with physical products, customer service, inventory management, and slow shipping times.
Affiliate marketing is a commission-based business model. As an affiliate, you promote a good or service that belongs to the affiliate marketing program. Then, you earn a commission for every sale you make. There are fewer moving pieces with affiliate marketing than with dropshipping. For example, an affiliate marketer doesn't need to worry about customer support, supply chain issues, or inventory management. Instead, their only job is to drive traffic to their affiliate links and make the sale.
Is Dropshipping Easy?
Dropshipping is not easy because you need to choose the right niche, find a reliable partner supplier, and stay a step ahead of market trends. Mario Martinez from Miami-Fort Lauderdale Area and content creator for AutoDS listed the challenges in dropshipping in their latest video posted on January 26, 2024. Besides the challenges mentioned above, Mario adds that product importing and handling stock outs and returns are some of the tough parts of dropshipping.
What Is More Profitable Dropshipping Vs Affiliate Marketing?
Dropshipping is more profitable than affiliate marketing because you control how much you charge for your product. As a dropshipper, you choose what things you sell and the marketing approach you use to promote them. Repricer says that nearly 23% of all online sales are fulfilled through dropshipping. Dropshipping also creates a valuable asset. Unlike affiliate marketing, you have a physical product. Once you have a proven concept and are making $10K/month in sales, you can brand your store. Or you can sell your Shopify dropshipping business for millions of dollars.
But with affiliate marketing, you don't own an asset, and the customer belongs to the affiliate network. Affiliates rely on the program to set commission rates and dictate their creatives. They also can't leverage return buyers or recurring sales. Instead, the consumer goes back to the network. Studies state that 16% of online orders in the United States come through affiliate marketing in 2024.
Which One Offers a Better Work/Life Balance: Dropshipping or Affiliate Marketing?
Affiliate marketing offers a better life balance than dropshipping. You don't need to deal with customer service issues as an affiliate. There's no need to build an online store or source winning products to stay competitive.
Affiliate Marketing Work/Life Balance
Affiliate marketers need to build an online audience and a readership that actively consumes their content. Then, you can get clicks on your affiliate links even when you're not working on your website, social media page, or YouTube channel.
Affiliate marketers need to invest considerable time to build trust and get eyeballs on your content. Be ready to publish text or videos every single day for months or even years. Depending on the niche and level of competition in your market, it can take an affiliate around 6-12 months to earn a decent income and at least 12-24 months before you make enough money to quit your 9-5. But once you have an audience, you can make a passive income.
As an affiliate, you can leverage AI tools like ChatGPT. Or reformat content and share it on multiple platforms to increase your presence on the Internet.
Dropshipping Work/Life Balance
As a dropshipper, you need to stay one step ahead of trends. Find new products people want to buy now to sell in your online store to remain relevant.
Dropshippers can earn money in as little as 3-6 months, but it isn't passive.
The dropshipping business model deals with customer service, supply chain issues, and inventory management.
Dropshippers can use automation software like EcomDash or Oberlo to streamline processes. But they still need to know how to run paid ad campaigns and how to design creatives that get people to stop their mindless scrolling and take action on your offers.
Which Requires the Least Business Know-How: Dropshipping vs. Affiliate Marketing?
Affiliate marketing requires the least business know-how because you don't need to deal with a physical product, source suppliers, or run an online store. There are no payment gateways or customer service issues. Instead, you just promote other people's products or services and earn a commission. But both business models require you to know how to get attention from the right people on the Internet. Other factors include things like:
Can You Outsource Affiliate Marketing and Dropshipping?
You can outsource affiliate marketing and dropshipping tasksto save time or scale your business faster. A few popular things to outsource as an affiliate marketer include the following:
A few popular things to outsource as a dropshipper include the following:
Affiliate marketers and dropshippers can hire a VA to take care of things like competitor research, SEO, and marketing. You can find low-cost options for freelancers on sites like Upwork and Fiverr.
What Is the Hardest Part About Dropshipping?
Finding a reliable dropshipping supplier is the hardest part of dropshipping. Research says that 84% of ecommerce retailers say finding a good supplier is the main challenge to starting a dropshipping business in 2024. Circumvent this issue and source pre-vetted wholesalers on platforms like CJ Dropshipping, Spocket, or AutoDS.
Another option is to use a sourcing agent from China, such as Supplyia or Skylard. They have numerous contacts and can find the best suppliers for your online business. But, the key is to secure multiple suppliers (ideally 2-3). Then, you omit the risk of running out of inventory, supply chain issues, or slow shipping times.
PRO TIP
Choose suppliers who can:
- Guarantee high-quality products for a decent wholesale price.
- Have an excellent reputation.
- Don't require a MOV.
What Is the Hardest Part of Affiliate Marketing?
Building an online audience is the hardest part of affiliate marketing. To make money with the business model, you need to build trust and know how to get attention from the right people. Learn everything you can about your buyer.
- What problems do they have?
- What questions are they asking?
- Where do they hang out online?
Then, share valuable content or videos that provide the best answer to their questions. As an affiliate, you compete against a global market. You're going up against trusted brands with more money and a loyal audience.
Research suggests that 83% of marketers use affiliate marketing to raise brand recognition. The key is to be relevant. Add value and be authentic. Listen to your readers/viewers. When people feel heard, they feel validated. As a result, they'll be more apt to act on the products or services you suggest.
Is Affiliate Marketing Better Than Dropshipping?
Affiliate marketing is better than dropshipping if you have an established audience on the Internet. Then, you can monetize it with affiliate links to earn passive income. Affiliate marketing is better for people who don't want to deal with customer service. Or would prefer to have less involvement in the day-to-day operations of the business.
An affiliate marketer depends on the affiliate partner to set the commission rates. The customer belongs to the company, not the affiliate. So, you never own a brand. But you can earn a steady income if you have a great niche and know how to get attention online. And you don't need to always be hunting for the newest product or latest trend.
But if your long-term goal is to make the most money, then dropshipping is the better option. Dropshipping offers higher profit margins because you decide what you sell and how much you charge. Dropshippers can leverage repeat orders, bundles, upsells, and recurring buyers. They have more control over their business and own an asset.
Is Dropshipping Easier Than Affiliate Marketing? Top Answers From Reddit
Dropshipping is easier than affiliate marketing for some Redditors. This post from a Redditor recommends dropshipping for beginners. The says there are tools to help you find a lucrative dropshipping niche, define your audience, find suppliers, and build your ecommerce store. Some also say that their personal experience with dropshipping was easy going.
However, other Redditors would say that dropshipping is not easier than affiliate marketing. This Redditor shared that affiliate marketing is easier to scale than dropshipping. He added that affiliate marketing allows you to focus on the most important part of your business and leave the customer service to others.
Start Dropshipping If You’re Interested in the Following
Factors That Make Dropshipping Easier Than Affiliate Marketing
Factors That Make Affiliate Marketing Easier Than Dropshipping
Affiliate Dropshipping Meaning
Affiliate dropshipping means leveraging people to act as affiliates for your dropshipping business. The goal of affiliate dropshipping is to increase your revenue and reach a bigger audience. You pay an affiliate for every sale they get. But this strategy can get your store more traffic without spending money on paid ads.
It can also increase your conversions and diversify your income stream. Dropshippers can set up an affiliate program for free using software like TapAffiliate, PartnerStack, or BirdEye. Then, find affiliates on comparison websites, use influencers on social media, or connect with content creators in your niche.
Why Local Lead Generation Is Easier Compared to Dropshipping and Affiliate Marketing
The local lead generation is easier compared to dropshipping and affiliate marketing because you own digital assets you have full control over. Unlike affiliate marketing, the clicks and calls belong to you. And unlike dropshipping, with lead generation, you don't rely on a third-party supplier to handle the most crucial aspects of your online business.
Instead, you build and rank simple websites that target one service in one location. Because the focus is on the local market, you can get your sites to the top of the search engines in as little as six weeks. There are over 41,705 zip codes in the USA. Each one represents a local market with untapped potential.
Once your sites are at the top of the SERPs, they produce leads that you can sell to a small business owner for profits as high as 85%-90%. Your lead gen property is valuable digital real estate. The website, the tracking number, and the leads belong to you. At the top, it's in front of a ton of people who are actively searching for the service you offer.
Once your sites are ranked, they only need a little maintenance (10-15 hours/year). But there's no limit to how many websites you rank. Each lead generation site has the potential to yield a steady cash flow. Build an empire to harness passive income, the ultimate payout in 2024.
