Dropshipping Vs Affiliate Marketing: Which Online Business Will Make You More Money?

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Most of the readers who visit MyWifeQuitHerJob.com fall into opposite extremes when it comes to their online business goals.

Either they want to go all out, create their own products or import their goods from Asia for maximum profit or they want to start an online store as a side business using the most “passive” methods available.

Dropshipping vs. Affiliate Marketing Which Online Business Will Make You More Money

The prospect of making money passively without requiring much work is extremely attractive which is why many readers fall into the latter category.

In other words, they want to be able to make money with as little active effort as possible. They don’t want to have to carry inventory or do product fulfillment which is why I receive many questions having to do with either running a dropshipped online store or becoming an affiliate marketer.

However, there seems to be some confusion about the differences between these two types of online businesses. I got a question from a reader the other day asking…

Why would I ever want to run an online store, even a dropshipped one, when I could do affiliate marketing and not have to worry about anything?

Clearly, this reader isn’t aware of the superior benefits of running an actual online business as opposed to being just an affiliate.

While there’s extra effort involved in running a dropshipped online store, the rewards far outweigh the costs, especially if you want to create a business that can last the test of time and establish your own brand.

What Is Dropshipping?

Dropshipping is a way to run an online store where you don’t have to store inventory and you don’t have to ship product. The way it works is that you set up your storefront and collect money just like a regular store.

But instead of having to pack and ship the product once you receive an order, you simply place an identical order with the distributor at a wholesale price and the distributor takes care of shipping the product to the end customer for you.

The amount of profit you make is your selling price minus the wholesale price.

The main advantage of dropshipping of course is that you don’t have to manage inventory or product fulfillment. However, since you are selling the product under your own store name, you are still responsible for customer support.

Note: If this business model sounds attractive to you, you can use a service like Worldwide Brands to find pre-verified dropship vendors.

What Is Affiliate Marketing?

Affiliate marketing is when you refer a customer to another business and take a commission if the customer makes a purchase. In effect, your website acts like a marketing and referral engine and you don’t actually sell any product.

In addition, you don’t directly collect any money either. Once a sale has been made, the affiliate business is responsible for paying you your commission which usually occurs on a monthly basis.

How does the affiliate business know that it was you who referred the customer? A tracking cookie is placed on the customer’s computer whenever they click on a link on your site that takes you to their business.

If the customer makes a purchase and has the cookie installed on their computer, then you get credit for the sale.

Advantages Of Affiliate Marketing

The main advantage of affiliate marketing is that the entire sales process is completely hands off. Once you refer a customer to a business and the customer makes a purchase, your job is done.

You don’t have to worry about product fulfillment. You don’t have to worry about customer support. You just get paid your commission and that’s it.

With a dropshipped online store, the customer is effectively making a purchase from “your store” even though you are not the one fulfilling the product.

As a result, you are responsible if the customer does not get their shipment on time. You are responsible if the product is defective or arrives broken.

Therefore, you will have to devote a certain amount of time dealing with customer issues especially if your dropship vendors are not reliable.

In addition, with a dropshipped store you have to setup a complete storefront that accepts credit cards and other forms of payment as opposed to affiliate marketing where all you have to do is throw up an informational site or blog.

The amount of work required to start a dropshipped online store is definitely more than the effort required to be an affiliate marketer.

Why Running An Online Store Will Make You More Money

For one thing, the amount of profit that you can make dropshipping will be much higher than if you are just an affiliate. With an online store, you get to set your own prices unlike affiliate marketing, where all commissions are fixed.

Whereas you typically can make a 50% gross profit on your dropshipped goods, the commission earned from being an affiliate marketer of physical goods is typically much less.

But even if the profit potential were the same, running your own online store carries one major benefit that outweighs everything else, word of mouth.

When you act as an affiliate, you are not a real business. You are just a referrer of business. As a result, when a customer makes a purchase using your affiliate link, you don’t get any long term benefits for the sale.

Where do you think the customer will go if he wants to buy again? Do you think he’ll go through your blog or back to the website where he originally made the purchase?

When he tells his friends about his new cool gadget, do you think he’ll refer his friends to your blog or to the store where he made the purchase?

Whenever you make a sale as an affiliate, it’s a one off transaction. That’s pretty much the only sale you are ever going to make from that one customer. Whereas with an online store, you have the opportunity to establish a reputation and a brand to get repeat business.

With an online store, whenever someone raves about your product or service, you’ll get the credit for it. Whenever someone asks for a referral, your store will be the one referred.

A quality online store will naturally grow over time with a strong foundation of repeat customers and word of mouth. However as an affiliate, you will constantly have to drum up new business and referrals because there is no customer base. There is no foundation.

Opening an online store takes more effort and is less “passive” but the difference is that you are building a true business, one that will naturally grow as your reputation spreads. So why not put in a little extra effort and build something that has the infinite potential to grow?

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89 thoughts on “Dropshipping Vs Affiliate Marketing: Which Online Business Will Make You More Money?”

  1. Engy says:

    Great comparing thanks

  2. Oh interesting. I thought dropshipping would be much better than affiliate. Didn’t think about the cons. Thanks!

  3. The “rub” that I’ve found between Affiliate marketing and drop shipping is the profits. Profits are way higher on dropshipping with just a few people everyday. Affiliate marketing is a volume game. Great comparison indeed.

  4. Shakeel says:

    How can we get affiliate market our store and automate commission payment to them upon purchases made by referred customers?

  5. Affilitate income can be very profitable with none of the customer service headaches of dropshipping. I say, if you can do both half way decent, you got some money coming to the bank!

    1. Jose,I was thinking the same thing while reading this whole blog. Great comparison, but way not have an online store and have some affiliate links on that sit as well. Kill two birds with one stone.

  6. Rich Hohd says:

    Once again, Steve, you continue to have this negative bias towards dropshipping, without any personal explanation as to why. Have you ever tried it? If you’re wanting people to build an online store for the first time, shouldn’t they be allowed to choose? Isn’t a balanced view between the different types of stores available more fair? If you don’t like drop shipping, then maybe you should state that somewhere out loud on your site “we build online stores (but inventory-only stores)” so anyone interested in drop shipping can stop wasting their time on your site. Transparency prevails, right? It’s only fair to new site visitors after all.

  7. You say that when people make says from your affiliate link it can be a one time transaction however you failed to mention list building which is crucial if you want to make a full time income strictly off of affiliate marketing. I also disagree with your notion that affiliate marketing is not a real business. You can still brand yourself and build credibility even if you don’t own your own product.

  8. I quite agree with your your write up. I run not affiliate marketing and drop shipping business, the most important factor is your control over how much you make. In drop shipping, you can make more money than affiliate marketing because list building may not work all d time besides if you have a well optimized store or website, its far better than list as your are sure of meeting new desperate buyers everyday, both business are great but its how you run it that matters.

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  10. Affiliate marketing, online income source is now trending. It is a very hopeful market sector too, for those who do digital product marketing. I will not give the definition of affiliate marketing, it is or what to do with it, you can see that Google or experienced technician in tuner post. I will discuss today an affiliate of the marketplace, from the marketplace that you can earn money with affiliate marketing. Many people earn thousand of dollar doing affiliate marketing. Affiliate marketing earning totally depend upon your effort and strategy which your apply.

  11. Anand says:

    I am new to affiliate marketing. I am looking to make money from affiliate. I am looking to join affiliate programs online. I found information about such sites like v commission, shareasale, cuelinks are best ways to earn money online. I have referred many post on affiliate marketing myinfostake. But after reading your information in detail i feel that i can also make money from affiliate without a website.

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  13. The truth is affiliate marketing is good when you have thousands of new visitors everyday. Dropshipping is a far better choice

  14. Affiliate Marketing involves less work compared to Dropshipping. As far as making more money from Dropshipping I think that is open to debate and depends of your cost. Before people buy from your store you need to spend in building a brand. An affiliate marketer do not have to worry too much about that because the merchant he/she is selling for has probably taken care of that.

  15. I think that affiliate marketing is the best way to make money online but the trick here it to first gain your readers trust and then you can make sales easily

  16. I think affiliate marketing provides a more open platform to make more money online. In all honesty, I prefer to pursue the affiliate marketing things than the Dropshipping.

    I know there is more more in the dropshipping business, but the stress it comes with is much, when compared to the government officials at the borders and the length you’ll go, i think it would be much easier to make money via affiliate marketing.

  17. Affiliate marketing is still the best , easiest way to make money online. Dropshipping is also cool , but quite stressfull and requires alot of attention.

    Affiliate marketing works well for me and i don’t see why i should worry about drop shipping. May consider it later tho.

  18. In my opinion, Affiliate marketing is still the quickest and less stressful compared to dropshipping. So yeah, Affiliate marketing over dropshipping anytime, anyday. At least, for now.

  19. I prefer affiliate marketing because of it hassle free nature.

  20. Oh interesting. I thought dropshipping would be much better than affiliate. Didn’t think about the cons. Thanks!!!

  21. they both have their advantages and disadvantages to me as you know drop shipping does not have anything to do with ranking or building up sites and all that but all involves seller and finding a right products that sells which certainly looks alot like that of affiliate marketing.

    Drop shipping to me makes more money but it is not easy

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