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

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 or 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.

For more information about affiliate marketing, read this post

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.

Go here to checkout some of the highest paying affiliate programs

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 30% 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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129 thoughts on “Dropshipping Vs Affiliate Marketing: Which Online Business Will Make You More Money?”

  1. Jim Juris says:

    Steve,

    Your article is terrific. I do want to point out that running an online store is much riskier than being an affiliate. The store owner has to do marketing, creating a website, finding and dealing with suppliers, shipping the product to the customer and customer service. All of these things take time and/or money.

    As an affiliate, I have NO risk whatsoever in the business. I do not have to deal with any of the items that I mentioned above except for marketing.

    Yes, I know that the financial rewards for being an affiliate are much less but so is the risk.

    Another advantage of being an affiliate is that I can be an affiliate of numerous products.

    1. Steve says:

      Hey Jim

      In many ways affiliate marketing is very similar to dropshipping and there is very little risk. Both don’t require any shipping of product to the end customer. Both require dealing with suppliers(affiliates) and both require marketing.

      In reality, there is little to no risk for either business model and you can dropship numerous products as well without carrying inventory. However, with dropshipping you are selling the item as your own brand which is extremely valuable if you want to build a customer base and a foundation for your business.

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  3. longjokung says:

    long post but interesting

    thanks for your info!

  4. Scott Fox, ClickMillionaires.com says:

    Great article! You do nice job of comparing and contrasting these 2 business approaches.

    I get this question quite often on my own blog and will refer people to this write-up.

    I would add that the piece that many new online entrepreneurs miss is having a good strategy in place first.

    Simply signing up with dropshippers or joining affiliate programs won’t make you any money. You need to first have good ideas about a profitable target market that is interested in the products you choose, and cost-effective marketing strategies to reach them.

    Scott Fox
    Author of e-Riches 2.0: Next Generation Online Marketing Strategies
    Host of ClickMillionaires.com

  5. Molly G from Dydacomp says:

    This article offers great advice that really helps provide insight into the differences between drop shipping and affiliate marketing. Online Websites are easier to create than ever and there are a number of sites that can help you set up and manage ecommerce sites. Small businesses shouldn’t be afraid to start an online store because it is not as difficult as you would think!

    Thanks,
    Molly G.

  6. emory @ clickfire says:

    Enjoyed this comparison very much, Steve. There are some counterpoints that can be brought up to the notion that a store will make more money, though. Some affiliate merchants pay equal or more than the price of the sale and other programs allow recurring commissions on subaffiliates. Thanks for this post!

  7. Marshall says:

    Steve,

    Couldn’t disagree with you more and agree with Jim more. Having done both, being an online merchant (including dropshipping) and currently an affiliate (with several websites promoting several different verticals), I can tell you first hand that being an affiliate is the ONLY choice for us.

    As you mentioned, having an online store selling products, whether you ship them yourself, or you dropship, you are still dealing with physical customers. This means you get to deal with all the ‘joys’ customers bring, which are not that many. Customers = headaches (at least they did in our experience).

    As an affiliate, we set up and promote our websites (which takes an incredible amount of time, but so does running an online store). We don’t deal with customers. We rarely deal with the companies we are promoting. We spend all of our time fine tuning and promoting our website. On our schedule, not on the customers schedule.

    As an affiliate, the sky is literally the limit. Since we are not constrained by how many orders we can process in a day, or how many customers we can deal with in a day, our income potential is limitless. Assuming we pick the correct niche and get good SERP rankings, we are golden. Of course this is easier than it sounds, but when you get traffic, it is free, except for your time. (We don’t use pay per click, so we rely strictly on organic search engine rankings to drive traffic.)

    Again, our potential is limitless because we have ZERO customer contact. Everything is automated. We literally make money when we sleep. I don’t care if you only dropship, you still get to deal with customers. Yes, our customers are one-and-done (you can have an affiliate business model where you do get repeats, it just is not the way we are set up). However, there are millions of potential customers, with new ones coming each day, so as long as we maintain good search engine position (again, easier said than done), we are golden.

    We promote companies that pay us as little as $10 a referral to ones that literally pay us hundreds of dollars a referral. You might scoff at $10 a referral when you think you can make much more than that per dropship sale, but we make more from JUST ONE LANDING PAGE at $10 a referral than most people make in a year. That is just one landing page – we have hundreds. That is the potential we are talking about. Limitless.

    Don’t let anyone tell you otherwise. Either being a successful online retailer or a successful affiliate takes A LOT of work. Don’t believe the B.S. hype that says otherwise! But no matter the amount of effort, it beats the heck out of working for the man. Period. End of discussion.

    -Marshall

    1. Steve says:

      Hi Marshall,
      It sounds like you have a good system going and you are correct, they both do take a lot of work. Most people will not have the time to put up hundreds of affiliate sites and stores. Given that you are comparing one affiliate site versus one dropshipped store, they both should take a similar amount of time to rank in the search engines. The advantage of the dropshipped store is that you won’t be completely dependent on SEO. If Google were to all of a sudden tank your website for your keywords (this has happened to me on several occasions), then you still have a solid customer base and word of mouth that will get you new customers.

      The level of customer support required depends on your vendors and your products. I have colleagues that run dropshipped stores that rarely have to answer any calls. Or, they hire a VA to handle returns and other matters. In any case, either way, it’s better than working for the man.

  8. Vladimir says:

    nice post
    as a newbie I am reading a lot hope to read more from You

  9. Richard Stooker says:

    Good article, but there are also other considerations. If you want to dropship, you must get a tax number from your state because they’ll want you to pay sales taxes.

    You’ll get tons of product catalogs in the mail. You must find true dropshippers, not the many scammers online. You must also have alternatives on hand in case your regular supplier is out of inventory when you have customers. You may take a loss.

    This makes dropshipping less attractive for people who wish to travel a lot. An online affiliate business can be done from Internet cafes or WiFi connected laptops around the world.

    For myself, I believe spending more time promoting your sites is more worthwhile than sorting through the extra paperwork required by dropshipping, even though profit margins may be higher on each unit of product sold.

    So everybody has to judge which model best suits their own inclination, dreams and strengths.

    Canadian Apartment Properties Real Estate Investment Trust

    1. Steve says:

      @Richard
      Getting a tax number literally takes 5 minutes online. Paying sales tax is just as easy as everything can be handled online these days. Depending on your revenues, you may only have to pay sales tax once a year so it’s not a major hassle.

      But certainly, I agree with you. If you want to live a nomadic lifestyle, then affiliate marketing is probably a better solution. But from a pure money perspective, opening an online store will get you there faster in the long run

  10. JamestheJust says:

    Marshall –

    This is an interesting POV, but it’s your blog and time, and it sounds like it suits your goals better than affiliate marketing. I’m with a number of affiliate programs, and love it to pieces.

    I’m also using AdSense but not as a main focus. In any event – I’d rather go for entirely passive once I put up content and build a site.

    If I want a pay raise, I either pick other products to sell, or I get to ranking more existing pages through SEO.

    I can also sell my sites much easier than a drop shipper can sell his or her business, to the tune of thousands depending on negotiations.

    Not to rag on you, I’m actually going to be incorporating some drop shipping on my blog soon enough since I enjoy diverse income streams – but I’d much prefer the set and forget success than go back into customer service.

    It just means more time away from my family if I had to deal with customer complaints (which are inevitable).

    I enjoy your unique perspective, however – just goes to show it’s more about preference and goals in the end. I’m not building a brand. I’m just enjoying what I do.

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  13. Marshall says:

    @Steve,

    Agreed that most people don’t have the time to put up hundreds of affiliate sites, and that is something we wanted to steer clear of. We made a decision early on to make one (and then two more for a total of three) authority sites so that we would only have to concentrate on updating/maintaining a very small number of sites instead of hundreds.

    Having multiple authority sites buffers us against swings in search engine rankings. The idea is to make enough money off each site independently, that if one, or two, would have issues in rankings, we would still make enough money to survive. Chances of all three being hit at the same time are slim at best. And if you play the ‘ranking game’ the way Google and Bing and MSN want you too, the chances of loosing all of your rankings are slim to none.

    Even if we did have problems with rankings, we could always go the pay-per-click route. Point is, there is plenty of traffic out there and plenty of ways to get it. And we NEVER have to deal with customers, shipping, returns, etc.

    Yes, it IS much better than working for the man. Stressful, but a different kind of stress – one I would take over commuting/working for the man any day of the week!

    -Marshall

  14. Marshall says:

    @JamesTheJust,

    You must have misread what I posted. We no longer dropship as we haven’t had an online store for years. We are purely affiliates with a few authority sites. Can’t stand dealing with customers and love our business model – it is VERY good to us and we are very blessed in what we do.

    -Marshall

  15. JamestheJust says:

    Marshall –

    Your post has no date, so it’s hard to tell when you’ve written it, but the final paragraph says it clearly.

    Also the sub-header:

    Why Running An Online Store Will Make You More Money

    That implies the conclusion that I disagreed with – but either way, if you’ve changed business models then more power to you. I am a bit confused now, though – considering the way you concluded the post.

  16. Marshall says:

    @JamesTheJust –

    OK, I see where the confusion lies. You think I wrote this post that we are commenting on. I did not. Steve did – this is his website, not mine.

    I am merely an affiliate who commented on this post – one that happens to disagree with Steve’s position that an online store is better than being an affiliate. It seems that you and I actually agree on business models and agree that Steve’s take on it isn’t what works the best for us.

    Whew! I am glad that is cleared up as I was a bit confused. Have a great weekend!

    -Marshall

  17. JamestheJust says:

    Marshall –

    That’s OK, I see the confusion is classically mine: I always get people’s names mixed up. 😀

    Yes, it is Steve’s blog, I meant my comment for him. I agreed with your assessment, actually, as I’m a pure affiliate (segueing out of freelance copywriting).

  18. Marshall says:

    James –

    No worries.

    Affiliate marketing is the greatest occupation for the average person to come along in quite a while. It is downright exciting – the potential of it. Working 9 to 5 for the man pales in comparison.

    I subscribed to your RSS feed as I am interested in seeing how your journey progresses. I saw that you previously did freelance copywriting and totally understand your wanting to shift to the affiliate model. One of these I am going to have to hire a copywriter and take some of the load off of me.

    Have a good one!

    -Marshall

    1. Steve says:

      So just curious guys. How much does your single, most successful affiliate landing page net you per year?

      a) 0-25K
      b)25-50K
      c) 50-100K
      d)100-250K
      e)250-500K
      f)500-1000K
      g)Over a million bucks.

  19. jamesthejust says:

    Steve –

    I don’t reveal what a page makes, though I do discuss my earnings at my site. What I’d much rather do is take the Tim Ferris approach and ask what is your relative income?

    Say you made $100k on one site. Great. How many hours do you work it?

    I’ve calculated the earnings on one of my landing pages. For the 10 hours I put into it in 2010, I was paid $578 an hour.

    No customers to contend with – no headaches. Hosting is so cheap it’s ridiculous, about $60 a year (and I don’t recommend cheap hosting, but is what it is).

    My costs for this site were about $300 all told, I created all my own content. It has 8 pages. I’ve ranked #1 for all the terms I’ve targeted.

    I’d much prefer affiliate marketing to online stores – but like I mentioned, it’s all in your business goals. I’m not interested in brand building, but I do like the idea that there are so many ways to make money online.

    How you choose to do so is your business (literally) and I commend you for your success. I wouldn’t trade shoes, however, with even the most successful brand and store owner – I don’t want the hassle.

    I did mention I was thinking about integrating an online store with one of my sites, but then I started reading your free guide and decided against it – it’s just plainly too much work, imho. Thanks for the information, though – it was eye opening.

    Cheers.

    1. Steve says:

      @James,
      Sounds fair. It’s just that the discussion veered from the topic of the post which was what method would make you the most money, not which one requires the most amount of work. In any case, I do both and have been successful with both business models. But in trying to replace a full time income in the shortest amount of time, online stores have greater money making potential.

  20. jamesthejust says:

    With statements like that, Steve, I’m still curious FWIW.

    BLP is actually a manual forum profile creation service. They don’t use tools that can get you banned, they just create a bunch of forum profile links for you on high PageRank forums.

    I use them as a regular part of my linking since it’s hands off, and I like to diversify my link profile.

    If you want great writers (I’m sure you already know about these but I’ll list them anyway):

    Elance (where I got my start)
    oDesk
    Guru
    GetaCoder
    GetaFreelancer
    Fivver

    And something people always forget: Craigslist. Check out Craigslist for the Philippines, for example.

    I prefer Elance, oDesk, Guru et al because of their productivity tools and protections for both provider and employer, and accountability.

  21. Marshall says:

    @Steve,

    Our best performing landing page falls into category C of your poll (50-100K per year). Again, that is just one landing page of hundreds. While not all of our landing pages have this kind of earning potential, many do. And we are just scratching the surface regarding the potential of our sites – they have a lot more growth potential in regards to new landing pages. Again, the sky is the limit with affiliate marketing – not so much with an online store (in my humble opinion, and experience).

    The funny part of all this landing page, money making discussion is that the program that currently makes us about 70% of our income is one that I almost passed up promoting because of the low payout. It is a lead generation program that initially paid $8 per lead and we have since had that increased to $10 per lead because of the volume we produce (that is the nice thing about affiliate programs – if you are a proven performer, you will get higher payouts). At first I wondered how much money one could make $8 at a time – boy am I glad I took a chance with this program! So we have one landing page making us around 50-60K per year, $10 at a time. And we have many more landing pages promoting this same offer, they just aren’t performing at the same level – yet.

    In total we promote around 15 programs, with the potential to promote many more within authority sites we already have, so we won’t have to start from scratch in the future (which is what takes a lot of time).

    When I say authority sites, I mean sites with hundreds of pages – a combination of landing pages and blog posts supporting the landing pages – all using WordPress. Yes, it takes time to build up sites like this, but they become an unstoppable force if you do it right.

    And just to reiterate – we only promote our sites through organic SEO. We don’t pay for traffic via pay per click advertising or display advertising. In essence, the traffic we get is ‘free’ minus all the blood, sweat and tears put into developing and promoting the site. Beats the heck out of working for the man and pays MUCH better.

    -Marshall

  22. Global TV Concepts says:

    Some people may not know the differences between drop shipping and affiliate marketing. Thank you for explaining the differences in each.

  23. Jim Juris says:

    What do you guys think about selling ebooks as an affiliate?

  24. Affiliate Program Chaser says:

    After reading a bunch of articles about bloggers making some serious money online I decided to finally give it a try and I started a blog at http://www.affiliateprogramchaser.com. At this stage I get around 100 visitors per day, however these can barely produce $0.20 on my Google AdSense account. Am I missing something out? Thank you.

  25. Jim Juris says:

    @Affiliate Program Chaser, I would say that if you are making 20 cents per day from Adsense you are doing pretty good.

    I don’t do Adsense, but the key is the placement of those Adsense ads. The best place to place your adsense ads to generate clicks is at the top of the page.

    Hopefully Steve and maybe some other people will confirm what I said.

  26. Carlton Seek says:

    It is a fact that affiliate marketing is among the simplest and most efficient ways to generate income online. However, you will have to make an effort right until you can generate income from your affiliate business. You must work hard if you want to achieve success and you will also have to apply certain tools in order to earn money.

    1. Commitment: The very first thing you have to do is to commit to yourself that you are serious with your choice, you’re serious with building your own business, serious about taking 100% responsibility with whatever you do. You might think that this sounds ridiculous, but it’ll guide you rightly on your journey. Once you can think, and are responsible like a real business owner, you’ll stand out from people.

    2. Education: The next important part that can make or break your business is your education, or your knowledge about this online business. Most people failed because they did not know exactly what Internet Affiliate Marketing is, how it works, and how they can do things correctly. If you want to see results in the long run, you must arm yourself with enough knowledge. Don’t let something that you don’t know holds you back.

    3. Focus: The laser beam can break through even the thickest plate of metal because it focuses its energy. You can break even everything if you stay focus too. Fact is, people have no advantages over you, everyone starts at the same level, the reason why some have success, some don’t lies in the word “focus”. Focus on what you can do best, on what you know the most, and go with them, you’ll join the 5% group soon.

    4. Taking actions: Isn’t it true that only taking actions can bring you closer to your goals? You can’t achieve results just by sitting there, making a wish! It’s time to put what you’ve learned so far to real actions. I know this is the hardest part, but believe me that when you can do the very first action toward your goals, the next steps will come naturally. Whatever you do, make sure that it guides you to your goals!

    5. Don’t quit: Quitters are losers! In fact, if you’re serious with your online business, having enough knowledge about what you’re doing, and are taking actions persistently, chances are you’ll never quit! Congratulations! Because most people came in fast, but they quit soon as well. If you just stay focus, taking actions, and don’t quit, you’ll be successful. Guaranteed!

  27. Jerrick says:

    Hwy not run both affiliate marketing and dropshipping. You able to earn more by running both and would not affect your business.
    Why i say run both, you can earn for both and you even can bring some traffic from the affiliate marketing. Like you selling a main product, you can get some affiliate marketing that selling your product accessories. Or you selling the accessories and you put affiliate marketing which is selling the related product. You can earn both and in less risk.

  28. Evan says:

    Marshall (Steve and all),

    Thank you for your comments. My wife and I are interested in going the affiliate marketing route as well. What we need now are the specifics on how to set up and structure the affiliate marketing business relationships with vendors / sellers / manufacturers. What agreement(s) govern these relationships? What are the steps to going from where we are now, at square one and no current relationships with sellers, to having binding contractual relationships and receiving checks in the mail? Can anyone give us the play by play on this process?

    Thank you!

    -Evan & Stephanie

  29. Jim Juris says:

    Evan and Stephanie,

    You do not pay affiliates any money unless they make a sale. Usually the percentage is 50% but it could vary anywhere from 25% to 75%. The higher the percentage that you pay the affiliate the more incentive they have to sell your product.

    Clickbank is primarily for downloadable products such as software and ebooks. I believe that they handle other types of products but I am not positive.

    You probably don’t want to have affiliates if your product sells for less than $20 because there is not much incentive for the affiliate to sell a $12 product and only receive $6.

    Depending on what you are selling you can go to clickbank.com and set up a seller account. I believe that Clickbank calls it a vendor account. Clickbank will handle everything for you, including paying the affiliates.

    I believe that you have to pay Clickbank a fee to set up your product of somewhere around $50.

    Sometimes people will want a refund so there is a chargeback to the affiliate because you have to issue the buyer a refund.

    Refunds should be 10% or less.

    Clickbank will also handle the refunds.

  30. Evan says:

    Jim,

    Sorry I was not more clear in my questions, we want to market products and re-direct traffic from our website to the seller websites. With that said, we need to know how to get started in forming relationships with sellers whereby they allow us to market their products and whereby they will pay us commissions if their items are purchased as result of our website being visited by their eventual customers. What is the contractual arrangement? What is the typical commission that we would be paid? How do we formalize and structure the contractual arrangement between us and the sellers, etc? We need the specifics on this process.

    Thank you again,

    -Evan & Stephanie

  31. Jim Juris says:

    Hi Evan,

    I don’t ever remember signing any type of contract to sell affiliate products for anyone.

    The commission rate can range from 25% to 50%, but usually 40% to 50% is the norm in order to encourage affiliates to promote the product.

    The website that sells products that you would like to promote should have an affiliate link somewhere on their website home page, maybe at the bottom. It will say affiliate or sell our products or something like that.

    The company that is looking for affiliates will give you the terms which are pretty much standard anywhere. They will provide you a unique link which will put a cookie on the computer of the person that clicks on that link. That cookie will identify you as the affiliate.

    The company will probably pay you through PayPal. They may hold the money for thirty days before they pay you the money just incase there is a request for a refund. That way you won’t get hit with a charge back.

    The cookie could be good for 30 days, 60 days, 90 days, 180 days or 1 year. Normally the cookie remains on the website for 60 to 90 days. 30 days is not very good, and maybe you should not do business with someone that only places a cookie on a persons computer for 30 days.

    You will not make a cent unless you make a sale. If the person requests their money back you will have a charge back which means that the next sale you make will be used to erase the commission that you received for the refund.

    Companies will sometimes give you information that you can use to promote their product such as a banner and/or article about their product.

    Don’t expect to become rich selling affiliate products. You may only make one or two sales a month or maybe only make one or two sales a year selling someone elses products. You may have a ton of competition which will make it less likely that you will make a sale.

    I am not trying to discourage you from selling affiliate products, I am just telling you how it is in the real world as an affiliate.

    I hope that I have answered your questions.

    Good luck.

  32. Evan says:

    Jim,

    Thank you very much. Extremely helpful. I am quite surprised actually that there is no binding agreement between the marketer and the seller defining the responsibilities of the parties.

    -Evan & Stephanie

  33. Jim Juris says:

    Evan,

    You are welcome.

    I may have ran into a couple of affiliate programs where there is some type of contract but that was a very long time ago and I can’t remember. When you sign up you agree to these terms in order to become an affiliate.

    Basically the agreement between you and the product owner is this-

    you make no money for your time and effort unless you make a sale. You are only rewarded based on performance.

    if someone clicks on your link within X numbrer of days and if they buy my product you will receive X% of the sale.

    Some sellers will have an affiliate area where you can actually go and see how many people have used your link to arrive at the sellers product page, the number of sales that where made from that affiliate link, the amount of money that you where paid, and when you where paid.

    Here is something that I didn’t think about before if you are selling informational type products. If you want to make a lot of money very quickly you will need to build a list of names and email addresses. The larger the list the better. That way when someone has a product that you can sell as an affiliate you can just send out an email message to your email list and people will start buying from you that day or in the very near future.

    You just keep sending out something new to your email list on a regular basis and people will purchase from you. You will need to use what is called an autoresponder service to do this. You can try aweber.com or icontact.com or getresponse.com. They are three of the best. There is also a free one that is called mailchimp.com. Steve talks about mailchimp and aweber in his posts. Of course not everyone will purchase from you, some will purchase more than others.

    The best way to get people to sign up to for your mailing list is to offer some type of FREE information in the form of a report which will be delivered in PDF format by your autoresponder. That will capture the persons email address.

    Building a list will take some time. Without having a list you will find it pretty difficult to earn money as an affiliate.

    Another thing that I didn’t mention is that if someone doesn’t have to sign up to your email list and they click on your affiliate link you will earn a commission if they make a purchase but you will not have access to their name and email information. They will basically be one time buyers for you because you didn’t capture their name and email address first.

    There is nothing wrong with that but you will make a lot more money and make the money quicker by being able to send out an email message to your list on a regular basis. Of course some of the people will unsubscribe from your list.

    It helps to send your list some free information that could be helpful to them on a regular basis in order to keep them on your mailing list. Your mailing list will be more receptive to your offers when they are not just receiving one sales pitch after sales pitch from you.

  34. Evan says:

    Jim,

    Again, extremely helpful information.

    So with regards to the affiliate marketing arrangement between us and the seller, we basically agree to the seller’s pre-determined commission %? There is no negotiation as to what our cut will be?

    Thanks,

    -Evan

  35. Jim Juris says:

    Evan,

    You are welcome.

    That is correct, you either sign up as an affiliate and agree to their payout or you go and find another seller with an affiliate program. You should find lots of affiliate programs that pay 50% or higher without any problem. Just be sure that the cookie is live for at least 60 days, the longer the better. Clickbank has thousands of affiliate programs.

    Some sellers will pay their affiliates a bonus if they sell a certain amount within a month or a certain amount of time.

    You could probably also search on Google for a subject and add the words -affiliate program to find one in a particular niche. For example, you could do a search on Google for- weight loss affiliate programs.

    You may want to use the weight loss niche to find some of the affiliate programs just to study about 5 or 10 of them and then go to another affiliate program on something like dog training just to study another 5 or 10 of their affiliate programs.

    You are not going to these affiliate programs to sign up to become an affiliate for either weight loss or dog training, you just are going to two or three affiliate programs that you have no interest in to gain an education on how they work.

  36. Evan says:

    Jim,

    I cannot thank you enough for this wealth of invaluable information, as we embark upon this unknown territory. We are extremely grateful. Please keep the information coming!

    Thanks again,

    -Evan & Stephanie

  37. Jim Juris says:

    Evan,

    My pleasure.

    I just remembered that I had to do a lot of paperwork in order to receive commissions from one affiliate program. I had to print out about 15 pages and initial things and sign, date the paperwork and mail it in. It was worth the effort.

    I have signed up for probably a dozen or so affiliate programs but I have only had success with a couple of them. I do not use an autoresponder. I simply place a clickable link with my affiliate id or a banner on one of my websites and wait and see if I make any sales.

    You can possibly sign up as an affiliate with Amazon.com. They don’t pay the rates that I said in my earlier posts, it is a much smaller commission.

    After you sign up with Amazon you can then go to Squidoo.com and create a squidoo lens on a subject. As part of your lens you can refer amazon products that relate to the subject of your Squidoo lens and if someone clicks on one of the Amazon products and they buy it from you then you would receive a commission.

    For example, if you wrote a Squidoo lens on bird watching in the lens you could recommend 5 or 6 possible products that are somehow related to bird watching such as a certain brand of camera, books on bird watching, bird feeders, etc.

    That would give you multiple chances to make a sale.

    You could then repeat the process by creating another Squidoo lens on a entirely different subject and then do it a third and fourth time using a different subjects each time.

    I would recommend that you check out other Squidoo lenses first before you go and try to do what I recommend. That will give you a better idea of what I am talking about. The more time that you spend on educating yourself about Sqidoo lenses and how to use them to sell products on Amazon the mor likely you will be able to do this successfully.

    You would also want to blog about your Squidoo lens or maybe post it on Facebook and tweet about it to give you a better chance of having it read.

    Probably the best way to start as an affiliate would be to find products about subjects that you and your wife are passionate about yourself. You are more likely to promote something that you are really interested in than you are to promote something that you have no interest.

    You also may want to start with a smaller niche rather than one such as diet and/or weight loss or internet marketing which will all have a ton of competition.

    Also, when a seller provides content for you to use it is more than likely to be used by many other affiliates. That is not the best way to go. If you can write your own content about a particular product that would be much better. Just be careful and not mislead anyone about the product or make false claims.

    Google likes FRESH and RELEVANT content. That is why it is not a good idea to just copy and use a sales letter provided by the product seller on your own blog or website.

    I believe that covers just about everything that I know about selling affiliate products.

  38. Evan says:

    Jim,

    You are a valued resource. We will be pouring over all of the information that you have given us and referring back to as we go down this path.

    Thank you so much for the guidance,

    -Evan & Stephanie

  39. Jim Juris says:

    Evan,

    Thank you for the compliment. I have tried to sell a few affiliate products over the last 7 years. Some of them I was able to make sales and many of them I never made a single sale.

    Not every affiliate program will work for everyone. Some have much more luck than others.

    I do want to point out that just because I mentioned creating Squidoo Lenses to sell Amazon products as an affiliate does not mean that you will be successful doing what I suggested.

    You may want to try creating two or three Squidoo Lenses and see how well they work selling Amazon products. You may only get one sale about every 6 to 12 months from one of your Squidoo Lenses. You may not ever get any sales from a Squidoo Lens.

    Affiliate marketing sounds like a terrific way to make money, but it is not anywhere as easy as it sounds. There is a lot to learn and a lot of work to sell products as an affiliate.

  40. Evan says:

    Jim,

    Understood. Well you have gotten us off to a great start by giving us a foundation to build from. Hopefully we can get something going in the affiliate marketing realm, as we do have a definite niche market that we are targeting.

    We shall see…

    -Evan

  41. Affiliate Program Chaser says:

    Most people think that making money online consists of building/releasing a website and then sitting and waiting for money to pour in. I must admit I was one of them too, however, I had to make some serious efforts before I could see any income comming from my blog. Btw, great article and keep up the good work.

  42. Chantel says:

    Steve,

    I really enjoyed this post. While Jim and Evan clearly have a lot of their own experience, many do not. You were able to explain clearly the difference between affiliate marketing and dropshipping, then share your honest opinion (oh, the beauty of blogging). I think this post would be a great help to a new entrepreneur when researching the possibilities for their new business.

  43. Pingback: Affiliate Marketing — Why Is There So Much Buzz About It? | Internet …
  44. Sash says:

    Hello,

    Its a great article. I was pondering with pros and cons of “Drop Shipping” Kindly add 2 points: 1) It also provide positive cash flow, you have window period cash received and cash paid to manufacturers. 2) You do not want your child school admin to know his father profession is an “Affiliate”. Affiliate is not a career, it is not even a business but a part time income model. I diversifying contract manufacturing and drop shipping to raise profits more then affiliate programmers. You can not affiliate 25 million inventories but can trade as drop shipping. Correct me if I wrong. Thanks for the post.

    Sash

  45. James Hussey says:

    Sash –

    Clearly you have a certain “type” of affiliate marketer in mind when you say that you wouldn’t want your child’s school admin to know you’re an affiliate.

    I think this is a clear sign of a cultural divide, since frankly I wouldn’t classify what I do as an affiliate as something to be hidden, nor would I hesitate to tell the planet I’m an affiliate marketer.

    It’s simply a form of advertising or marketing – and for me, it’s not a hobby. It is a career.

    If my kids’ school admins had an issue, the problem would be their snobbery and not my profession.

  46. Free Joomla Templates says:

    I still think that affiliate marketing pays better then dropshipping. At least it’s not as risky. What happens if the customer pays and the other company doesn’t deliver the goods?
    Adam

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  48. Eva says:

    Hi guys! I think between affiliate marketing and online store the real problem is the capital that is involved, if you want to earn more you also need to invest more. What is good about affiliate marketing is that, you can earn even without having to shell out a single cent, all you have to do is to maintain a good site and increase your viewers. The more credible and the more people view your site the more businesses will pay you. I may agree in some point that online store may pay off more only that you also need to invest more. You need a starting capital for your products, good if you really have the business. But for those who do not have the money but have the time affiliate marketing may be more profitable for some.

    You may want to learn more about TOP Paying Affiliate Programs by clicking here.

  49. Mike says:

    Hi,
    Crusty old UK reader here.
    I’ve just read through all the blogs on the site and an no further forward than previously.
    It seems to me the point is being missed throughout the forum?
    If the aim of the site is for people to gloat about how well they are doing and that drop-ship is better than affiliation, or vice versa, why is it that I was directed to this site when I searched for ‘how to find drop-shipping companies’ ?

    I thought I’d be greeted with useful information (and I have to some extent), but I’m neither for or against either method as both seem to have their place.
    What I was after was a method of obtaining a sure fire way of seeking out those companies who would be interested in drop shipping OR affiliate marketing.
    A step by step protocol if you will-tried and tested?
    The recession has hit our country in a bad way and I’m thinking it’s getting worse.
    I have to explore avenues I’d once never imagined I ever would.
    When I try to search for drop-shippers in the UK (and I obviously know there are many), I’m greeted with websites that seem bogus or scams. Most ask for money up front which I wouldn’t begrudge paying if it semi guaranteed profit based on effort. But I’m very nervous about how to approach this more fully without getting bitten in the process.
    Any advice would be greatly appreciated.
    And hey-let’s be friends eh? Drop-shippers and affiliates unite! You have nothing to lose but your preconceptions!

  50. Pingback: Information on Drop Shipping and Affiliate Marketing « tesslarcade
  51. Pingback: Connellymailbox » Blog Archive » Insider Tips For Profiting With Dropshipping
  52. Engy says:

    Great comparing thanks

  53. leshia says:

    This is a great site!

  54. Ryan says:

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

  55. Jibran Qazi says:

    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.

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  57. Shakeel says:

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

  58. Jose Roman says:

    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. Randle says:

      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.

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  61. 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.

  62. Pingback: How to start drop shipping business | InMarketer, Mom
  63. Derrick says:

    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.

  64. Oge says:

    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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  71. wikifo says:

    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.

  72. 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.

    1. masha says:

      how is this possible to make it work without website for affiliate marketing?

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  74. Steve says:

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

  75. Paschal says:

    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.

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  77. Rohit Singh says:

    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

  78. James says:

    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.

  79. Kelvin says:

    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.

  80. Certified says:

    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.

  81. wali says:

    I prefer affiliate marketing because of it hassle free nature.

  82. AArti says:

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

  83. Techy Nigerian says:

    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

  84. Elick Matara says:

    Very informative site. Think with the advancement in technology and presence of internet allover the world, one can make good income through affiliate marketing.

  85. Risper Nyabwengi says:

    Cool i personally do agree with the idea of making money via affiliate marketing. Blogging for a reason. make sure you target the right traffic and your affiliate marketing will never disappoint you

  86. naira smith says:

    This is a marvelous site with a funny name. Thanks for all the info. Both affilitate marketing and drop shipping works in their fantastic way. It now boils down on the one you can handle. Every business comes with their risks, you just have to choose the one that works for you.

  87. mp3kpop says:

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

  88. mp3z says:

    Cool i personally do agree with the idea of making money via affiliate marketing. Blogging for a reason. make sure you target the right traffic and your affiliate marketing will never disappoint youThis is a marvelous site with a funny name. Thanks for all the info. Both affilitate marketing and drop shipping works in their fantastic way. It now boils down on the one you can handle. Every business comes with their risks, you just have to choose the one that works for you.

  89. Franklin Price says:

    I personally think dropshipping is the best, Facebook ads works well with it coupled with gigantic ROI, I stand with dropshipping anytime.

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  92. usoro says:

    Thanks a lot for this in dept post,i will really want to start affiliate marketing because it is the easiest i can start,although dropshipping is more profiting i will still stick to affiliate marketing.

  93. index mp3 says:

    I personally think dropshipping is the best, Facebook ads works well with it coupled with gigantic ROI, I stand with dropshipping anytime.Thanks a lot for this in dept post,i will really want to start affiliate marketing because it is the easiest i can start,although dropshipping is more profiting i will still stick to affiliate marketing.

  94. download lagu mp3 says:

    Cool i personally do agree with the idea of making money via affiliate marketing. Blogging for a reason. make sure you target the right traffic and your affiliate marketing will never disappoint youThis is a marvelous site with a funny name. Thanks for all the info. Both affilitate marketing and drop shipping works in their fantastic way. It now boils down on the one you can handle. Every business comes with their risks, you just have to choose the one that works for you.

  95. John says:

    How to promote affiliate website…

  96. Hezekiah says:

    I will take Affiliate marketing over dropshipping.
    I enjoy the ease of starting and running an affiliate marketing business.
    Moreover, dropshipping isn’t much of an option in my niche.

  97. Jossiah says:

    Nice post Steve!

    I would like to start drop-shipping in later years to come. However, for now, Affiliate marketing does the trick for me. I see no reason why I wouldn’t try drop-shipping when I have saved enough to try new things out.

  98. Pingback: Affiliate vs Drop ship – Weekly Reflections
  99. Franklin says:

    Well i will go with affiliate marketing because i know how much i make from it on my blog

  100. Blogtrainee says:

    Hi Steve, great compare. I want to start either of these but I’m confuse what tot choose. I have my full time day job work and surely I can’t manage customer support and I don’t have enough budget to outsource it. Is affiliate marketing for me?

  101. Phone Specs says:

    I’ve really read much about drop-shipping and would like to try it out but the start capital is not encouraging to me

    1. Royce says:

      You clearly don’t understand, drop shipping, there is no startup capital, only a website is required.
      Rkoyce

  102. MakaPedia says:

    Great and amazing

  103. BrowsingPhone says:

    Affiliate marketing is the best for me – I don’t have to bother about shipping, price or whatever, just build a blog and let the merchant do the work.

  104. Emmanuel says:

    This is an amazing information you put up but I don’t know how to get started. I believe the information would go a long way if you consider adding up how to get started in the article.

    thanks

    1. Eddy says:

      Hello Emmanuel,

      be so kind and read the post again.

      Dave did present you a way on how to get started.

      He even posted a link, his 6 days mini course.

      Also checkout his other stuff on this website, it’s pure gold and it’s free.

      Best wishes

      Eddy

  105. Devin says:

    Great information! I think it contrasts two very lucrative ways of making money on the internet.

  106. debbiet fortune says:

    I’ve really read much about drop-shipping and would like to try it out but the start capital is not encouraging to me

  107. priceurb says:

    great article but i will still prefer affiliate marketing..once its served to the right audience it will definitely blow

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  110. Franklin Onyejekwe says:

    I prefer affiliate marketing because setting up affiliate sites has become less difficult these days plus u can make quick cool cash once you start selling

  111. Instrumentals says:

    Affliate marketing still remains the best, in all aspects, for dropshipping, you still have to take care of inventories which may start getting stressfull as the inventory increases, but for affliate, just put the banner link on your website and you get commission per sale. i would always be a fan of affliate marketing

  112. Richardson says:

    The knowledge of affiliate Marketing you portray here has really broaden my horizon. I can now go ahead and start my business. Thanks so much.

  113. Robiul islam says:

    It’s really a great and useful piece of information. I am glad that you shared this useful info with us. Please stay us up to date like this. Thank you for sharing.

  114. Naziman Azlye says:

    Thanks for this post. I want to start as affiliate marketer seriously but somehow I confused between affiliate and dropship. I can’t answer my friend question.

    From this entry, the affiliate marketing is suitable for me than dropship. Based on the time required, and my experience with affiliate marketing.

  115. Techverbal says:

    For affiliate marketing is the best for especially for some niche, Drop-shipping is needs a lot of capital and require time.

  116. vivek says:

    Hey! recently I have started a new e-commerce site. Now I am planning to do the Affiliate marketing. I hope this blog will help me out in this.

    Beginners, follow this blog I am sure this can be helpful.

  117. tope adegboye says:

    even though both dropshipping and affliate marketing require no initial startup income, I feel dropshipping is better because unlike affliate marketing, you need to build an audience and look for good quality leads, but dropshipping, you just need to use adverts to get your initial customers and then they can start referring.

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  120. AsenT says:

    Hi,

    thanks for your amazing post.
    Dropshipping is no doubt better for entrepreneurs, because they can set up their own margins and price uplift. Nobody thinks for the customers in this situation, because they are paying more for something, which costs less. This get me motivated to create a small affiliate eCommerce aggregator with the best tech deals from one of the biggest China online wholesalers. Because I truly believe that the customer needs to pay the true price of the product I also implemented a Crypto Cash Back reward program where he can withdraw up to the full amount of the affiliate commission in cryptocurrency. Soon I will also add paypal.

    The project is very new (one month online). Do you think that this model will work? I will appreciate any suggestions/criticism.

    Thanks in advance
    AsenT @ trueprice.shop

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