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 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.

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 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?

Ready To Get Serious About Starting An Online Business?


If you are really considering starting your own online business, then you have to check out my free mini course on How To Create A Niche Online Store In 5 Easy Steps.

In this 6 day mini course, I reveal the steps that my wife and I took to earn 100 thousand dollars in the span of just a year. Best of all, it's free and you'll receive weekly ecommerce tips and strategies!

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

  1. 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

  2. MakaPedia says:

    Great and amazing

  3. 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.

  4. 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

  5. Devin says:

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

  6. 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

  7. priceurb says:

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

  8. Pingback: Make Money Online With You Own Wholesale Dropship Store – Profits Beyond Belief
  9. Pingback: Difference Between Affiliate Marketing And Dropshipping – Profits Beyond Belief
  10. 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

  11. 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

  12. 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.

  13. 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.

  14. 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.

  15. Techverbal says:

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

  16. 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.

  17. 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.

  18. Pingback: Affiliate Business – Your own online money
  19. Pingback: Dropshipping Vs Affiliate Marketing: Which Online Business Will Make You More Money? – Welcome To DPAPA's AutoBiography
  20. 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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