Over the last 10 years, I’ve dabbled in various ways to earn an income from affiliate marketing to dropshipping. Each with its pros and cons. So is affiliate marketing the same as dropshipping?
No, affiliate marketing and drop shipping are not the same. Affiliate marketing is an arrangement with an online retailer that will pay a commission for sales or leads. Whereas dropshipping is a retail method an online retailer uses to sell products that it doesn’t own but buys and ships directly to the buyer.
In the rest of this article, I’m going to show you the differences between affiliate marketing and drop shipping but also share which one is more profitable, which one is easier and where you can learn more about these two opportunities.
Affiliate Marketing vs Dropshipping – What’s the Difference
Affiliate marketing and drop shipping can be very different and very similar.
To help you understand this better I broke things down into 4 sections, the website, the product, the selling process, and how payments are earned.
The Marketing Process
The first way affiliate marketing differs from drop shipping is the marketing process itself.
With affiliate marketing, you market through an online retailer promoting their products for them. In a sense, you are selling products for that company.
A good example of this is Amazon.com. As an affiliate with them you can market literally every product on there site on your website.
To do this Amazon gives you a link for the product you promote and you simply place it on your website and if someone clicks on the link and buys you will earn a small commission.
When you drop ship products you are fulfilling the role of the retailer. When someone buys a product off of your website you will turn around and buy the product from a distributor and ship it directly to your customer.
So with affiliate marketing you make a sale and the retailer takes care of the rest. With drop shipping you are the retailer and have to fulfill the order.
Website and Content
Another way affiliate marketing and drop shipping differ is by the type of website you will set up.
With affiliate marketing, you will set up more of a blog on a specific topic and write product reviews covering what you know about the product.
A good example of this is the Kajabi Review I recently wrote. In this review, I shared my experiences with Kajabi and what I liked and didn’t like.
With drop shipping, your site will look more like an eCommerce site. You will work with multiple distributors and place their products on your site.
An affiliate site is set up on WordPress while drop shipping sites are typically set up on something like Shopify.
When it comes to the products in some cases you could literally sell them as an affiliate or as a drop shipper.
For example, I could sell a product from a supplier on my own website on Shopify but that same product might also be found on Amazon.com and I could be an affiliate for that product and promote it on a blog.
However, with dropshipping, it’s limited to physical products only. Whereas with affiliate marketing I could sell physical products, eBooks, digital courses, and online software.
You also have to consider where the product comes from itself. With drop shipping, your product comes directly from the supplier while with affiliate marketing this is all taken care of by the retailer.
On top of that with drop shipping you will be responsible for things like returns and customer service were affiliate marketing the retailer takes care of all of those issues.
How You Get Paid
Finally, the last way these two marketing opportunities differ is how you get paid. When it comes to this they differ a lot.
To start, with drop shipping you will get paid directly from the customer when they place an order on your website. You will then place the order with the supplier who sells the product.
The difference between the money the customer pays you and the amount you pay for the product is your profit. For example, if you have a customer who pays you $100 for a product and you buy it from your supplier for $70 you will profit the difference of $30.
With affiliate marketing you get paid by commission in either a flat free, or a percentage of the sale. For example, on product I promote it pays a commission of 3%
With affiliate marketing, the fee or the percentage is already decided whereas with drop shipping it’s all up to what you are charging for the product.
Which is More Profitable
Now you might be wondering if these two opportunities which one is more profitable and the answer is that it all depends on what product you are selling.
For example, let’s say I am selling a $200 product on Amazon. The average commission is around 3% and would earn me $6. Now let’s say I could work out a deal with the company that provides the product to buy it for $150.
If I would sell it for $200 on my own site I would earn around $50 which is better than affiliate marketing.
What I’ve found is dropshipping physical products can be much more profitable than affiliate marketing because affiliates usually only get paid a few percent when it comes to physical products. However, there are some costs involved.
When you get out of the physical product side of things affiliate marketing because very profitable when it comes to selling digital courses, online software, and membership programs.
For example, one online software that I promote pays me a recurring commission of 30%. This means that every time the customer pays their monthly fee I will also earn a commission month after month.
The great thing about this is that I don’t have to sell new people every month. I can sell someone once and keep getting paid month after month until they quit.
Which is Easier to Start With
Now even though drop shipping can earn you more you might be wonder which is easier to get started with, drop shipping or affiliate marketing?
The simple answer here is affiliate marketing. With affiliate marketing, all you need is a WordPress website for a few bucks and you’re ready to go.
Related Article: If you want to start a blog follow my complete guide here.
With dropshipping, there will be a lot more cost to get up and running. First, you’ll need a platform like Shopify that is geared for drop shipping which will also take care of things like taxes and shipping cost.
Second, with a dropshipping site, you’ll need to advertise in order to drive customers and if you’re new to this type of marketing it can get expensive real quick.
Finally, when it comes to drop shipping will want to invest in setting up some sort of limited liability contact also known as an LLC. This will protect you from any issues should a product you sell cause physical harm to someone.
Now I am not a lawyer but I would defiantly talk to one who knows more about selling stuff online as well.
When it comes to affiliate marketing your legal liabilities are much less since you are not the retailer and in most cases won’t have much to lose.
Where to Learn More
Now that we’ve discussed the differences between affiliate marketing and drop shipping you might be wondering how can I learn more about each of these opportunities.
Below are course that I recommend you check out.
Side Note: I am not an affiliate of either of these programs but I do own both of them and I highly recommend them.
Dropship Lifestyle is run by Anton Kraley and is someone who is the foremost expert on dropshipping. What I like most about this course is that the course is well laid out and he explains everything in detail.
Even if you can’t afford his $2000 course just check out his YouTube channel here, as that alone has wealth of knowledge.
However if you decide to invest in his course Anton will teach everything from niche selection, market research, to setting up your site, getting suppliers, and getting traffic.
Of all the courses I’ve taken this is the only one I recommend.
Project 24 by Income School
Now if you decide to go the affiliate marketing route then Project 24 by Income School is the best way to go. Run by two down-to-earth guys, Jim and Ricky, they will teach you everything you need to know about affiliate marketing and more.
This membership program is full of some great courses but the best part is that they give you a 60 step plan to follow that walks you step by step through the first two months of your business.
Project 24 is designed to help you get to a full-time income in 24 months. Now obviously this isn’t guaranteed but if you follow their plan you’ll be more likely to be successful than if you don’t.
So what interest you more, affiliate marketing or drop shipping? Share your thoughts in the comments below.