The Dropshipping vs Affiliate Marketing Showdown? (Winner Is ?)

Dropshipping vs affiliate marketing, which is better and what should you know before getting started?  Although these are 2 of the most popular ways to make money online, the similarity really ends there.

You will have to weigh the pros and cons of each business model to decide what the best fit is for your lifestyle.

After being involved with both, I have my favorite and I will disclose it at the end of the post.

Keep reading….

 

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Dropshipping vs Affiliate Marketing Growth and Popularity

Both of these different business models have been growing in popularity due to people becoming more comfortable buying products online.

The chart below shows the growth starting from back in 2013.

Chart Loading Below


As you can see they both were growing steadily running parallel with each other.

Affiliate marketing had been the more popular model up until July of 2017 when dropshipping started to become more popular and has seen a surge.

 

Which Is Better Dropshipping vs Affiliate Marketing

A common dilemma for those of us looking to make money online is which business model to choose? Which one will make the most money and give us the lifestyle were looking for?

So first let me define each so that everyone is familiar with them.

Affiliate Marketing

Is promoting someone else’s product or service in return for a commission. An affiliate doesn’t handle the products, deal with any customers or handle the payments.

The commission is set by the merchant.

Dropshipping

Is typically a retailer that sells products direct to the consumer without actually having the inventory on hand. Inventory is purchased as needed and shipped directly from the manufacturer or wholesaler to the customer.

A dropshipper will handle the customer service and payments.

They make a profit based on the difference between their cost and what they sell a product for.

 

Differences between Dropshipping vs Affiliate Marketing

So comparing the 2 business models you can see that there will be a lot less work as an affiliate than there would be for a dropshipper.

Let’s compare some of the specifics here.

1. Retail Customers Service

For example even though you aren’t handling the product as a dropshipper, you will still need to deal with the retail customers. Calls and emails are common regarding product availability, refunds or shipping problems.

One of the most annoying things that I hated dealing with while dropshipping was the customer calls about their products not arriving on time or at all.

Some vendors wouldn’t have accurate shipping information. Which made it hard to relay the tracking information to the retail customer. Then the angry customer calls or emails looking for the information.

Another problem was returns.

Many times I had customers order the wrong product or just didn’t like it once they received it.

In the case of a return the dropshipper will either have to take the return and keep it for a loss or return it to the vendor and get hit with a restocking fee.

As a affiliate marketer there is no interaction between you and a retail customer, so I have to give the win to AM on this.

(Affiliate Marketing = Win)

 

2. Accepting Payments

As a dropshipper you will need to accept payments on your website which means setting up a merchant account and gateway such as Authorize Net.

Plus you will need to get a tax id number and business account set up at the bank.

The cost for a merchant account will typically be $15 to $20 per month plus whatever the percentage is they take out for processing the customers credit cards.

There’s also the possibility of chargebacks that a dropshipper may have to deal with.

As a affiliate marketer there is no need to accept credit cards, so the win goes to AM on this one.

( Affiliate Marketing = Win)

 

3. Startup Costs

Costs for setting up a dropshipping business will vary depending on the e-commerce cart used, automation services, merchant account, email autoresponder, licenses required for your state and accounting software.

Just as an example a hosted e-commerce cart from BigCommerce or Shopify will run $29 to $300 per month. Then include the other expenses and your basic monthly expense will range from $50 to $100 per month for a minimum set up.

Starting an affiliate marketing business will require web hosting and an email autoresponder which will run $25 to $40 per month basic setup.

( Affiliate Marketing = Win)

 

4. Potential Profit

Trying to figure out which one of these two business models is more profitable is a little harder because of the different variables.

For example if your an affiliate marketer commissions range from 1% to 10% for Amazon, 33% commissions on email autoresponders which is also residual and some commissions can go into the $1,000’s for membership sites.

There are some membership sites where affiliates earn up to $8,000 to $12,000 commissions.

With dropshipping it can depend on what category of products you sell.

If you dropship electronics, then your profit margins will be low in the 10% to 15% range. While dropshipping jewelry will net margins 30% and up.

So its really impossible to say how much money you can make on average with either and due a head to head comparison.

(Winner = ? )

 

Dropshipping vs Affiliate Marketing | Daily Routine

I see a lot of people online talking about how easy it to make money with these 2 business models. I can tell you that there is nothing easy about making money online.

So what is it like to run a dropshipping or affiliate marketing business everyday?

Dropshipping Daily Routine

Updating Products – If you have a online store then one of your daily duties will be to make sure all your products are updated as well as adding new ones or removing discontinued products.If you have a large e-commerce store with 1,000’s of products, this can be a daunting task. Knowing how to use spreadsheets like excel will come in handy.

Advertising – most likely you will be doing some type of advertising if you want to generate an income from your online store. Google Adwords, Bing Ads and Facebook Ads are just some of the different advertising channels. So placing new ads as wells as updating bids for existing ads would be part of your daily routine.

Customer Service – before a customer buys they may have questions so you will be answering emails or returning phone calls.Its also possible that customers will want to change something on their order or change the shipping method.

Accounting – at the end of the day you will need to reconcile the bank account and make sure all transactions posted. Also make sure there were no billing errors from the vendor which can happen.

Sourcing New Products – In order to grow the business you will have to add new products to your online store, so looking for new suppliers should be done on a regular basis although this may not need to be done daily.

Education – learning new things is essential to growing any business. Part of the day should be spent staying on top of whats new in the industry or learning how to grow your existing business.

 

Also See : How To Do Affiliate Marketing On A Budget

 

Affiliate Marketing Daily Routine

Keyword Research – in order to get your blog ranked in the search engines doing keyword research for your blog posts is essential. So part of the day would be dedicated to looking for new topics to write about as well as which keywords to use.

Writing & Updating Blog Posts – some affiliates post everyday to their blogs while others only post a couple times per week. Either way new content needs to be added and the old posts need to be updated or tweaked to improve ranking in the search engines.

Advertising (optional)– if your using advertising such as Google Adwords, Bing Ads or Facebook Ads then placing new ads and updating existing campaigns will need to be done.

Education – things are always changing and there are always ways to improve that will increase income. Part of the day will be spent improving existing systems and learning whats new.

So when it comes to the dropshipping vs affiliate marketing daily routines, both are going to be a full time endeavor if you want to have any success.

Overall though from my experience affiliate marketing with a blog is less stressful and time consuming than dropshipping on a daily basis.

 

Dropshipping vs Affiliate Marketing | Products

Finding products to promote isn’t hard with either of these business models.

Finding Products For Dropshipping

When it comes to finding products to dropship there are directories such Worldwide Brands and SaleHoo that offer a list of vendors as well as products in different categories.

This streamlines the process of trying to locate vendors on your own.

The only problem is that everyone else has access to these same directories. So the same products show up all over the web creating cut throat competition between dropshippers.

To have the most success with dropshipping finding unique products or hard to get products (customizable) are the best option. Although this can be time consuming in the beginning, the benefits would be seen later on in higher profits and sales.

Finding Products For Affiliate Marketing

It is a simple process to find products for affiliate marketing as well.

Similar to the directories that list dropshipping products there are affiliate networks such as ShareaSale and Rakuten for affiliates. These affiliate networks list vendors in different categories along with the commission that they will pay an affiliate for a sale.

Signing up is fairly simple and can be done with a click of a button.

As an affiliate there is also the opportunity to sell digital products such as e-books and courses. ClickBank is a popular affiliate network that lists the different digital products that can be promoted.

 

Dropshipping vs Affiliate Marketing | Expectations

When starting any business online you need to think long term.

If you plan to get started online and do affiliate marketing or a dropshipping business you must realize that neither of these business models will produce an instant income.

It can take months to years to make any money if any at all.

A dropshipping business is going to be more expensive to start up and is going to require more time and resources than a affiliate marketing business.

What most dropshippers don’t realize is that it will also take money to advertise because everyone is selling the same products, using the same e-commerce carts and using the same manufacturer descriptions for the products.

So how are you ever going to get noticed?

 

Conclusion

After having experience with both business models I can truly say that when it comes to the dropshipping vs affiliate marketing question, I prefer to be an affiliate instead of a dropshipper.

Some of the main reasons are:

  • Can be done with just a computer
  • Only need a small budget
  • Passive ( not tied to the business everyday)
  • Promote big brands like Nike, Apple,MasterCard
  • Residual income opportunities

Some people want you to believe that there is more money in doing dropshipping, but that is not really the case and here is why.

Unless you are selling some unique product, you will be competing with millions of other sellers. In order to get a sale its going to be based on the lowest price which results in low profit margins.

Are you going to be able to compete against Walmart, Ebay or Amazon as a dropshipper? The answer is no, but you can make money as an affiliate working with all 3 of those companies.

So along with low profit margins with a dropshipping business the expenses will be considerably more than a affiliate marketing business and will eat away at your profit.

After experiencing these things I made the decision to get out of dropshipping.

The Realization

I realized that by sitting at a desk all day answering emails and phone calls from customers along with competing in price wars with other merchants wasn’t my idea of the lifestyle business that I wanted.

I did want to do my own thing but I didn’t want my life to revolve around a dropshipping business.

That is when I made my discovery.

The affiliate marketing business model was exactly what I saw as the perfect lifestyle business.

No dealing with customers, no dealing with inventory and the opportunity of earning passive income.

So after this realization I decided to learn as much as I could about affiliate marketing so that I could take advantage of everything that it offered. I joined Wealthy Affiliate a program that offered a training course and all the tools that I needed. I got started with their free account and took advantage as much as I could.

Now I am helping others discover the benefits as well.

Best of all you can get started for free the same way that I did and build your first couple affiliate websites in 5 simple steps with my help.

So if your ready to get started with affiliate marketing and your free training, then click the link below and we can get started building your lifestyle business today.

 

I Would Love To Hear From You So Please Leave A Comment Below!

42 thoughts on “The Dropshipping vs Affiliate Marketing Showdown? (Winner Is ?)”

  1. Dropshipping definitely seems to be more involved as far as getting all the pieces of the puzzle working for you and advertising and managing shipping, etc. If you are not a good writer or like writing, dropshipping may be more your cup of tea. Affiliate marketing is a great option but you must be willing to do a lot of writing. If you can handle the writing, then affiliate marketing is a much better option. I chose to get started in affiliate marketing and have learned a ton since!

    Reply
    • Hi Jen,

      For me dropshipping was too time consuming because I had to do too many things and there was never enough time in the day it seemed.

      Yes you are right, as an affiliate with a blog you do a lot of writing but that is the main focus and you don’t need to worry about all the other time consuming tasks.

      I also like that affiliate marketing is more passive, so if I need a day off its not a problem and I have a more flexible schedule as well because I don’t need to deal with customers or suppliers. So I can work at night after my son goes to sleep.

      Thanks for the comment!

      Reply
  2. Thanks, Chris, for this very thorough comparison of the advantages and disadvantages of drop shipping and affiliate marketing.

    I have often considered exploring the world of drop shipping and I had so many questions about it. Your post has answered most of the queries that I had about these two methods of earning income online.

    I appreciate the honesty that you bring to this review.
    It really gets annoying after a while, listening to these “fake” gurus walking around their mansions or showing me their 10 lambos.

    After seeing your list of pros and cons, it made an easy choice to go the affiliate marketing route.

    This becomes even more important when the program you are promoting includes an educational component.

    How long were you involved in drop shipping?

    What percentage of your time was taken up by customer interaction?

    Paul

    Reply
    • Thanks for the comment Paul.

      For me dropshipping was more like a job vs the lifestyle business that I was looking for and yes I’m tired of the guys like Tai Lopez making it seem easy too.

      I did it for 4 years.

      In the beginning their wasn’t much customer interaction, but as the business grew, I had to answer emails and return phone calls regarding different issues. Time wise it took about an hour per day.

      Affiliate marketing is the business model that gives me what I am looking for when it comes to flexibility of schedule and being able to work from different locations. Plus no dealing with customers!

      Reply
  3. Hi Chris,
    Love your article on drop shipping vs. affiliate marketing. I joined the WA community in summer of last year and while I haven’t made any real money yet besides a little bit from google Adsense I am enjoying the journey. I have been looking into ways to expand and looked at drop shipping. It certainly does seem to be more “hands on” than what I was wanting to do, especially since I keep myself pretty busy and am stretched to post a few blogs a week to continue to try to build my website.
    I appreciate the insight into the drop shipping. I have definitely decided it is not the right move for me at this time.
    Cheers!
    Mat A.

    Reply
    • Hi Mat,

      If your looking for more of a lifestyle business where you don’t have the day to day interaction with customers and merchants, then definitely consider affiliate marketing.

      You get more freedom and ability to control your schedule as well as an affiliate.

      Dropshipping is something that you have to be involved with everyday. Try going on vacation and keeping up with your online store! Very difficult.

      You just don’t get the same flexibility as you would with a affiliate marketing business.

      Reply
  4. Hi Chris.
    Thanks so much for the article about Dropshipping VS Affiliate Marketing. I’ve only recently heard of Dropshipping, but I didn’t know what it was. Now I do. Your article was very clear, concise, and to the point. I believe I will just stick with Affiliate Marketing.
    BTW… Your style of writing is excellent.
    Thanks again for the great info.
    Wendi

    Reply
    • Hi Wendi thanks for stopping by.

      Dropshipping is just another business model but it is more involved than being just an affiliate. I like the idea of location freedom and being able to work from a laptop which you can’t do as a dropshipper.

      So it really depends on what lifestyle are you looking for.

      For me I prefer a more passive business model where your not having to deal with customers, inventory and such.

      Reply
  5. Firstly, the level of profit you can generate is far higher than if you are only an affiliate. With an online shop, unlike Affiliate Marketing, you can set your own prices where all charges are fixed. In general, while you can make a gross profit of 30 percent of your goods, the commission from being a physical goods affiliate is usually much smaller. As an affiliate, you will constantly have to drum up new business and referrals because there is no customer base. There is no foundation

    Reply
    • I never ran across any dropshippers that were making 30% on their products so I would be interested in knowing what these products might be.

      The typical dropshipping business makes 10% to 15% percent from what I have seen.

      Now as far as affiliate marketing goes you won’t have the same overhead and you don’t have to drum up new business because you can use social media as well as a email list to build your foundation.

      I have done both of these business models and I prefer affiliate marketing because of its flexibility and low overhead.

      Reply
  6. Drop shipping has its advantages certainly, however when it come to affiliate marketing, it’s a no contest in my opinion.

    I also share your views, any day of the year, I’d rather be an affiliate marketer than a drop shipper. There’s more work to put in when drop shipping, than affiliate marketing. So, I’d go with affiliate marketing all day!

    Reply
    • Yes your correct with what you say. For me it boils down to having a lifestyle business because I have other things going on and affiliate marketing offers this advantage.

      Reply
  7. I have noticed more and more people turning towards building their very own dropshipping businesses online, and most of them seem to be going through the Shopify route to succeed. 

    Personally I still think this is a lot more work than affiliate marketing, even if it seems simple at first. I also wonder how long this form of buying/selling will go on for without a big roll out in laws etc. After all, you can’t put all your eggs in one basket. 

    Do you think stronger regulations will hit dropshipping at some point in the future?

    Reply
    • Shopify is a e-commerce cart that is very popular with dropshippers. They make it easy to get started and they offer some great features as well.

      Dropshipping is definitely more work than affiliate marketing in my experience.

      I like affiliate marketing better because all I need to do is create content in order to earn commissions. 

      I don’t see more laws or regulations needed for drop shipping because most legitimate suppliers require resale certificates plus business bank accounts which means you need to be all set up with your local government in order to run the business.

      Reply
  8. Thanks for writing this article on the difference between affiliate marketing and dropshipping.  I already know about dropshipping. Before now I have heard many things about dropshipping even though I don’t make money from it. Because affiliate marketing has been what I base on from the beginning and it works for me. I know many will find this article useful in choosing between dropshipping and affiliate marketing as an online business 

    Reply
    • Glad to hear that your a successful affiliate. 

      Reply
  9. Chris thanks for the comparison between Affiliate marketing and dropshipping.
    I must say that after reading your experience, I’m happy to be an affiliate marketer.

    I just can’t imagine myself dealing with chargeback and small commissions. Because of my low start up cost as well I do not think I can do drop shipping.

    So now that you’ve made me aware of pros and cons  between the two, I will not touch or even advise anyone to go for dropshipping.

    Thank you so much Chris.

    Reply
    • The dropshipping business model isn’t bad it just depends on the amount of time that you have to dedicate to getting started as well as running it.

      For me the affiliate marketing business model fits my lifestyle and schedule.

      Others may enjoy running a drop shipping business.

      Reply
  10. To me affiliate marketing because it thought me so much about online business and how to build my own business, i see drop shipping like waste of a time, am not saying dropshipping is not good but affiliate marketing is better and i believe i will make it with been an affiliate marketer.

    Reply
    • Affiliate marketing is more of a lifestyle business and dropshipping is more hands on.

      I rather create content and earn commissions than spend the days dealing with customers and all the other little things that go along with a dropshipping buisness.

      Reply
  11. What an engaging review on the comparison between Dropshipping and Affiliate Marketing. I really appreciate this interesting review as it even helpful to someone involved in one or two of it. I can categorically say dropshipping is little bit time consuming and involved some stress and requirements compare to affiliate marketing. I really make my choice right from the start before choosing affiliate marketing and am doing well with it. Good job man. Wish to see more interesting article on this website more!

    Reply
    • Definitely more time consuming to run an e-commerce business using dropshipping. You have to wear many hats especially in the beginning when getting started.

      Unless you are selling some unique products its going to be very competitive because consumers are price conscience always looking for the best price.

      Reply
  12. Hi Chris, i really love your post, it is as if you know what i was thinking and all your post answers all the questions that have been pondering me about drop shipping and affiliate marketing, i wanted to start a business as a new online entrepreneur a friend introduce affiliate marketing and drop shipping but with the way you have outlined every point in your post i am vote for the affiliate marketing.

    Reply
    • Glad you were able to make a choice which business model works best for you.

      Reply
  13. I did try drop-shipping briefly, just using Amazon and Ebay, and although it definitely worked, the amount of money made as very small compared with the amount of time sorting out the products and getting them up on Ebay. So I concluded, like you, that drop-shipping was not for me!

    So I completely agree with you that Affiliate Marketing is the winner – no contest!! But it is important to learn exactly the correct way to go about it, so I would definitely recommend anyone who wants to do Affiliate Marketing to join Wealthy Affiliate and go through the brilliant training there.

    Very many thanks for your really interesting post

    Chrissie 🙂

    Reply
    • Thanks for the feedback Chrissie. There are so many people using the dropshipping business model selling the same stuff that its too competitive.

      To be successful you need to find unique or hard to get products. Or better yet manufacture your own.

       

      Reply
  14. Hi Chris, you really did great with your comparative analysis between drop shipping and Affiliate marketing. There is no easy way to making money online, however it is different stroke for different folks. There are people that are more gifted when it comes to selling irrespective of the fact that there are competitors, the same is applicable to affiliate marketing.

    I am on the same page with you as far as affiliate marketing is concerned. I prefer affiliate marketing to drop shipping. What I detest most in drop shipping is having to deal with the returns or grumpy customizers that will quickly change their minds once they see the product physically.

    I will rather stick to affiliate marketing and promote other people products, that way I don’t have to deal with the hassles that comes with drop shipping.

    Reply
    • I agree with what you say.

      It really depends on what the person and which business model works best for them.

      As soon as my son leaves the house I plan to travel so it would be hard to run a dropshipping business while moving around.

      That is why I got into affiliate marketing.

      All you need to do is create content and refer people to products that they need which can be done from anywhere.

      Reply
  15. I chose affiliate marketing over dropshipping any day. The aspect of dealing with customer service is too much. I will chose to handle all the customer services and all the payments only when I have the e-commerce and the mark up is higher then worth it. I find affiliate marketing to be so lucrative, all you have to focus on is to do your research for the product and the way you want to promote it. The commission might be little when you first started but a penny will become a dollar and eventually you might be able to score high commission. For me it is no brainer, affiliate marketing is better than dropshipping in my opinion.

    Reply
  16. I have very little experience in those two as I am just starting but in this online business journey. But from the little research that I have done,I think affiliate marketing consumes less time, is more cost effective, has the ability to pay out more and is less stressful when it comes to dealing with customers. I definitively would choose Affiliate Marketing anytime,any day.

    Reply
    • That pretty much sums it up Vapz! 

      If your looking for a lifestyle business that is more passive then affiliate marketing is a better choice than dropshipping.

      Reply
  17. Nice one. You chose the option I had in mind, which is Affiliate Marketing. As an e-commerce site developer, I understand what drop shipping is all about, though I have not been involved in the business before, however, I have been involved in affiliates marketing before, and I can boldly say it is far better, profitable, and less stressful compared to drop shipping. The major work an affiliate marketer needs to do is to build his/her audiences trust in the credibility in his/her review of products and services.  

    Reply
    • That is how I feel as well.

      At this point in my life I am more interested in a lifestyle business and I can get that with affiliate marketing.

      Reply
  18. Hi Chris. Thanks to you for writing this great comparison between dropshipping and affiliate marketing. I always thought dropshipping is the real deal but this post just made everything more clear to me now. I love affiliate marketing too and I’m currently working on my first website with wealthy affiliate. Thanks for sharing this

    Alex

    Reply
    • No problem Alex.

      I have nothing against drop shipping to be honest I just no longer believe it fits me personally as a good business model.

      I rather be an affiliate without having to deal with all the little nuisances. Plus my goal is to be as mobile as possible in the future.

      The affiliate marketing business model offers this.

      Reply
  19. Thanks for sharing this article on dropshipping vs affiliate marketing. I feel the same way as you.  Affiliate marketing being a passive income platform it allows me a chance to attend other offline businesses. On the other hand drop shipping consume time the more. Plus its becoming hard to compete with the dropshipping business model.

    Reply
    • I haven’t been involved with e-commerce for the last few years so I can only imagine how competitive it has become.

      I know it was cut throat back in 2014 when I got out of it.

      Being an affiliate is competitive as well but the business model works for me.

      Reply
  20. Nice, very interesting articular and comparison of to ways to make make money form a home based business,i never realized,how much work drop shipping could turn out to be, but thinking about my personal use of shopping online there has been lots of returns and wrong items,work that you get blamed for but not your fault …that would drive me crazy.Also the amount of competition and a changing market drop shipping seem full time…I am with you on affiliate marketing,still a lot of work,and picking a profitable niche can be tricky,but once it gets up and running you have a good chance at long term prophet thanks for the education  T.C

    Reply
    • Yes for those people looking to be in front of a computer all day and dealing with customers, vendors as well as shipping mishaps then dropshipping may be something they want to try.

      I’m more into a lifestyle business and that is achievable using the affiliate marketing business model.

      Reply
  21. This is a very interesting topic that I’ve always yearn to read about. I’ve been trying to precisely know the pros and cons that relates to these two areas, to have a sound judgement. Seriously, the comparison you made about both services / endeavours are just very unique.. It has helped me to know which to prioritise. 

    However for me , there is much job to do by the Dropshipper than the Affiliate marketer and there is explicitly less risk to undertake by the Affiliate Marketer. Thank you for this article. Worth reading over and over again.

    Reply
    • Some of the things that I have noticed over the years is that it has become quite a bit more expensive to get started with dropshipping.

      Plus trying to get your e-commerce store ranked in the search engines is almost impossible which means as a dropshipper you need to spend money on advertising.

      In comparison starting a affiliate marketing business is still inexpensive. On the downside it also makes it more competitive.

      Reply

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