The opportunity to live in an era of crucial technological advancements has opened up gates for self-employment and also, entrepreneurship. Today, it is way easier to start your own online business.
With such a myriad of opportunities and online liberty, we can explore countless ways to make a stable income and make a mark on the world at the same time.
In this internet savvy world, the two most common medium that people use to make money online are 1) Dropshipping and 2) Affiliate Marketing.
The most important thing to take into consideration is the surprisingly low barrier that these two ways present, making the common man choose them for an additional source of income!
Still, the question that must have risen in the minds of you, the readers, is which one is better and more profitable?
In this blog post, we will study the differences, commonalities, pros, and cons of each of the above online business to help you decide the best one for you.
So, let’s cut to the chase and dive straight in!
What do Dropshipping and Affiliate Marketing have in Common?
Before plunging into the discussion of how they differ from each other, let’s point out their similarities.
- Both of these business models require minimal investment to start up
- Both don’t require you to keep inventory or buffer for the products you sell
- Both provide ample scope for creating significant wealth
- Both of these platforms require a deep understanding of how the world of digital marketing functions and how social media can be used as a leverage to successfully run the chosen business model.
Now, both of these business models are exceedingly popular and worth giving a shot. So, what should you consider when choosing the right fit for you? We answer it all here.
Let’s first start with Affiliate Marketing.
Pros and Cons of Running an Affiliate Marketing Program
The most famous definition of the affiliate marketing trend was brought up many years ago by Pat Flynn on his Smart Passive Income website:
“Affiliate marketing is the process of earning a commission by promoting other people’s (or company’s) products. You find a product you like, promote it to others and earn a piece of the profit for each sale that you make.”
The most lucrative benefit that most Affiliate marketers boast of, is that you are not required to pay any costs to run the business. Generally, the entire cost of producing, listing and delivering the product is managed by the merchant.
Well, that shouldn’t make you think that it requires ZERO money to run. The thing with Affiliate Marketing is that you need to have a source of online traffic that you can influence. Affiliate Marketing aims at selling the merchant’s goods with online traffic that you generate. That requires having your own website and intricate knowledge of running online ads.
Another aspect of Affiliate Marketing that will definitely keep you hooked is the opportunity it brings to run the business on your own. You don’t need to hire a salesperson, nor customer support for Affiliate Marketing. You are not held responsible for the shortcomings of the product or the service provided by the merchant. All you have to do is run the channel that drives the traffic to the merchant site.
Therefore, with no limit to selecting niches, affiliate marketing is as close as you can get to generating a stable passive income.
What’s wrong with Affiliate Marketing? Well, the biggest drawback is that you’ll make only a percentage of the sale. Since you cannot decide the final price of the product, you will only get a percentage of the profit generated by the merchant.
Another drawback that comes along Affiliate Marketing is the dependence you’ll have on the merchant sites. This means that regardless of the hard work you put in to generate traffic for the merchant site, you still depend on the merchant for the monthly payout.
Now let’s switch to dropshipping.
Pros and Cons of Dropshipping Business Model
With the dropshipping model, you can earn as much you want since you are the one who decides the final price. You set up an online shop and create your own margins, unlike Affiliate Marketing where you’d have to settle for a profit percentage. You are in the driver seat here in dropshipping.
Again, no inventory is required here. Initial investments like websites and ads mount up to be a low initial investment when considered the high-profit margin.
Buy E-Commerce dropshipping websites and literally run your business on your own terms. You will be building your own brand and will run it being a boss.
When it comes to being your own boss, a few of the E-commerce websites that allow for dropshipping automation can literally reduce the effort required to manage your online business.
The greatest drawback of dropshipping is the requirement of a dedicated person that can handle customer support, website development, marketing, order management, etc. Secondly, you’d have to pick a niche before you start dropshipping unlike affiliate marketing, where you can change your niches.
This leaves no room for experimentation when it comes to dropshipping.
Which online business model is better for you?
Well, this question can only be answered by you. When it comes to Affiliate marketing and drop shipping, it generally comes down to the amount of time you are willing to devote to the business.
If you are into running a marathon, drop shipping might be your thing.
For the short term money makers out there or the ones looking for passive income, Affiliate Marketing is the way to go.
We highly recommend reading and understanding more about both business models before taking a plunge.
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