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In 2022, two of the most profitable ways to earn money online were dropshipping and affiliate marketing. Those who are entering the digital marketing world will get confused about which of the two is more profitable to start.
So, in this post, we will focus on the pros, cons, and comparison of t2hese two earning models to decide which one is better for you.
Honestly speaking, both dropshipping and affiliate marketing requires hard work to start. Most people enter online marketing thinking that they can easily get rich by making the website and streams of income will start popping out in no time. That is a grave mistake. Whether it is dropshipping business, affiliate marketing, or any other online business, it requires consistent effort to grow the business.
|How it Works||In Dropshipping, you don’t have to store inventory or ship products. Just get orders and make a profit on arbitrage||In Affiliate marketing, you refer a customer to another business and take a certain percentage as commission|
|Business Model||The amount of profit you make is your selling price minus the wholesale price||The amount of profit you make is the commission on the product you sell. The commission is usually paid on a monthly basis|
|Business Management||You sell products that are not yet in your inventory from your store. The customers pay to you and then you pay to the manufacturer||Whenever a potential customer clicks on an affiliate link on your site they will be automatically directed to the merchant’s website. The affiliate tracking cookie remains on the browser of the visitor’s browser for a limited time|
|Ease of Use||You are responsible for customer support||You are not responsible for handling anything related to store|
|Commission||As you earn by arbitrage, you can name your own price||You are paid a fixed commission by the merchant|
|Growth Prospect||A quality online store will naturally grow over time with a strong foundation||A quality affiliate website will grow over time but the affiliate marketer will always remain dependent|
|Recurrence||You get repeat business and recurring orders from customers||An affiliate purchase is just a one-off transaction.|
|Control||You have full control over the dropshipping offers available to you||You don’t have control over the affiliate offers available to you|
|Customer Data||You own the customer data||You don’t deal with customers|
|Future Prospect||Your dropshipping store can easily become a full-fledged business||As an affiliate marketer, you are dependent on the retailer/manufacturer whose products you promote|
MMO (Make Money Online) is a form of business that is growing extremely strong today. With many different types of businesses such as Affiliate, Dropshipping – FBA, PPC, CTC, PTC (Paid to click), etc. If you have experience with MMO, you probably know that Dropshipping and Affiliate Marketing are two of the best ways of earning money today.
But if you are a newbie and want to choose a path to pursue, you will be wondering what to choose. In this article, I will analyze Affiliate Marketing vs Dropshipping: Which To Choose.
Dropshipping is a method of sales that bypasses shipping. It is a retail method that you do not need to store inventory. Instead, you transfer customer orders and shipment details to another manufacturer or supplier. These people will then deliver the item directly to the customer. With this way of doing business, retailers do not need warehouses and goods in the warehouse, and no need to care about the shipping.
You can simply understand that you buy a product at a low price, sell it at a higher price, and profit from the gap. The profit you get is the price difference between the supplier and the price you sell to customers minus shipping costs. The difference will be more or less depending on the type of product and how you choose a supplier.
The biggest difference between Drop Shipping and other retail models is that merchants do not need a warehouse or inventory. Instead, these traders buy inventory when needed by a third party – usually wholesalers or manufacturers – to complete their orders.
Affiliate Marketing is a form of promoting products or services of the Supplier, the company whose products or services want to go through the websites of partners promoting goods and services to end-user. Partners making money online receive a commission when a user visits the Partner’s website to manage and perform actions that the supplier wants from the end-user, such as Purchasing, registering to use services, filling in the information, etc.
Participants in Affiliate Marketing include:
Although Dropshipping and Affiliate marketing are two distinct areas of two different industries, these two methods also have many similarities, such as:
Currently, Dropshipping and Affiliate Marketing are becoming attractive business models for both traders and long-time traders. However, none of the business models are perfect. Any type of business will have its advantages and disadvantages. So let’s take a look at what are the advantages and disadvantages that Dropshipping and Affiliate Marketing bring.
Does not require much capital
Perhaps the most signiadvantage of Dropshipping is that you can start an online business without investing a large amount of inventory. If you do business in the traditional form, you will have to spend a significant amount of inventory. With the Dropshipping model, you won’t have to buy any products unless you’ve sold and paid customers. If you don’t need the cost of inventory, you can start a successful dropshipping business with very little capital.
Easy to start
Starting an online sales business is usually easier when you don’t have to deal with physical goods. With Dropshipping, you don’t have to worry about:
Since you don’t have to deal with inventory purchases and warehouse management, your overhead will be quite low. In fact, many successful drop shipping businesses are setting up offices right at home with just one laptop and spending less than $100 per month. As you grow, this cost may increase, but it will still be less than traditional businesses.
A dropshipping business can move anywhere with an Internet-connected device. As long as you can easily communicate with suppliers and customers, you can start and manage your business.
Free to select product type
Because you don’t have to buy the items you sell, you can offer a range of products to your potential customers. If the supplier hosts a list of goods, you can list them all on your website for free.
Easy to scale up
For a traditional sales business, if you want to get three times more sales, you will have to spend three times more time and effort than usual. By taking advantage of drop shipping vendors, most of the additional order processing work will be handled by these suppliers, allowing you to expand the sales scale with less effort more to increase these sales. Growth in revenue will always bring more work – especially in relation to customer service – but businesses that use the drop shipping model are only more relative to traditional online businesses.
Low profitability is the biggest drawback to a highly competitive drop shipping business environment. Because it is easy to get started and the investment and operating costs are minimal, many traders will set up a store and sell bargain items in an effort to increase sales. They have invested very little to start a business so they can afford to operate with low turnover.
If you stock all your goods, it’s very easy to keep track of items that are still in stock or out of stock. But when you have supplies from different warehouses and also orders from many other traders, it is difficult to keep track of where your goods are. Meanwhile, there are a few ways you can better synchronize your inventory with suppliers, which are not always possible and not always supported by all vendors. technology for you.
If you work with multiple vendors the products on your website will be sourced from different vendors – this will make your shipping business more complicated.
If a customer places an order with three products at different suppliers, you will incur three shipping costs for each product sent to the customer. But you probably won’t be able to ask the customer to pay shipping for these three products because customers often take it for granted. And even if you want to collect shipping costs on each product, automating these calculations is difficult.
Have you ever been blamed for something that was not your mistake, but you still have to take responsibility for those mistakes? Even the best Dropshipping suppliers make the mistake of completing an order – mistakes they will be responsible for and apologize for. Trivial and poor quality suppliers will cause endless frustration when losing goods, damaging goods and poor quality packaging, which will harm your business.
No Cost for Being an Affiliate
When doing Affiliate Marketing, you will not have to spend too much money. You just need to create your own website or a blog that is related to your business products, sources of goods that you can deeply understand them and manage them effectively.
Source of Passive Income
Affiliate marketing policy will probably create you a sustainable business model that provides a source of income on a regular basis for you over many years. You do not need to worry about creating products, no need to worry about shipping costs and other complicated things. All you need to do is make sure you are sending highly targeted traffic to the merchant landing page to drive conversions and you will receive money. So we can see that Affiliate Marketing gives us a pretty good and sustainable source of income.
No need to do customer support service
In an Affiliate Marketing business, affiliate suppliers provide merchants with their potential customers. Therefore, you are not necessarily a product expert. Merchants handle all customer support issues. If the customer is not satisfied with their product, the merchant will process the refund. If a customer needs help to solve a specific problem, the merchant is responsible for helping them. So when you have a customer’s inquiry, all you need to do is direct the customer directly to the merchant.
The profit earned when selling 1 product is low
If you are an affiliate, your profits will be calculated based on Commision. For example, you make an Affiliate for Amazon, the Commission you receive ranges from 4 ~ 10%. That is, if you spend $ 100, you can only earn $ 50 or less. This profit is much lower than Dropshipping.
Payments May Be Delayed
Those who do business in the form of Affiliate often have difficulty in financial matters. Because some providers may not be reliable in paying on time.
People Can Remove the Affiliate Link or not use your link to buy products
Sometimes, if you don’t use link shorteners, people might hover over the link and find that it’s an affiliate link. Therefore, they can assume that the cost is higher to buy through the link. Most people do not acknowledge that you only receive a commission for the sale. Therefore, people can choose to manually access the website you recommend directly without clicking on your affiliate link. When customers want to buy next time, they usually will not visit your blog but they will go directly to the product link to buy. Since they didn’t click the link, you will not earn any commision for that.
No Control Over Products and Pricing
With Affiliate Marketing, you can not control the product you are advertising. You can not control the interface, description, price or post-sales service of the product. This may limit what you can do as an Affiliate Marketer from an advertising standpoint. You may not be able to mention certain features due to your terms and conditions. You can rely on photos to advertise products. But these may be outdated or low quality that make product promotion less effective.
Clearly, Dropshipping and Affiliate Marketing have different advantages and disadvantages. These points will suit different audiences. Dropshipping will be suitable for those who want to make money online but have little capital, those who love real business. Meanwhile, Affiliate Marketing is suitable for people who are good at web design, have web experience and SEO knowledge. In addition, doing Affiliate Marketing also requires more effort and financial investment than Dropshipping. Those who are doing Dropshipping, FBA who want to invest more in other money channels can also consider this field.
While Affiliate Marketing is great for beginners who don’t want to take on too much of a business such as customer support, Dropshipping is a much more lucrative choice. Running an online Dropshipping store can help you make more money than an Affiliate Marketing site. You can easily market your products by uisng Facebook Ads and Google Ads. Moreover, if your store is providing excellent product quality, you will soon start receiving a consistent order line.
Moreover, a dropshipping store can also be turned into a passive business by hiring employees for the marketing and management activities of the e-commerce dropshipping store.
In comparison with Dropshipping, affiliate marketing is a lot easier to start and manage. In a dropshipping website, you will have to actively monitor the store and order products through suppliers. All this requires time. But in an affiliate website, you don’t have to actually do any of this because you get a commission by letting people buy through your link. That’s it.
So, if you want to start both at the same time, simply start a review website and add affiliate links in the reviews. Add a ‘Store’ section to your website and fill that store section with dropshipping products. Promote these products on social media and search engines. This will help you run both the businesses at the same time and maximize earnings.
So with the comparison between Dropshipping and Affiliate Marketing above, I have given the similarities and pros and cons of both forms. In an increasingly technological age, MMOs like this will help us get businesses that benefit without spending too much capital to invest in. Hopefully after the article, you will find yourself the most suitable direction.