Which is More Important for Your Business: Dropshipping or Affiliate Marketing? Figuring It Out
Kateryna Tytarenko, SEO Specialist in Multi-Programming Solutions • 8 min read
In 2023, entrepreneurs may consider two ways of earning money online. The referral links model is easier to start and manage, while selling goods directly from a supplier can greatly benefit your further business scaling.
In both cases, merchants sell and advertise goods that do not belong to them. They are also not responsible for delivery and quality control. So let’s figure out what is better, affiliate marketing or dropshipping, and why they are so popular today.
Table of Contents
Why does everyone talk about affiliate marketing?
Modern entrepreneurs always find ways to make their businesses grow. Affiliate promotions become an additional source of income for those who won’t stop even if they are already thriving. It is a fast-increasing industry based on other companies’ product sales commissions, which are replenished daily by new businesses. As part of the marketing strategy, affiliates advertise another entrepreneur's items or services by sharing links to the referral channels.
Affiliate marketing works 24/7 without holidays, so you can benefit from such a partnership by accumulating passive income even when you sleep or generate development ideas for your brand.
The possibility of attracting users from another niche is also perfect for this e-Commerce strategy. While researching promoted stuff, clients suddenly become interested in your propositions and replenish your traffic. What is even more exciting: referral ads can result not in sales only. Some business partners pay for the target audience's growth, ad clicks, attracted leads, or app installation provided from your brand's source.
Joining an affiliate program is usually free. So it is a low-risk way to support your business with extra earnings from partners promotion . If you are interested in more details, keep on reading the article.
Affiliate marketing: types, benefits, profitability
Joining a program doesn’t require special skills or much time. Place an ad or refer to another entrepreneur, whether you have a website with a blog, or social media account. If someone tracks through it and makes a purchase, you earn at least 5% from the deal. With additional arrangements, the commission rate can reach even 50%. This passive income percentage may be generated while promoting classes or events.
Merchants can choose several ways to participate in promotional programs. Let’s look at them in more detail.
Types of an affiliate partnership
Business owners can advertise a product, regardless of whether they have experienced its quality and features themselves. So there are three different types of online revenue affiliate marketing dropshipping you may observe:
- Unattached. This marketing means you have no experience in the promoted niche. If you didn’t build solid relationships with the target customer and just want to earn, then this option is the right choice.
- Related. Here affiliate merchants promote goods to which they are related but haven’t tried on their own. For example, you sell clothes and participate in a t-shirt print on demand affiliate program. You have a target audience and can influence their purchases with authority recommendations. However, this type has some disadvantages: you risk losing clients' trust if the promoted product turns out to be bad-quality. But at the same time, your advertising will be cheaper than the use of campaigns with high fees.
- Involved. It is the most trusted way to sell stuff because vendors make advertisements based on their experience. Your honest and transparent reviews become the best promotion and inspire customers’ confidence. So, by providing an involved print on demand affiliate program, you’re transforming into a reliable source of content for any occasion.
Sellers can accept the partnership proposition on any marketplace or e-Commerce platform. For instance, is Shopify good for affiliate marketing? Yes, it can open an additional income channel for your business and be beneficial in other issues. Soon you’ll find out which one.
Advantages of affiliate programs
Around 65% of sellers reported 5-20% annual revenue on partnership links. It is indeed worth it, being a low-cost venture with a chance of immediate profit. Merchants choose referential marketing due to its several pros:
- Easy to join. You don’t have to develop software or organize another complicated process. The only task for an entrepreneur is to use digital marketing while selling goods.
- Low risk. The only investment you should make at the beginning is time to grow traffic. There is no money to participate in promotional programs, so why not take the chance?
- Scalability. Introducing new products to the target audience gives you passive income with the main work in the background. So, referral links can increase your business budget without significant strategy changes.
On average, affiliate marketing can bring an additional $53.290 to entrepreneurs. These statistics are based on almost 7000 sellers’ accounts. Also, the annual income from promotions depends on the followers’ number and their level of trust. Therefore, making ads for personally checked items will benefit your business more.
Vendors widely establish dropshipping and POD business along with the referral links strategy. It is another way to scale your online store with low investment, driving traffic and brand recognition growth. Let’s analyze why it is so popular among e-Commerce traders.
What is dropshipping, and why has it become mainstream?
Like the referential programs, dropship providers handle, print, and deliver the inventory while you act as a middleman in this business model. Vendors open an online store without owning a warehouse, or manufacturing powers. Entrepreneurs’ work lies in building relationships with suppliers and customers, choosing and experimenting with the products’ line to find bestsellers, maintaining shop orders, and marketing.
Print on demand dropshipping in the USA and worldwide isn’t limited to basic stuff only. So you can customize any item, like accessories, kitchenware, wall arts, pets’ products, wedding gifts, and more, connecting POD suppliers to your selling network.
It sounds like both dropshipping or affiliate stores can be profitable, low-risk, and easy-performed. Still, let’s find out what will suit your goals best in the long perspective later in the article.
Similarities and differences: affiliate marketing vs. dropshipping
Partnership programs and selling goods directly from a manufacturer or a supplier can greatly influence your business growth. But let’s learn more about the common characteristics and contrasts of the two main e-Commerce strategies!
Affiliate marketing vs. dropshipping: are there any common points?
Although these online sales approaches aren’t the same, they have something in common. So let’s figure out what mostly benefits your trading process:
- Affiliate and dropshipping businesses don’t require merchants to keep stock and make direct delivery.
- Both e-Commerce models decrease the risk for startupers, because they don’t make large investments at the initial stage.
- Entrepreneurs can generate profit immediately after launching a strategy.
- The skill set is common for both options and includes marketing knowledge, the ability to drive traffic and create promotions.
All the ways to raise your revenue seem attractive enough. So, MPS editors present the main differences between affiliate marketing and dropshipping to determine which strategy is better for your case.
Dropshipping vs. affiliate marketing 2023: which one to rely on
When talking about distinct features, first-time entrepreneurs may be interested in testing product categories to get the customer's feedback. This way, direct-to-customer sales from the manufacturer provide boundless possibilities to experiment with an online store assortment. Nevertheless, you choose the stuff performance using affiliate marketing and dropshipping on one website. Merchants will control photos, descriptions, prices, and support. In short, product representation may be personalized according to your liking or users' analysis. With referral promotions, you don’t influence these issues, which can result in ad inefficiency and outdated information.
You may find it useful to read the other differences between print on demand dropshipping and affiliate marketing listed below. They can help to choose which e-Commerce model will better embrace your business objectives.
Which strategy is less risky?
Although referral marketing doesn’t need an initial investment, it may have commission payment delays. Moreover, if a partner declares bankruptcy, the entrepreneur loses all the earnings.
You can get a weekly salary while operating dropshipping print on demand service, and there are no limits for withdrawals. For comparison, affiliate programs can set up a minimum threshold, for instance, $100, to send them to your card. But if you are subscribed to the AliExpress dropship center, you get what you earn in time.
Building an asset
Dropshipping print on demand business will help to establish and popularize your brand, not the other company products. An online shop design, advertisement performance, and social media presence allow entrepreneurs to manifest their uniqueness. At the same time, creating assets in referral programs is available only for entrepreneurs who run them.
What is more profitable: dropshipping vs. affiliate marketing
While the merchant's income consists of commissions from referral link sales only, the best dropshipping print on demand store can propose a higher margin. Thus, if you buy a product for $2 and price it at $10 on a website, you’ll keep the more significant profit, excluding expenses. On the other hand, with referral marketing, you can rely only on a percentage from the deal.
Entrepreneurs can grow their revenue also by combining dropshipping and affiliate marketing. For example, you may promote partners’ items, earn commissions, or make your program for brand advertisements through referral links.
What about retargeting?
By selling from a supplier, you can try to catch your customer with different approaches (like in multichannel marketing) and make a better conversion rate. Affiliate marketing will redirect traffic to the partners’ website, where you can’t affect retargeting.
Now we know the similarities and advantages of each strategy. Nevertheless, making the right choice may be tricky. Look through the FAQ on this topic to find more answers.
Frequently asked questions about affiliate marketing and dropshipping
Who are affiliates?
These entrepreneurs advertise other brands' goods and earn percentages from sales, leads, downloads, or other results.
Who are dropshippers?
These vendors sell products from suppliers, who pick, pack, and ship orders to the end customer.
Where can I find an affiliate program?
How to start affiliate marketing?
Provide a few simple steps:
1) Pick up a niche and platform.
2) Find a suitable program.
3) Create catching content.
4) Drive organic traffic.
5) Advertise products.
6)Earn passive income.
Are dropshipping affiliate programs worth it?
Entrepreneurs can earn 5-20% of their annual revenue and even more participate in partnership marketing. An average income can reach more than $50000, depending on the niche and followers number.
Do referral links bring less money than dropshipping?
Vending through suppliers is better for business growth and brand recognition, but you should provide customer support on your own. To make this strategy more profitable, there is the practice of arbitrage, where a marketer purchases PPC traffic campaigns and makes sales by interlinking.
Dropshipping or affiliate marketing strategy significantly benefits an e-commerce enterprise. They are low-risked, free to start, and can be run in the background of your primary job. But by relying on other businesses only, you can face the risk of payment delays or even earned commission loss. That’s why implementing a dropshipping model may be a better idea.
It can help to establish a stable income flow, provide flexible management and try different product lines, including print on demand goods. In addition, pricing and dropshipping marketing customization are under your control compared to affiliate programs.
Of course, there is no restriction to combining both e-Commerce models. For example, you can dropship, promote other sellers’ stuff and make your own referral program to provide multiple income sources. We hope, with this guide, you’ll find it easier to figure out the best way for your business development and generate maximum profit.