Needless to say, they are the most popular online business models, with hundreds and even thousands of success stories associated with them.
The reason why they are so popular is that they’re quite affordable to start. Also, understanding both business models is really not that difficult considering both are pretty straightforward.
The thing is that most people who want to start an online business don’t really have the time to jump into multiple businesses, especially if they work a typical 9 to 5 job (that they want to get away from).
So … which one should you choose? Well, if you’re here to find out the answer to this question, then you’re in the right place!
By the end of this article, you will know exactly which business model you should choose.
Affiliate Marketing VS Dropshipping: What Are They?
Before we dive into the reason why you should choose one over the other, it’s important to fully understand how everything works.
If you’re a beginner, it might seem a bit hard to understand a certain business model. Luckily, it’s much easier than what you expect.
Affiliate marketing and dropshipping are the easiest business models to understand, therefore you will not really have problems in that department.
What Is Affiliate Marketing?
For example, if you have a woodworking blog, you could review woodworking programs and get a commission when someone buys through your affiliate link.
Most people are attracted to affiliate marketing because they don’t need to create their own product in order to build a sustainable business. Creating your own product is one of the most difficult things you can do, and I don’t suggest you try it unless you are an experienced entrepreneur.
Another great thing about affiliate marketing is that you can make sales however you want. For example, you can either have a blog (like in the previous example), build sales funnels or run YouTube ads.
Having a website is a good choice but it takes months or even years in order to start making money. That’s because it takes time for Google to start trusting your website and ranking it on the first pages of their search engine.
Also, you will need to be consistent with content production. Once you get a couple of hundred articles, you will slowly start getting traffic via SEO.
Some people find it enjoyable to write content, while others hate it. The thing is that it might seem discouraging when you don’t see results right away.
However, the best and most profitable way to make money with affiliate marketing is running Facebook ads. This is still my main source of income and it will likely not change anytime soon.
If you want to learn how to do that, I highly recommend checking out Robby Blanchard’s Commission Hero. It will teach you from A to Z everything you need to know about affiliate marketing with Facebook ads.
What Is Dropshipping?
Dropshipping is when you sell a product that someone else creates. Also, that “someone else” will package and ship the product to the customer’s house.
Usually, dropshipping business owners find suppliers from China because they usually have better prices. I personally use SaleHoo in order to find suppliers because it allows me to avoid the bad ones.
After that, they create an online store and post pictures with the products.
From this point on, the only job they have is driving traffic to their website. Facebook ads are usually the “go to” way of driving traffic because Facebook is really good at targeting the people who are most likely to buy your products.
Dropshipping is attractive for beginners because they don’t need to buy bulk products from a manufacturer. In stead, they sell products that they don’t even own.
However, they still need to drive traffic to their store in order to make sales. Buying traffic is the biggest expense in regards to dropshipping.
Affiliate Marketing VS Dropshipping: Which Is More Profitable?
Now that we talked about the boring things, it’s time to get into the important stuff.
Knowing how profitable a business model can be is one of the most important things to keep in mind. That’s because it just wouldn’t make sense to start a business that can never be profitable.
I’m going to tell you my opinion, as I am doing dropshipping and affiliate marketing for more than 7 years. Therefore, you will be able to get to your own conclusions.
What you are about to hear might be surprising. Also, some people will not agree with this point of view. Usually, these are the people who just watch YouTube videos and don’t take action, so their opinion doesn’t really count.
Dropshipping is less profitable than affiliate marketing. And this comes from the perspective of someone who still has 2 dropshipping stores.
Usually, the profit margins in regards to dropshipping are around 15%-20%. Which is really not that much to be honest.
If you run Facebook ads (which is almost a must in regards to dropshipping), it’s really difficult to break even when you’re selling $10 T-shirts. Meaning you need to sell quite a lot of them in order to be profitable.
With affiliate marketing, the profit margins are quite similar BUT you can collect leads and follow up through email sequences. I’m sure you’ve heard the phrase “the money is in the list”.
When it comes to affiliate marketing, that’s absolutely true because you can promote products inside your email follow ups for as long as people decide to stay on your list.
Let me give you a very recent example: a couple of days ago someone purchased a digital product that I was promoting to my list. The funny thing is that this specific person was on my list for 14 months.
After 14 months, he finally decided to buy something through my affiliate link. So, when you’re running Facebook ads, you don’t really need to break even right away.
To be honest, I am completely fine with losing money on the front end while getting people to sign up on my email list. However, this usually doesn’t happen and I almost always break even on the front end.
With dropshipping, it’s much more difficult to promote products via email. Therefore, you need to become profitable right away and you don’t always manage to do that.
Affiliate Marketing VS Dropshipping: Which Is Easier?
Now that we established which one of these business models is more profitable, it’s time to find out which one is easier to start.
The good thing about both of these business models is that they are fairly easy to start. If you have a decent budget (for example $1000-$1500), you could realistically start any of them and become profitable in a couple of months.
However, you need to have some skills in order to do so. If someone tells you otherwise, please know that they’re lying to you.
You can’t make money without skills. That’s because you’re competing against people who have them.
If you want to start affiliate marketing, you first need to become good at running ads. But for the sake of this article, let’s say you want to start an affiliate blog and drive traffic via SEO.
You would need to optimize your blog so that is “search engine friendly”, as well as some marketing skills in order to get people to click on your links. Also, it will take a long time before you see any results, meaning that you will need to work for free for at least 6 months.
I wouldn’t recommend starting an affiliate blog if you’re a beginner, as it can get really discouraging when you don’t see results right away.
On the other hand, if you already have a successful business and you want to have fun writing articles, then this is a great idea.
Actually, this is exactly what I’m doing right now on this blog. However, keep in mind that I really don’t care so much about making money with this website because I’m doing it for fun.
The best way to make money with affiliate marketing is by paying for ads, because Facebook and Google are very good at targeting the right customers. You will need to become good at some king of paid ads and get people on your email list.
On the other hand, dropshipping requires a bit more marketing skills than affiliate marketing. If you want to make money with dropshipping you will need to deal with manufacturers, become good at copywriting and select the right products.
Even if you use SaleHoo in order to find good products from reliable suppliers, you will need to learn how to market them correctly. I would say that dropshipping is harder than affiliate marketing if you’re a beginner.
Affiliate Marketing VS Dropshipping: Final Thoughts
Affiliate marketing and dropshipping are 2 very popular business models. Both can be profitable and you can really have fun building a business in these markets.
However, affiliate marketing is better than dropshipping. This might seem weird coming from someone who has done dropshipping for such a long time, but it’s the truth.
If you’re a beginner, I would definitely suggest you build an affiliate business. After you get a hang of it, you can start dropshipping as well in order to experiment and have fun.
My advice is to become good at Facebook ads, as they are extremely profitable. That’s why I suggest checking out Commission Hero, as it’s the best Facebook ads training.
If you have the budget, you will definitely not regret it.