Difference Between Affiliate Marketing and Dropshipping?

In today’s world, you can make money on the internet while you sleep. If you are an entrepreneur, chances are you have heard the terms dropshipping and affiliate marketing thrown around. While both methods are very similar, there are differences between affiliate marketing and dropshipping that are important to know.

What is Affiliate Marketing?

Affiliate marketing is a popular tactic to drive sales and generate online revenue. It is one of the many ways to make money on the internet without going through the hassle of starting an actual business. It is a business model where you promote someone else’s products or services to an affiliate network and earn a commission.

Amazon is a feasible example of an e-commerce website that successfully incorporated this business strategy. Over 900,000 affiliates participate in Amazon’s affiliate program, boosting their sales tremendously. Affiliate marketers play a crucial role in online marketing and drive significant traffic to e-commerce products.

What is Dropshipping?

Dropshipping is an order fulfillment method in which a store does not keep the products it sells and uses a third-party supplier to purchase and ship the products. The biggest difference between dropshipping and standard retail is the selling merchant does not own the inventory, they act as the middleman.

Brands like Trendy Goods and Wikipedeals are good examples of successful dropshipping websites. Consumers who buy from these brands receive their products from the shipper without ever touching them. It is that simple!

Read our What is affiliate marketing? article for more information.

Affiliate Marketing and Dropshipping Similarities

Since both are in the same category of e-commerce selling tactics, it’s not surprising the two have a lot of similarities. Both are low-risk business models with high earning potential. Both also allow you to start a business without requiring inventory or shipping goods. To be successful at both, you must also understand advertising and your overall online presence. This includes your website, product landing pages, social media, etc. Knowing how to market products, whether it’s affiliate marketing or dropshipping, involves a good foundation of knowledge about what you’re delivering.

Main Differences Between Affiliate Marketing and Dropshipping

When dropshipping, you are selling a product directly from your website whereas, with affiliate marketing, you are leading a customer to another e-commerce website through your link. It means that when drop shipping, you must handle all customer service inquiries since you are looked at as the seller. Affiliate marketers are not involved beyond the point of marketing the specific product.

Another stark difference is that for dropshipping, you have full control over your profit margins since you set your price. Affiliate marketing only allows a certain commission rate based on a price you have no control over.

Conclusion

Both are profitable business models when generating income and business growth. Essentially, both are easy to get started with less additional upfront spending. Regardless of which tactic serves you best, the more you advertise your business and lead consumers down the selling pathway, the more profitable you will be.