Which is better, affiliate marketing or dropshipping? Which makes the most money? Find out!
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What is Affiliate Marketing? How Do You Make Money with Affiliate Marketing?
In this business model, your goal is to refer customers/clients to another business. If they purchase their products/services, you make a commission on the sale. The way that these businesses track your sales is with something called a hoplink. When a customer clicks on this hoplink and then purchases an item, you get credited with the sale.
What is Dropshipping (with Aliexpress)? How Do You Make Money with Dropshipping?
Dropshipping (with Aliexpress) is when you go to Aliexpress and find low-cost items to list in your own online store (e.g. you can make a store with Shopify) with a mark-up price. You then run Facebook ads to the products in your store promoting them. When a customer buys an item in your store, you then go to Aliexpress and order the item for them. You keep the difference in profit.
Question 1: Which Is Easiest for Beginners – Affiliate Marketing or Dropshipping?
There is no clear winner when it comes to this question: both business models have their own advantages and disadvantages.
With affiliate marketing, it has the advantage that your affiliate merchant partner is likely established and has built up trust online. That means that if you refer a potential customer to them, that the conversion rates will be higher because they are more likely to feel comfortable purchasing from them – unlike with dropshipping where as a fresh store, you don’t have built up credibility.
On the other hand, with dropshipping, your store is usually in a less saturated market for Facebook ads. For big, profitable affiliate products, a lot of affiliates will be trying to run Facebook ads directly to the offers, making traffic expensive and competitive. In addition, you have larger profit margins to work with when dropshipping, which also helps make it easier to create profitable Facebook ads. This is very relevant as Facebook ads are probably the easiest source of traffic for beginners.
Question 2: What Makes the Most Money? Affiliate Marketing or Dropshipping?
Dropshipping has the highest potential to make money. The reason for this is that when you create a store and sell products in it, you are building up a list of buyers that you know are interested in the products that you sell. So if you have a store selling products related to Astrology, then you know that people who purchase items in your store are interested in products related to Astrology – and you can send out emails to them in the future promoting similar products, and make more sales/money.
With affiliate marketing, you are helping your merchant build a list – NOT you. And they will take the buyers that you send them, and they will send them a lot of emails promoting more of their products. With affiliate marketing, you are making one-off sales.
Question 3: Which is the Most Passive? Affiliate Marketing or Dropshipping?
Affiliate Marketing is a more passive business model than dropshipping. The reason for that is while you can semi-automate a dropshipping store, you still need to manage and fulfill orders. When a customer comes to your store and purchases an item, you need to go to Aliexpress, order the item and then get it shipped out to your customer. This is called order fulfillment. You also need to do customer support and reply to emails and messages left by customers. You can in-time make your business a lot more passive by hiring staff to run it for you, though you will need to manage those staff members.
But with affiliate marketing, you don’t do any of this – the merchant partner does this for you. THEY send the products out to the customers, THEY fulfill the orders and THEY answer customer emails. As long as you have a traffic source setup that is sending referrals to the merchant, the business will run on autopilot.
So which is better? The answer is neither: they both have their own pros and cons. Choose the business model that is right for you.