Affiliate Marketing vs. Dropshipping: Which is Better?

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Thinking about starting an online business but can’t decide between affiliate marketing and dropshipping?

You are not alone! These two popular business models are popular options for persons who wish to start an online business. But don’t worry – I will try to help you figure out which one is the best choice for you to achieve some success online.

Picture this: You’re sitting at your computer, dreaming of financial freedom and being your own boss. You’ve heard about people making money online, and two terms keep popping up: affiliate marketing and dropshipping. They both sound great, but which one should you choose?

Let’s break it down in simple terms.

Affiliate marketing is like being the go-to friend who has tried everything. You promote other people’s products and earn a commission when someone buys through your link.

On the other hand, dropshipping is where you run an online store without keeping any inventory. You sell products, and when someone buys, you order from a supplier who ships directly to your customer.

Both business models have their fans, and for good reason. They’re low-cost ways to dip your toes into the world of online business.

But which one is the best fit for you?

That’s what I’m going to help you figure out in this article. So grab a cup of coffee (or tea, if that’s your thing), and let’s dive in!

What is Affiliate Marketing?

Affiliate marketing is like being a matchmaker in the online business world. You introduce people to products or services they might love, and if they make a purchase, you get a reward in the form of a commission.

Here’s how it typically works:

You sign up for an affiliate program (Amazon Associates is a popular one for beginners).
You get a special link for the products you want to promote.
You share that link on your blog, YouTube channel, social media, or wherever your audience hangs out.
When someone clicks your link and buys the product, you earn a commission.

Sounds simple enough but there’s actually a lot more to it. Read on to find out more.

Affiliate Marketing Pros

Low startup cost – You can start with just a website, YouTube channel or social media account.
No inventory to manage – You’re not responsible for storing or shipping products.
Flexibility – You can promote products in any niche you’re interested in
Passive income potential – Once you’ve created a piece of content, it can continue to earn you commissions for years to come.
Learn as you earn – You’ll gain some valuable marketing skills along the way.

Affiliate Marketing Cons

Takes time to build an audience – Whether you’re driving traffic from search engines or building a YouTube channel, success isn’t going to happen overnight.
Competition can be fierce – Popular products often have a lot of affiliates
No control over products or pricing – You’re at the mercy of the merchant in this aspect.
Unpredictable income – Sales can fluctuate based on many different factors.

What is Dropshipping?

Dropshipping is where you run an online store but never actually touch the products. Here’s the basic idea:

You set up an online store (using platforms like Shopify or WooCommerce).
You partner with suppliers and list their products in your store.
When a customer places an order, you buy the product from the supplier.
The supplier ships the product directly to your customer.

You make money by charging customers more than what the supplier charges you. It’s like being a middleman, but without ever handling the products yourself.

Dropshipping Pros

Low startup costs – Like affiliate marketing, you can start with just a website.
No need to hold inventory – Even though you’re selling physical products, your supplier handles all the storage and shipping.
Wide range of products – you can sell almost anything.
Scalability – It is relatively easy to add new products or expand to new markets.
You set the prices – This gives you a lot more control over your profit margins.

Dropshipping Cons

Lower profit margins – Competition can drive prices down.
Less control over quality and shipping – You have to rely on your supplies to do a good job with these aspects of the business.
Customer service can be challenging – You are responsible for any issues, even if they’re your supplier’s fault.
Can be hard to stand out – Many dropshippers sell similar products.
Managing suppliers can be tricky – You have to keep track of inventory levels, pricing changes, and more.

Should You Choose Affiliate Marketing or Dropshipping?

Now that you have an understanding of how both business models work, it’s time to compare the key factors so you can make a more informed decision about which one to choose.

Initial Investment

Affiliate Marketing: You can start with just a website, YouTube channel or social media account. Your main costs might be hosting a website (around $5/month on the low end) and maybe some marketing tools.

Dropshipping: Similar low start-up costs, but you might need to pay for a more robust e-commerce platform (around $30/month for Shopify, for example) and maybe some initial inventory.

Winner: It’s a tie! You can start both businesses on a very low budget.

Time Commitment

Affiliate Marketing: In the beginning, you’ll spend a lot of time creating content and building an audience. Once you’re a little more established, things become a bit more passive. What you created before can continue earning commissions for years.

Dropshipping: This is a bit more hands-on and requires ongoing time for tasks like managing orders, customer service, and dealing with suppliers. It’s more like running a traditional business.

Winner: Affiliate marketing doesn’t take too much of your time. This is the one to choose if you want something that is a little more hands-off.

Profit Potential

Affiliate Marketing: Commissions vary widely, from 1% to 50% or more and there are even different commission types. Your income depends on your traffic and conversion rates.

Dropshipping: You set your own prices, so there’s potential for higher margins. However, competition can sometimes drives prices down.

Winner: It depends on your niche and skills, but dropshipping might have a slight edge for quick profits.

Control Over Products & Pricing

Affiliate Marketing: You have no control. You promote what’s available at the price set by the merchant.

Dropshipping: You choose what to sell and set your own prices. However, you’re still limited by what suppliers offer.

Winner: Dropshipping gives you more control.

Customer Service Responsibilities

Affiliate Marketing: Minimal. The merchant handles all the customer service for their products.

Dropshipping: You’re fully responsible for customer service, even for issues caused by your supplier.

Winner: Affiliate marketing is less demanding in this aspect.

What To Consider When Choosing

Choosing between affiliate marketing and dropshipping isn’t just about the pros and cons of each business model. It’s also about you – your skills, interests, and goals.

Here’s a breakdown of what else you should consider when choosing between both business models.

Personal Skills and Interest

Are you someone who loves to write or maybe you do great with social media? Maybe you love making videos.

If any of these are YOU, then affiliate marketing might be the business for you. It relies heavily on content creation (whether creating written content or uploading videos) and building an engaged audience.

On the other hand, if you have a knack for spotting trends and enjoy the idea of running your own store then dropshipping could be the one for you. It requires more business sense and a good eye for products that will sell.

Personally, I chose affiliate marketing because I’m an introvert and having a business where I didn’t need to physically interact with people on a daily basis. Dropshopping offers the same benefit, however you’ll still need to do customer service and deal with suppliers.

Available Resources

Your available resources may impact your choice here. If both sound appealing up to this point, here is where you might be able to finally make a decision.

Let’s take a look at how your resources can make a difference.

Time: If you have a full-time job and can only work on your side hustle a few hours a week, affiliate marketing might be more manageable.

Between dealing with customer issues in a timely manner and dealing with potential supplier issues, dropshipping can often require more consistent daily attention.

Money: You can start either business on a small budget, but dropshipping might require a bit more upfront investment in your store platform and possibly in some initial inventory.

Expertise: Are you already an expert in a particular field? That knowledge could give you a head start in affiliate marketing.

If you’re more of a jack-of-all-trades, the diverse world of dropshipping products might appeal to you.

Long-Term Goals

Do you dream of building a personal brand? Affiliate marketing often goes hand-in-hand with becoming an influencer or thought leader in your niche.

A dropshipping store might be easier to value and sell than an affiliate marketing operation tied closely to your personal brand. If your goal is to one day sell your business, then dropshipping might be a better direction.

Success Stories & Examples

I’ve achieved success in affiliate marketing and so have countless others. Dropshipping also has their fair share of success stories as well.

Below, I’ll share an real affiliate marketing success story and a dropshipping success story to help inspire you.

Affiliate Marketing Success Story

Roope success with affiliate marketing post at Wealthy Affiliate

Roope Kiuttu is from Finland and is not a native English speaker. In 2015, he decided to learn how to make money online and joined Wealthy Affiliate, a website that teaches people how to do affiliate marketing.

When he started, he didn’t know you could copy/paste links and make money (affiliate marketing) but he quickly learned and took action. Since English wasn’t his first language, he chose to start a YouTube channel instead of a website and posted videos everyday. He also added email marketing to his strategy.

With consistent effort he started making sales and some time ago he shared a post with other members to inspire them: $13,357/month from 1 affiliate program with 0 blogging.

Roope still makes a lot of money to this day using his same affiliate marketing strategy.

Obviously, Roope’s story isn’t typical and not everyone is able to achieve the same level of success but it does show that you can be successful with affiliate marketing even the odds seemed stacked against you.

Key takeaway: If you want to be successful at affiliate marketing, you need to apply consistent effort and create content in a niche that you’re passionate about.

Dropshipping Success Story

Tze Hing Chan started out selling phone cases through a dropship supplier. Selling phone cases didn’t work out too well for him because it’s probably a niche where it’s hard to stand out and has a lot of competition.

During the Covid-19 pandemic, he decided to start another store selling bubble tea plush toys since bubble tea was a huge up and coming trend in Asian communities.

In just two months of selling plush toys, he made $19,000 in profit and had continued success with this niche since. You can read his story here.

Key Takeaway: Dropshipping success often comes from identifying trends and providing excellent customer service, even when faced with challenges.

Getting Started: First Steps

Feeling inspired? Great! Here’s how you can dip your toes into each business model:

How To Get Started With Affiliate Marketing

If you feel like affiliate marketing fits your personal skills and interests – maybe you’re great at writing content or you already feel comfortable with the thought of running a YouTube channel, then here’s how you can et started, step-by-step.

Choose a niche you’re passionate about.
Start a blog or YouTube channel in that niche.
Sign up for affiliate programs related to your niche (Clickbank and Amazon Associates are usually recommended for beginners).
Create valuable content that naturally incorporates affiliate products.
Promote your content and engage with your audience.
Track your results and adjust your strategy as needed.

In 2024, artificial intelligence is a huge topic that is changing how affiliate marketing is done. People use AI to find niches that they’re not so passionate about but are profitable, because AI can also help create content and do research.

You still have to be mindful to not let AI do all the work otherwise you can be penalized by platforms that you rely on to find your intended audience.

It is important also to find a structured affiliate marketing course that can help you learn the details of doing affiliate marketing. This way, the guess work is removed and you wouldn’t make as many mistakes in your journey.

How to Begin with Dropshipping

If you want a more hands-on type of business where you can feel more involve with the everyday operations then dropshipping might be the way.

Here’s how you can get started with this lucrative but sometimes challenging business.

Research product trends and choose a niche.
Set up an online store using a platform like Shopify.
Find reliable suppliers (AliExpress and Spocket are two popular choices to start).
Add products to your store and set prices.
Set up payment and shipping options.
Start marketing your store through social media and ads.
Provide excellent customer service and continuously optimize your product offerings.

Again, AI is a huge topic in 2025 and people are seeing how they can leverage AI in almost all areas of business.

AI can help identify trends (which you’d still have to check), help with creating winning ads and even customer service if done right.

The key to success though is to find emerging trends and products to fill the demand. To learn how to do dropshipping without too many risks, you may also want to invest in a good dropshipping course that will guide you through every step.

Conclusion

I think I’ve covered nearly everything I could so you can decide which online business model you would prefer to get involved with.

Here’s a quick recap of the key differences:

Affiliate marketing is great if you love creating content and building an audience. It can be more passive over time but usually takes longer to see any significant income.
Dropshipping is ideal if you want to run your own store and have more control over products and pricing. It can provide quicker profits but requires more ongoing work and more initial investment.

So, which one is better for beginners? The honest answer is: it depends entirely on you!

If you don’t mind creating content and building over time, then affiliate marketing could be your ticket to online success. It’s a great way to turn your passion into profit while building a personal brand.

If you’re more business-minded and don’t mind handling customer service and dealing with suppliers, then dropshipping could be your path to entrepreneurship. It’s a fantastic way to get hands-on experience running an online store without the risks and expenses of going the traditional route.

Remember, there’s no rule that says you can’t try both!

Many successful online entrepreneurs have their hands in multiple pots. The most important thing is to start somewhere. Pick the model that excites you most, give it your all, and be patient. Success rarely happens overnight, but with persistence and hard work, you might just find yourself living that dream of online business success.

So, which is it going to be?

Are you ready to be the next affiliate marketing superstar or dropshipping mogul? The choice is yours – now go out there and make it happen!

Affiliate Marketing vs. Dropshipping: Which is Better for Beginners?