If you're new to dropshipping you might be wondering how it's different from affiliate marketing. In fact this is a question I get quite often from people who have been successful in the online marketing industry for a while.
For those of you who don't know, affiliate marketing had its heyday in the early 2000's. As people started to sell more and more products online they would recruit others to do the selling on their behalf. You would be given a referral link to share with your audience and for everyone who purchased through your link you would earn commission on the seller's sales.
Fast forward to 2019 and this is essentially what influencer marketers are doing.
So if you're an affiliate you:
- Don't need to hold inventory
- Don't need to process payments
- Could generate traffic through your social accounts without even having a website
- Get paid commission on someone else's product
Sounds great, right?
But there's one problem…
You're just the middle-man! You're driving customers to someone else's product, growing their business and you are paid a commission which they set.
- The customers are not growing your business
- You won't get repeat business
- Your income is dependent on the seller paying you your commission
- You're in competition with all other affiliates for sales
The question is… Do you want to be one influencer or the seller who has hundreds of influencers sending visitors to their site, advertising their products?
With dropshipping you own the store, you are not just a marketer but a business owner. That's a far more advantageous position for long term success.
When I started my first dropshipping store and when I speak to our users the overwhelming reason we're on this journey is to create a sustainable business for our families to have the lives we all want.
If affiliate marketing is the “get rich quick” way to make money online, then dropshipping is the “steady investment”.
With dropshipping you:
- Create and design your store
- Find and add products, regularly update them
- Set your own prices
- Process payments from customers
- Handle customer support and returns
- Promote your store or hire others to do so (such as influencers/affiliates)
This gives you the same benefits without the downsides:
- You don't need to hold inventory (the supplier dispatches all items)
- You don’t need to process payments directly (your e-commerce Platform does that)
- Your e-commerce platform hosts the store so there's nothing technical to worry about
- You can still generate traffic through your social accounts
Rather than being paid a commission which is a fraction of the profit on the item, you take the whole profit: Selling price – cost of goods.
Affiliate marketing has been the dominant way to start making money online in the past decade simply because only until very recently was it possible to handle all these elements of a business yourself.
3 years ago, you would have needed a team to manage a Shopify business, but today you can do this with a few clicks by following the steps that have been laid out for you by people who have successfully traveled the journey.
Shopify aims to automate the entire technical process of running a store, from hosting to processing payments. Dropified aims to automate the entire process of sourcing products and ordering them from suppliers who will dropship.
That means you can benefit from:
- Setting your own profits on the products you sell
- Any advertising draws more and more visitors to your site
- Customers can become repeat customers
- You build a business that can support you for the future.
If you're looking for a hands off approach then try the affiliate marketing route. If you're looking to control the products that you're selling and have more influence over how you sell them, then dropshipping might be for you.
To make it easier to see the differences, I created this table to help you weigh up the pro’s and con’s of each: