Industry Insights

Dropshipping Vs. Affiliate Marketing

By: Charlotte Couch
Dec 29, 2020 • 6 min read

Dropshipping vs. Affiliate Marketing: Which Side Hustle Brings in More Money?

Recently, an increasing number of people have explored the idea of starting a side hustle. Due to the uncertainty and instability that the pandemic has brought, people have been looking for new ways to make and save money. If you’ve already done a little bit of research on side hustles, you might have come across the practices of dropshipping and affiliate marketing.

You can find hundreds of YouTube videos and TikTok clips of people claiming to make up to 100k a month from these side hustles. While it’s certainly possible to see huge earnings from these side hustles, it can take a while for some people to see true results in their bank account. Deciding whether you should pursue dropshipping or affiliate marketing should be your first step. Keep reading to find out how to make the right choice for you! 

What is Dropshipping?

Dropshipping is a common retail fulfillment method that allows businesses to sell products without actually keeping them in-stock. Instead, they purchase items from a third-party manufacturer, who then ships them directly to the customers. Most dropshippers source their products from AliExpress. You can find clothing, accessories, tech gadgets, and more in this extensive online marketplace.

Starting Costs

When budgeting for your dropshipping business, you need to keep some upfront costs in mind, such as your company’s:

  •     Domain name
  •     Website subscription
  •     Google and Facebook ads

This can add up to several hundred dollars. That said, these costs are still cheaper than opening a brick-and-mortar store, which can cost around $10,000. 

dropshipping

Initial Steps

To establish a sense of authority and authenticity for your brand, you should invest in your business’s domain name. While you can certainly get away with a “.net” or “.co” domain, we recommend using a .com. This is better for SEO and UX purposes. Building credibility will significantly boost your brand’s reputation! 

You will also need to host your online shop somewhere. Most dropshippers go with Shopify since several dropshipping extensions and apps are compatible with Shopify. It is also easy to set up and use. Getting the name of your business out there will be important. While you can make organic social accounts, paid Google and Facebook ads will give you that extra boost you need to succeed.

Pros and Cons of Dropshipping

Sounds fun and easy, right? Well, you should weigh both the pros and cons of dropshipping before trying to start your own e-commerce store.

We’ll start with the pros:

  •     Presents a low risk compared to other business models.
  •     Has meager overhead cost.
  •     Faster to start than other side hustles like freelance writing or tutoring.

As for the cons, you need to consider:

  •     The complicated shipping process involved.
  •     Possible inventory issues that could pop up.
  •     Dealing with low-profit margins before scaling up.

Getting Things Done book beside gray Acer Chromebook on gray textile

What is Affiliate Marketing?

Affiliate marketing is another popular side hustle that requires meager start-up costs. It does distinctly differ from dropshipping. Affiliate marketers earn money by marketing and promoting products for different retailers. To grow traffic to their online “marketplaces,” they may start a blog or YouTube channel. Never underestimate the power of social media! 

When someone purchases a product due to your marketing efforts, you’ll make a commission off the purchase. You don’t sell them yourself. Amazon Associates, Awin, and CJ Affiliate are popular programs that people enroll in.

Starting Costs

You’ll need several hundred dollars to start out. As you budget, you should account for:

  •     Paid ad campaigns
  •     Tracking tools
  •     Website hosting

While it might be tempting to skimp out on the paid ad campaigns or avoid purchasing a domain name, this will ultimately hinder your ability to draw traffic and make serious money. You’ve gotta spend money to make money! 

dropshipping

Initial Steps

To start, you want to find a niche to focus on. You can write about everything from the tiny house movement to fitness equipment. Broad categories like “food” and “fashion” are extremely competitive, so you might want to narrow your focus to “vegan desserts” or “sustainable kids pajamas.”

Then, you’ll need to decide what type of content you want to create. Some people go on YouTube and start a vlog, while others design a website to update blog posts. Once you decide how you will be producing your content, you need to find an affiliate marketing program to join.

Pros and Cons of Affiliate Marketing

You’re not going to start off earning the big bucks like seasoned affiliate marketers brag about on their social media channels. However, with time and dedication, you can see some great returns from your work. Compared to other business startups, affiliate marketing is a low-cost and flexible method to earn extra cash. Unlike dropshipping, you won’t have to worry about customer service or shipping problems. This can be a significant advantage for those who want a low-maintenance side gig. 

Affiliate marketing does come with some cons. For one thing, you’re at the mercy of whatever affiliate program you sign up for. Some programs don’t offer recurring commissions. As a result, you would only get paid for the customer’s initial purchase. The customer will probably not purchase from you again, but rather the retailer itself. It’s also possible for other people to hijack your affiliate links or simply avoid using them altogether by going directly to the retailer’s website.

Which Side Hustle is More Lucrative?

When choosing between dropshipping vs. affiliate marketing, people typically consider the time commitment and income potential from both options. While dropshipping typically brings more money in than affiliate marketing, it can be more time-consuming. You’ll have to deal with customer support, shipping, and returns. Of course, you can outsource your customer support services, but that will decrease your profit. 

Let’s take a quick side-by-side look at the two side hustles.

person using Microsoft Surface Laptop black laptop

Time Commitment

While both dropshipping and affiliate marketing offer flexible hours, you might find some of your time being taken up by customer service issues with dropshipping. So, in terms of time commitment, affiliate marketing wins out.

Winner: Affiliate marketing

Start-Up Costs

Both drop shipping and affiliate marketing are relatively cheap to start. You’ll need to budget for a website host, domain, and paid ad campaigns at the very least.

Winner: Tie

Profit

Most people consider dropshipping to be more lucrative than affiliate marketing. Affiliate marketers are solely commission-based and can lose out on money if customers remove the affiliate links they place on their site.

Winner: Dropshipping

dropshipping

The Verdict 

To sum things up, you should go for dropshipping for bigger returns and affiliate marketing if you have limited time for managing your side hustle.

Remember, there’s no rule against doing both dropshipping and affiliate marketing! You could create a blog and add affiliate links in it and a store section for your dropshipping products.

The idea of earning money while you sleep is appealing to many people. With thorough research, planning, and hard work, you can launch a successful e-commerce business. So, do you think you’ll try dropshipping or affiliate marketing? Connect with us on social media and let us know! 

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