On the face of it, dropshipping and affiliate marketing have a number of similarities. They take little or no investment to get started, and both allow you to make a profit by having someone else ship the product to the customer. However, if you're looking to build and grow a business that will be profitable for the long term, there are a few reasons why dropshipping may be a better opportunity for you.
Dropshipping can mean you see a profit sooner
With a dropshipping business, once you sell a product, you keep the difference between the price you sold it for and the price you paid your dropship supplier as profit. With affiliate marketing, you are rewarded with a percentage of every sale you refer to a merchant.
With dropshipping, you see your profit as soon as you make a sale, but with affiliate marketing, you are reliant on the merchant paying you your responsibilities in order to get your profit. When merchants will pay you can vary, from a couple of weeks to a few months, so dropshippers could be getting the profits they can use to grow their business a lot sooner.
More control over pricing
With your own dropshipping business, you can control how much you want to sell your products for, where as affiliate marketers have to sell the product at the price set by the merchant. A Dropship Business that can be flexible on price, has a better chance of being competitive, particularly in a crowded market.
Dropshippers who know they can sell plenty of a particular dropship product may decide to adjust their price up or down, in order to make more overall profit. Affiliate marketers do not have this flexibility, and it can there before be harder to compete, especially when just starting out. The only way they can improve their profit margin is by trying to keep costs as low as possible, which could make it even harder to compete.
Some affiliate schemes come with restrictions
As an affiliate marketer, there may be certain restrictions on the way you can promote products, depending on what it is you are selling. Bigger merchants are not that keen on you using their company or brand names in your marketing, and they may even restrict the channels you can use to try and attract customers.
When you're promoting someone else's business, you have to do so by their rules. With your own Dropship Business however, you can pretty much promote your dropship products any way you want – because it's your own business. Dropshippers have much fewer restrictions on the use of brand and company names (within reason), and can use a variety of promotion methods that will enable them to use the best ways to attract customers for their dropshipping business, and make more profit.
Building a longer term business
Because of the way dropshipping works, dropshippers have a much better opportunity to develop their customer base and grow their dropship business over the long term. Affiliate marketers simply refer customers to a merchant, who captures all their customer information so he can market to them and make more money in the future, without the help of the affiliate.
Some affiliate marketers try to capture potential customers 'details by offering free giveaways, but it's the buyers' names, addresses and e-mails you need in order to really make money, and dropshippers get these every time they make a sale. Marketing to customers who've already sent money, rather than those who simply signed up for a free offer, means dropshipping businesses can grow bigger, by selling more dropship products to existing customers, as well as new ones.
To many, it might look like dropshipping and affiliate marketing are very similar business opportunities, but in reality, affiliate marketers are helping someone else grow their business in return for a few dollars in commission. Dropshippers are promoting and building their own dropshipping business, with more control over the products they promote, how they market them, and more importantly, the profit they are able to make from them.
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