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Dropshipping Vs Affiliate Marketing: Who Is Going To Win

by Olga L. Case studies
5.0 rating
May 31, 2017 12 minute read
18516 6

drop shipping business wins over amazon affiliate

Why are you still doing affiliate business?

Don’t get us wrong, we don’t judge you. We’re all grown-ups, and we are all taught to respect each other’s choices.

But still, we are just wondering why would you waste your time on something that brings you nothing but stress and a tiny amount of money that doesn’t even come in due time?…

No wait, you don’t see the point yet.

Okay, let’s start from the beginning.

Pros and cons of most popular online business models

drop shipping business wins over amazon affiliate

Image credit: NBC

Generally speaking, if you don’t create and sell your own product(s), you have 3 common ways to easily earn with online business:

  • Join affiliate program like Amazon;
  • Monetize your own website with ads;
  • Start a dropshipping business.

People all over the globe gladly use these models of online business because they:

  • Are easy to start. You don’t spend much on launching such a business, and you don’t need to be officially registered, etc.;
  • Let you run a business without manufacturing anything since you don’t sell a physical product;
  • Actually, free you from all the product-related concerns. You don’t buy anything from suppliers, therefore there are no risks of going bankrupt. You don’t have to rent or buy a warehouse, and you don’t hire additional staff to work on it. Also, you don’t deal with shipments and deliveries, which saves your time and nerves;
  • Give you freedom and let you work as flexibly as you fancy. You don’t depend on a fixed time and place, so you might as well go on vacation and still earn money while relaxing on a seashore;
  • Provide you with a source of passive income – you don’t go coal mining, and you don’t submit monthly balance sheet to your boss, so why not?

Whoa, wait. Speaking about having a boss… well, that’s where the devil hides.

Dropshipping business is the only one of these 3 models where you DON’T actually have a BOSS

drop shipping business wins over amazon affiliate

Image credit: NBC

What do we mean?

We mean that the other types, like monetizing your website through ads, or taking part in an affiliate program, are actually not as bright and cheerful as they seem.

Let’s start with monetizing your already existing website through placing advertisements. Google Ads is a good example. It seems to be a relatively easy business that doesn’t require you to do much. You just sign up, choose the type and design of advertisement banners that suit your website, place them wherever you like, and enjoy the profits.

But in the reality, it’s not all that easy.

Just take a look at all the requirements that Google Ads has for you and your website, and you will instantly understand who’s the boss here.

No, really.

You are not allowed to:

  • Place more than 3 banners and 3 link units on each page of your site;
  • Place ads on pages that don’t meet the requirements of Google’s Landing Page Quality Guidelines;
  • Place ads on pages which contain ‘inappropriate’ information (mature content, information regarding tobacco, alcohol, etc. – the full list goes for ages);
  • Place ads on pages where the content is protected by copyright law;
  • Place ads on pages that receive their traffic as the result of paid-to-click programs or from several other specified sources;
  • Sign up if your site is not ‘easy to navigate’ for users.

Meh.

As you can see, many of these rules are quite vague – it’s easy to misinterpret or misread them, but the system doesn’t care much. You will be banned anyway, and your excuses and explanations will be worth nothing. Even IF you manage to meet all the requirements when you sign up, there are no guarantees that Google won’t make some crazy changes into the rules some time after. And yay! – your account is terminated, the money goes down the drain, great story.

The same (and actually even worse than that) is true for the vast majority of affiliate programs.

You certainly won’t like these features of affiliate programs

drop shipping business wins over amazon affiliate

Image credit: NBC

Generally, affiliate programs mean that you form an official agreement with some retailer to place their product links on your affiliate sites.  Every time a customer makes a purchase from your website through this link, a certain commission is transferred to your account.

Sounds easy and profitable, but check out the terms and regulations of Amazon Affiliate program that is thought to be one of the most popular ones:

  • The money is paid to you about 60 days after the end of the calendar month you’ve earned this profit – if you get banned within this period of time, you might as well say goodbye to the income;
  • Amazon can change the program rules any moment. And you can bet they will change the terms for THEIR OWN benefit;
  • Any special program fees offered from time to time for various products can be modified or cancelled by Amazon any given time with no notifications. Also, it’s up to the company to limit your opportunity to earn these affiliate commissions;
  • There is a whole list of products and services that are not included in the program, so you need to be really careful with what you’re doing;
  • Not all the purchases are qualified for a payment (returns, incorrectly tracked purchases, purchases made through a link shown in a search engine or other referral service, etc. are not counted);
  • In case the affiliate links you place on your website are not formatted correctly from the technical point of view, the purchases simply won’t get tracked – which again, means no money;
  • You don’t have the right to take part in the program if your website contains Amazon trademarks in any form and kind;
  • In case the company thinks you’re inappropriately using trademarks of Amazon or its affiliates, you’ll get banned – therefore, no money;
  • If you’re not a US citizen, you need to follow a special Operating Agreement regulating your actions outside the United States.

Ugh.

So what do we have as the result?

  • It will take you at least 60 days to get the money you earned this month;
  • You can be banned for literally ANYTHING and wave goodbye to the money;
  • It’s up to the company to twist terms and conditions the way they like and basically kill your business.

The downsides of this type of business become more and more obvious. People are getting worried because their affiliate accounts are banned in the blink of an eye, and there goes all the profit. This issue is widely discussed on niche forums:

drop shipping business wins over amazon affiliate

 

Not only professionals and experienced entrepreneurs are worried about Amazon Affiliate actions. Online business is not for gurus only – common people also get involved in it because they are counting on a stable and solid source of passive income. And what’s the result? Tons of frustrated Quora users wondering what to do next!

drop shipping business wins over amazon affiliate

 

Oh but what we are talking about. Even Reddit, the same Reddit you use to catch up with memes and adorable geeky stuff is literally FILLED with complaints about a bad experience in affiliate marketing!

drop shipping business wins over amazon affiliate

 

Doesn’t seem right.

Well, it’s easy to understand why people are so unhappy about Amazon Affiliate: they were promised a quick and effortless profit, but what did they get as the result?

  • Never-ending lists of terms and conditions – try remembering and following them all!
  • Full dependency on the affiliate marketing program’s owner: the slightest change in the program’s rules leads to your ban, and goodbye the money!
  • An extremely long wait for the profit – even if you manage to keep your account properly working, you’ll wait for your affiliate commissions for months. Literally.

Oh, and speaking about the profit – not that there is much. In March 2017, some changes to the fee structure were introduced. As the result, the whole profitability of the program got REALLY questionable.

drop shipping business wins over amazon affiliate

 

The sad news instantly made the headlines of the most reputable blogs and niche websites.

drop shipping business wins over amazon affiliate

 

Really, everyone was discussing it since it actually killed tons of small businesses.

drop shipping business wins over amazon affiliate

 

Maybe it’s time to think about reasonable alternatives?

Dropshipping vs affiliate marketing: we’ve got a winner

drop shipping business wins over amazon affiliate

Image credit: NBC

Dropshipping business has 3 very specific advantages that make it an interesting type of venture for everyone in any corner of the world:

  • Huge profits
  • Safety
  • Independency

What do we mean by these benefits?

When you take part in someone else’s affiliate or monetization program, you accept their requirements. Your business, in fact, doesn’t belong to you – you just play by the rules and secretly hope they won’t change.  The slightest amendment to these terms and conditions will put your business at risk.

At the same time, when you do dropshipping, you fully own your venture. That’s your own website with your own style and design, with your unique product descriptions, and with your own price markup. It’s up to you to decide what niche to enter, which suppliers to choosewhich products to add to your online store, and what price to set. You run your business as you like, choosing any promotional methods you fancy, and you are fully in control of it.

The supplier doesn’t seem to be nice? No problems, you can easily stop your partnership and start a new one with a different seller.

The product you’ve added is no longer available, or its price skyrocketed? Okay, remove it from your offer, or find another supplier who can deliver it.

The marketing strategy doesn’t seem to be working? Fine, try out something new.

What is even more important, your money is always within an easy reach. You don’t need to wait for it for months – you get it into your account as soon as a purchase is made. It gives you the opportunity for further growth and development as you can use the money to boost your dropshipping store traffic. Affiliates don’t have this luxury – they stay stuck without their profit for months, so they can’t properly enhance their business performance.

Speaking about the money, we need to mention that affiliate and monetized sites won’t give you as much as dropshipping store can. The profit per visitor on these sites is insignificant, so you will need to attract tons of customers to your website in order to make more or less solid money. With dropshipping, profit per sale fully depends on the profit margin you set – therefore, you will get a nice income much quicker. A great opportunity to start making money right away!

And remember: with the right type of automated dropshipping solutions, you can get high stable income with minimum manual work. An independent business where you are your own boss getting 90% profit per order (and not Amazon’s funny 4%) – isn’t that the thing you’ve always dreamed of?

Are you with us on this?

 

By Olga L.
Olga is a content creator at AliDropship, and she aims to explain the most complicated drop shipping concepts in the simplest terms possible.
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6 Comments
Arthur Siew June 4, 2017 6:22:22

As a Dropshipper, you can sell any product you wish as long as you can think of a creative mean. You can even create your own product printed mint and work with TaoBao and Alibaba supplier to create a high quality products.

Blake R. June 4, 2017 12:13:42

I’m doing AM since 2011, work hard, have my result and not going to switch to smth else. I think this article is good but biased a little. So I’d like to supplement it with the following information:

1. U.S. affiliate marketing spend nears $5B. That is twice the economy of Belize
2. UK affiliate marketing drives ~1% of the country’s total GDP (more than industry of agriculture)
3. Affiliate marketing ROI in the UK amounts to £15 per every £1 spent; with 4 in 5 Britons involved
4. 40% of marketing professionals quote affiliate marketing as the most desired digital skill
5. Approximately 15% of all digital media industry’s revenue comes from affiliate marketing
6. 78% of CMOs admit affiliate marketing to be their least mastered area of digital marketing
7. Developed affiliate programs account for generating 15% to 30% of all advertiser’s online sales
8. Over 80% of brands utilize affiliate marketing
9. 38% of marketers call affiliate marketing one of the top customer acquisition methods
10. In 2015 Amazon.com revenue surpassed $100B. Likely, its affiliates generated at least $10B of it
11. In the UK brands spend £1.3B a year on affiliate marketing and lead generation
12. Nearly 50% of affiliate-referred traffic originates from a mobile device
13. More than 30% of affiliate-generated sales originate from a mobile device
14. As early as in 2008 Amazon’s affiliate program already had over 2 million affiliates aboard
15. Rakuten’s aquisition of Ebates for $1 billion marked largest amount paid for an affiliate
16. More than 75% of Australian market is owned by one affiliate network, Commission Factory
17. ShareASale affiliate network has more than 1,000,000 affiliate accounts registered
18. Over 50% of top affiliate programs fall into 4 categories: Fashion, Sports, Health & Beauty, Travel
19. In most affiliate programs less than 10% of affiliates drive 90% of traffic and conversions
20. Pay-per-call affiliate marketing campaigns convert at 10-15% (vs 2-3% online conversion rate)

Ryan June 5, 2017 9:14:44

Drop shipping business with self-affiliate works better than regular Drop shipping business or Amazon Affiliates.

    Mohamed Qassem August 21, 2018 2:26:04

    @ryan
    “Drop shipping business with self-affiliate”

    i don`t understand what you exactly mean ?
    i searched it but no results!
    can you explain it to me ?

    thanks

Dennis June 24, 2017 0:33:31

One thing that scares me off when dropshipping is their shipping fee and time. It takes a month before the product arrives

    yaros June 27, 2017 5:17:58

    AliExpress has improved shipping greatly for the last year, not it takes less time to deliver to many countries, even with standard China post. Besides, when you offer free shipping on all products, your clients are ready to wait. Furthermore, we strongly recommend using ePacket shipping option that takes only 5-14 days to deliver and is free or costs $2-5.

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