A reader of the blog contacted me to get my opinion on these two topics. For this blog, let’s assume we’re only talking about affiliate marketing of physical products. As with the digital products, the comparison is like apples and oranges.
I prefer dropshipping over affiliate marketing for a variety of reasons so let’s compare the two.
During both affiliate marketing and dropshipping, you’re often creating very little value outside the revenue generated right there and then. However, affiliate marketing, in my humble opinion, is an even lower hanging fruit than dropshipping and I consider dropshipping itself to be a pretty low hanging fruit.
The reason why I think that is because in dropshipping you control the offer end to end. You control the sourcing price of the product. You can play with the quality of the product to increase or decrease the sourcing price. You control the sale price of the product. So, if you’re able to sell the products but unable to make a profit, you could always increase the price and make it profitable for you.
With affiliate marketing, your hands are tied. You only get certain commission per sale. The commission is determined by what the goods cost, how much they are sold for, and how much does the offer provider want to pay you after keeping profits. If your advertising costs are higher than your commissions, then your only option is to optimize advertising. You can not play with the sourcing cost of goods and the sale price to make a profit.
In addition, in affiliate marketing your access to data about the customer is very limited and restricted. You can often not reach out the same customers again to generate more sales in the future without adding additional email capture steps in your funnel. You may also not be able to use the customer data to create lookalikes on ad platforms to target similar customers due to lack of access to customer data.
When dropshipping, you have a much better lock-in with your customers, and a better access to data. While lifetime value often stays low in both cases, you still have better control with dropshipping.
You could also copy anyone’s offer as almost all products are available for sourcing in China and recreate a dropshipping store using the same product, similar landing page etc. So it’s not that difficult at all to use someone else’s offer to create your own dropshipping store.
In addition, for dropshippers just like affiliate marketing, there’s very little to no work that needs to be done with regards to shipping and handling of the products as there are plenty of Chinese vendors who can make this process very seamless for you.
In the end I’m not too fond of both the models, but if I had to do one, I’ll definitely go after the dropshipping model.