Hey guys, welcome to Fruitful Income. In this post, we’re going to be talking about which Business model is better, affiliate marketing or dropshipping with AliExpress. I know you guys have heard a lot about both businesses and, therefore, have tons of questions.
So, in this post, I’m going to be answering the following questions:
Truth be told, you’re going to discover that there’s no one business model that’s better than the other. They are both quite different and they each have their own advantages and disadvantages.
So, let’s jump straight into it.
I want to start off by quickly looking at each of the different business models and discuss how they make their money.
With this business model, your main goal is to refer customers or clients to someone else’s business. If a customer makes a purchase from that said business, you get a commission.
ClickBank, for example, is an affiliate program that you can sign up for. They offer lifestyle and digital products from different manufacturers and allow digital marketers to promote those products to potential customers.
If you sign up to promote an affiliate offer and refer a customer to purchase any of the products, you get a percent commission on the product’s sales price. Commission rates can vary but some products rates can reach up to 75% or even 100%.
Each affiliate’s earnings are recorded through links with a tracking code inside of them (called a Hop link). When someone clicks on your specific link and purchases the offer, you get that commission on the sale.
There is no single way to promote your affiliate offers. You can start making YouTube videos about your offer or you might start up a blog about it or you can even choose to run paid ads to it. Whichever method best suits your strengths is probably the best one to go with.
Ok, now let’s look at how you can make money with AliExpress Drop Shipping.
This method is when you set up an online store using a platform like Shopify and you list products for sale, that are being sold on aliexpress.com.
AliExpress is a website that allows you to buy items individually and directly for manufacturers that are based inChina. Therefore, the prices of these items are super cheap.
What you then do is take an item on AliExpress, list in your store, and put a huge markup on the price, usually by running paid ads to your store (Facebook ads are perhaps the best method).
When customers come to your store and purchase the items in it, you then go to AliExpress and purchase the item that the customer bought and get it shipped directly to them while keeping the difference in profit. This is the dropshipping process in a nutshell.
As you can see, both of these business models are extremely different and they each have their own strengths and weaknesses.
I recommend taking a look at which method looks the most fun and interesting to you and which one would play off your strengths more.
One of the challenging aspects of starting a Dropshipping store is that nobody knows who you are. When you advertise your store to someone on Facebook, you are essentially asking them to come on in and buy an item from you, despite the fact that you have built up no trust or credibility with them.
For beginners, this is one advantage of affiliate marketing. You don’t have to worry about building trust because the merchant of the offer you are promoting has most likely already done this part for you.
Take this affiliate product above for example, Leptitox. They have invested in the amazing domain name. They have huge amounts of free content on their site and they even have invested tens of thousands of dollars into creating a brand.
When you send customers to Leptitox, you have the benefit of the brand and the trust that they have built, which will make converting sales easier.
On the other hand, with affiliate marketing, running paid traffic can be a bit of a challenge, especially if you’re trying to direct that traffic directly at your affiliate offer.
And although free traffic is a viable option, it is slower process and you also need to learn extra skills like search engine optimization. Thus, paid traffic is usually the fastest and easiest way for beginners to make money online.
Now, consider this, when you are dropshipping, you have huge margins to work with so you can make a lot of profit. Say for example you find a product on Ali Express like this Crystal Necklace Pendant below. You can purchase it for as low as $1.06!
When you add the cost of e-package shipping (which is $2.26) the total that you will pay to dropship this item is $3.32. And as you know, necklaces like this can sell for $15.00, Easy! That gives you above a 70 percent margin to work with when spending money on paid ads.
While top affiliate marketing products, admittedly, has very high commission rates of 70% percent, this can vary depending upon your niche. Some online products and offers do not have commission rates that high. That means you sometimes have a much smaller margin to work with when you were running paid ads to your affiliate products.
Plus, if an affiliate offer is a particularly high conversion, it’s going to become saturated very quickly with affiliates trying to run paid ads for it.
So, if you choose affiliate marketing, you get the bonus of the fact that your affiliate merchant has done the work of building up brand awareness and trust, which will make it easier to get higher conversions
But with dropshipping, you have the advantage that you have bigger margins to spend on paid ads. And, your niche is likely less saturated,
Now, both Affiliate marketing and drop shipping can make you huge amounts of money. And when I say huge amounts of money, I mean millions of dollars every year.
Something to keep in mind with affiliate marketing is, although you can earn super high commissions, you are ultimately giving your customers to your affiliate partner (which in this industry you refer to as the merchant).
Let’s go back to our Leptitox example. Say you are in the health and wellness niche and you plan to sell products like Leptitox. You’ve got two options to pick from.
Well, here’s the thing. If you chose option 1, then you will make fast commissions at the price of giving up your customer’s information to a merchant partner. From there, the merchant will use that information (like the customer’s email) to market to them over and over again.
Like most affiliate merchants, they don’t just plan on making money from one sale. They want to turn their customers into loyal followers and repeat buyers.
As an affiliate, however, you are constantly on the treadmill of making sales because the moment that you send your customer to an affiliate partner is the moment that you lose them.
Note: there is the exception of trying to capture a customer’s info in a landing page, but for beginners, this can prove to be difficult
If you had chosen option 2 and built a dropshipping store in the health and wellness niche, then this wouldn’t happen to you.
Why? Well, when someone comes into your store and buys your product it’s you that gets your customer’s details. This means that it’s you that gets to send follow up emails to customers recommending more, similar, products for them to purchase.
With Dropshipping, you can take advantage of super high commissions after you’ve given yourself some time to upsell more items to your customers.
With dropshipping it’s easier to build your buyer email list, which is crucial for making long term money and turning your customers in to repeat buyers.
For this question, there is a clear winner. Affiliate marketing is usually a lot more passive than drop shipping is.
The reason why affiliate marketing is the clear winner is because of Drop shipping’s issue of order fulfillment.
Consider this, I have typed this post and it is now published here on this blog. Yet, if I were to get into a car accident tomorrow, and become bedridden, this blog (considering it is well optimized) would still be getting traffic to it every day.
People would still be reading my content and everyday people will be clicking on my affiliate links, which allows me to make money. The fact that I am bedridden wouldn’t matter because I would be making money passively.
Okay, let’s compare this to a Dropshipping store. If I am running Facebook Ads to my site, and they are converting, I need to fulfill those orders as soon as possible when someone purchases an item from me.
I would have to go onto AliExpress, order the item, and get it shipped out to my customers. This process is called order fulfillment. And although it only takes a few minutes to complete (especially if you’re using apps like Oberlo) I would still need to come in and fulfill each of those orders.
With affiliate marketing, you don’t have to worry about any of that. It’s the affiliate merchant that sends the customer the product and answers the customer’s emails.
Now, I’m not saying dropping shipping takes loads of time to run, because it doesn’t. Typically, it takes roughly 1 to 2 hours a day to manage.
It just doesn’t compare to affiliate marketing, which is passive from the start. With a proper automated traffic funnel in place, you can literally make money in your sleep.
So, you see, while both business models are great, they each have their own pros and cons. Just make sure you weigh them both and choose the one that’s right for you.
If you think affiliate marketing sounds like the right fit for you, then I recommend getting started with ClickBank University. It is a program that teaches you how to sell through the well-established ClickBank Marketplace, which has been the top provider of high commission digital products for a very long time.
Another great free option for new affiliate marketers is Wealthy Affiliate. They provide great training on how to promote all kinds of products for a commission. You also have access to a helpful community full of great sources of expert advice.
However, if you think that drop shipping sounds more exciting, then I recommend you get started with Shopify. They are my eCommerce platform of choice for the fact that they make building your first website a breeze. With free customizable themes, you can literally have a store up within hours.
Well, that is it for my Affiliate Marketing vs. Drop Shipping face off. I hope you guys enjoyed this content. If you have any questions or comments, feel free to reach out to me. As always, I love to hear from you.
Want to read more of my content? Here are some of my personal favorites!
Getting your website to rank in Google can quickly become a long-drawn-out process. If you…
The idea of not having to wake up every morning to a demanding nine to…
I’ll admit, one of the scariest times in my affiliate marketing journey was when I…
I'm no genie but something tells me you have been struggling to get traffic from…
Before we dive into this post, let me first ask you a simple question. Why…
Odds are you are here because you are interested in getting started with affiliate marketing.…