Affiliate Marketing VS Dropshipping: Which Online Business Is The Best For Beginners?

Affiliate Marketing VS Dropshipping: Which Online Business Is The Best For Beginners?

Sharing is caring!

What is the best online business to start in 2019 and beyond? Which industry is best suited for beginners? We will answer all of those questions and then some. The two main models of online businesses are dropshipping and affiliate marketing. They are by far the most profitable and lucrative models. Let us explain first of all what’s the difference between the two. In case you don’t know.

What Is Affiliate Marketing

Affiliate marketing is a type of business that allows you to get commissions when you refer someone to a particular product. Sounds familiar? It’s very similar to friend referrals. Companies do that all the time, and it’s a widespread and profitable type of marketing. It’s a win-win situation. Because the seller only pays for actual buyers (that you give them). You get money for that. And the customer gets to know a product he/she didn’t know about before because they never bought it before that. So it’s not a pyramid scheme, nor something illegal or immoral. Affiliate marketing is a legitimate business. The buyer, of course, doesn’t pay more for the product (in contrast to drop-shipping). In other words, the money that you get is a percentage of the cost of the product.

How Affiliate Marketing Works

Almost every company in the world (including Amazon, eBay for example) has an affiliate program. To get started, all you have to do is sign up, like you’ll sign up for any other service. Most of the time, they will ask you how you intend to promote them. So they know that you know what you’re doing and not spamming links (we’ll get to that in a bit.) And that’s it. After that, you’ll get a unique link that’s called an affiliate link. When you refer someone to a product, and he/she clicks that link. And then a cookie is stored in their browser so when they make a purchase the seller knows it’s from you. And you get a commission (through PayPal, bank account, check, etc. Depends on the seller.)

Sounds simple right? In essence, the core process is a lot simpler than E-commerce, but you can’t spam links online and expect people to click on them and buy, do you? You need to set up a proper business, set up a strategy. That’s when things get complicated because you have to learn many skills to make that work. The abilities that you need are, for example, how to set up a website and a landing page, how to design them, how to write blog posts for SEO, how to use email marketing software, how to use paid ads to skyrocket your business, and more.

How To Properly Do Affiliate Marketing

As we said, you can’t spam affiliate links online in the hope of someone to click and buy from them. We’ve seen too many instances in which that thing exactly happened, so let’s make it stop and educate ourselves on how to do proper business. There are a couple of ways to do affiliate marketing in the right direction, but we highly encourage you to do all of them simultaneously eventually. We will explain why shortly.

We’ll say in advance that we won’t make a different section about email marketing, which is another way to do affiliate marketing, because it’s tied to the other methods. Meaning, you can’t use email marketing on its own, you have to have something to direct your potential customers to give you their email, hence a landing page or a pop up in your site.

Build A Website

The first way to do affiliate marketing is blogging. You have to set up a website, design it, and write content. If you have no idea how to create a website, click here to read our article on the matter. However, if you know how to create a website but don’t know how to use WordPress properly, click here to read our full WordPress tutorial. If you want more types of online businesses to create and learn about, click here to get more information on how to create an online store. Don’t hesitate about choosing a good hosting company. You have to select a reliable hosting that’ll help you troubleshoot errors, do daily backups for you, and provide speed and efficiency. We recommend SiteGround and think they tick all the boxes of a great hosting company. Click here if you want a 70% discount.

Best hosting for Affiliate Marketing
SiteGround Pricing table.

The Essential Steps To Build A Website In Short

Let’s make some things more transparent and make a quick summary. To set up a website, you have to have a domain name, which is the URL of your website (costs about $15 a year.) Have hosting, which is essentially buying space in a remote server of a company that stores all the data of the website, and make it accessible on the internet. (If you get the 70% discount it’ll cost you $5.95/mo.)

Furthermore, down the line, you’ll need an email marketing software, and you’ll also need a paid theme or paid page builder (not a necessity but highly recommended) to design your website. We recommend Elementor. It’s a great page builder that is easy to use (it has a learning curve, but you can watch their tutorials and be a pro in no time, no coding skills required!) you can get Elementor here for $49 a year for one site.

In conclusion, the initial cost that you’ll pay right off the bat is $135 a year, which is very cheap. That doesn’t include the cost of an email marketing software (costs roughly $15 per month.) And the expenses of additional software you might need, advertising costs if you use paid ads, and paying for outsourcing your content if you want to. If you add all of that other costs, it’s still way cheaper than having a physically located business.

What To Do After You’ve Built The Website

Now you have to write helpful content, and let Google know your website. At first, you won’t see any traffic whatsoever. You’ll see little spikes when you publish new blog posts. That means that Google is testing your content and expose it to people, to know how good it is. After around half a year – a year you’ll see the ball starts rolling and you’ll get more traffic as long as your blog posts are professional and helpful.

You should put affiliate links in the blog posts. For example, you can either write a thorough review of the product. Add bonuses, and put an affiliate link to potential buyers. Or you can make a tutorial about a product if the product has a free version and put an affiliate link for people to buy the paid version after you show them all the benefits of the paid ones.

Also, you can tackle a problem, write an article about the problem, and offer the product that solves the problem. For example, when people type on Google “how to make an eBook fast,” which is a problem. In other words, they are saying, ” I want to make an eBook fast and I don’t know how! teach me!” You can make an article explaining how much time it takes to make an eBook, and offer them software which can make the process way faster like Sqribble.

How To Scale Your Business

When you start getting traffic, you’d want to do the following things. Email marketing, and paid ads (if you’re going to take it to the next level.) We will make tutorials in the future about email marketing and paid ads, so don’t worry. Email marketing is critical because you can use it to drive traffic back to your blog from emails, and offer them products through email as well.

Paid ads can help you boost your traffic, especially in high targeted keywords. The name of the game is to find highly searched keywords with cheap cost (less than a dollar is optimal.) You can find keywords with free tools like Ubersuggest. However, you should know that even though your post will be at the top of the search results, you’ll get only approximately 3% of the traffic. Big money is in SEO and organic traffic. Organic search results are where most people will click (snippet and first place.) The downside is that SEO takes time. Paid ads can make you money almost instantly, but don’t lay aside SEO. If you need our tutorial about keyword research, click here.

Make A YouTube Channel

Another way to do affiliate marketing is with YouTube. You can do product reviews on YouTube and show people how to use them. Put an affiliate link in the description and tell people that you’ve left a link for those who want to check the product.

A different way is to make tutorials about a pro version of a product. People that already use the free version will see the value they get from the paid version. You should offer them a discount if you can, and people will eventually buy it. It is more probable that they would buy the product because they are familiar with it.

The last way is to make free tutorials and videos in your niche and put an affiliate recommendation about further training on the subject. You don’t have to talk about it in every video. When people see you have authority, and you help them, they will trust that your recommendation is genuine.

Create A Landing Page

The process is very similar to building a website. But the difference is that it’s simpler to do on the one hand, but on the other hand, it costs more money. To set up a landing page, you’ll need hosting and a domain name. If you go with a landing page tool like ClickFunnels, or Leadpages, they will host your landing page on their server, so you won’t need to buy hosting (which is cheaper.) But you would need to buy a domain name.

Those types of software are great don’t get us wrong, but they are also expensive. ClickFunnels costs $99 a month(!). While hosting will cost you around that price for a full year, plus a page builder like Elementor that’ll cost you only $47 more per year. It’s a lot cheaper. The downside is that in page builders, it’s more of a “do it yourself” kind of attitude. While on sales funnel software, they give you a lot of made-for-you templates, tutorials, etc.

Benefits And Negatives Of Having A Landing Page

Making a landing page and set everything right will take you about half an hour-hour of work. You can connect your sales funnel straight to an affiliate offer (not recommended.) Or, offer something for free in exchange for their name and email, and then sell them in the email sequence. The downside of a landing page is that you have to spend money on paid ads. There is no SEO, and you don’t create content (which is free.) So you continue spending money on ads, to make it back later.

Social Media

The easiest way to do affiliate marketing, in our opinion is social media. The hard part is to get followers, but once you go viral, it’s a done deal. You can put an affiliate link to your favorite product on your Instagram bio, for example. And also on your Facebook page, and you can sell products through the stories. A lot of people are making a lot of money on social media because it’s easy. Be aware that you’ll have to be consistent about posting, always post excellent content, and keep things fresh. The best social media to do affiliate marketing with is Pinterest. We have a tutorial about Pinterest here. The second one is Instagram. It’s easier to use but harder to get followers.

Why You Should Use All Of The Above

If you want to build an empire, you need to do all of the mentioned ways to do affiliate marketing simultaneously. All of the traffic that comes to your social media platforms. (which you also use separately to promote products). YouTube channel, and email marketing all need to funnel your visitors back to your website.

The website is the big “hub” in which you’ll make most of the money. Why? Because it’s your property. All of your social media accounts could be deleted tomorrow as far as you know. You could never know what will happen. Your site is your safe place. So all of that funneled traffic comes to your website, and from the website, you’ll use email marketing to make them come back. You’ll put links to your website on social media so your followers will come to your site. When you chain together all of those platforms, your business will skyrocket.

What Is E-commerce

E-commerce or dropshipping is a business model that allows you to sell other people’s products as your own and sell them at a higher price. Meaning, when a customer buys something from your store, you buy (automatically) that product from the merchant and send it to the client. In other words, you are a middle man between the customer and the product.

Now you might say, “Well, that is immoral and greedy! why would I make someone buy a product with a higher price than what it costs?” In case you didn’t know, almost every company in the world is doing that. The merchant doesn’t have a store or don’t advertise himself at all, so you are doing the advertising for him. You give the merchant clients, and the clients are paying the cut.

Examples To Clarify

For example, if a product costs $2 and you sell it at $10, the customers are paying the cut you’ve set for that product which is $8. That $8 is the price of which you decided to give to the product to advertise it. In other words, that $8 is the price your clients pay you to “discover” them the product. Because if they bought from you, that means they didn’t know about that product before. They are paying extra for the knowledge that this product exists. In affiliate marketing, the seller is paying you a percentage they set from the price of the product for your advertising, and in e-commerce, the buyer is paying an interest you set on top of the actual price, for your advertising. We hope that makes sense.

A Real-World Example

Also, we will give you a real-world example that happens every day. Think of Apple, for instance. Apple is selling all sorts of products. Even though Apple has thousands of stores around the world, they want to reach a market as big as they can. What do they do? Sell the products to a local store. The local store sets the price a bit higher than the original, so they’ll make a profit. So customers are paying more for the availability, and in drop shipping, they are paying more for advertising, for knowing that this product exists. E-commerce has an advantage here because even though the analogy is the same, in this example, the store buys the products upfront. In dropshipping, you order the product only after the customer buys it. You don’t pay for anything upfront.

What’s The Difference Between E-Commerce And Affiliate Marketing

Now e-commerce is a whole different story. While in affiliate marketing, you can start for free (YouTube, social media) or with low capital (have a website), dropshipping requires you to use paid ads. There is little to no SEO involved. You aren’t creating content which can get you traffic for free. You are selling products. Hence you need to market yourself. However, you can use social media for advertising your store, but the problem is that it’s not passive, so it’s not always enough. What we mean by that is that if people stop buying, you aren’t making money. So you have to advertise your store to continue getting sales continually.

In contrast to that in affiliate marketing, you’re getting traffic for free from Google, and you could have recurring commissions. Meaning that as long as the customer keeps paying for a product which gives you recurring commissions. (Not all products have that of course), you’ll get recurring commissions without doing anything. We want to add to that, in essence, recurring traffic (free traffic from search engines like Google, Pinterest, and YouTube) without recurring commissions, won’t make your business truly passive. You want to find as many products that have recurring commissions as you can find.

How E-Commerce Works

We’ve explained what e-commerce is and how it works on paper. But how you can create an e-commerce store? You have mainly two options. Either use Shopify (recommended for beginners) or use WooCommerce (A plugin that integrates with WordPress and allows you to create a store within your website.) In other words, Shopify is a dedicated platform for online stores, which can have a blog within it. And WooCommerce is a plugin that allows you to create a store within your blog.

The WooCommerce plugin is free to use. But down the line, there might be functionality that costs money that you’d want to add to the plugin. So do your research on what’s best for your business. And how much you’ll eventually pay after all of the upsells. Of course, you’ll need to buy hosting and domain to use the WooCommerce plugin. Shopify, on the other hand, costs between $29 a month, up to $299 a month. When you’re starting, buy the least expensive version. It’s more than enough.

Shopify is more straightforward to use as a beginner, while WooCommerce gives you more freedom, in the cost of simplicity. That is why we recommend Shopify if it’s your first store. On the other hand, if your blog or website is your primary business, and you want to add a store to it, use WooCommerce. Don’t buy Shopify and make a separate store.

Start an e-commerce store with Shopify.
Shopify pricing table

How To Make Money With E-Commerce

Your main job in running an online store is to test products. The art of dropshipping is all about experimenting and finding viral products that you can sell in your store. If you want to be successful in this business, you have to know how to use Facebook ads correctly because you don’t want to lose money. You need to understand how to target the right audience, how to create profitable ads, and when to scale or kill the ads if necessary. Your second job is to ensure your store is well optimized. You have to have excellent product descriptions and great pictures, good customer service (hire a virtual assistant.) And make sure everything is running smoothly.

Remember that you have to always pour money back into your business (into ads) for you to make money. Having an e-commerce store is not a passive business. It can be semi-passive if you hire a virtual assistant that will run your Facebook ads and a virtual assistant that will make the customer service. However, if you have a store within your blog or a massive YouTube channel, you don’t have to use paid ads because you get organic traffic from your content.

E-Commerce VS Affiliate Marketing: Which Is The Best Business For You

The million-dollar question. After you fully understand by now what is affiliate marketing and what is e-commerce, let’s conclude what’s the best out of the two for you. We’ll discuss pricing, which is more passive, and which method is the best overall.

Pricing

If you have a low tight budget and don’t need to have money in your pocket right now, go with affiliate marketing. If you need money as fast as possible, go with e-commerce. E-commerce is a way faster way to make money online but more costly. Starting an affiliate marketing business can be completely free (YouTube, social media) or in the worst-case scenario, very cheap.

What’s More Passive

If you want a truly passive business, affiliate marketing is the only type that is genuinely passive because of recurring commissions. Remember that succeeding with affiliate marketing would most of the time, take a lot longer than succeeding in e-commerce. Getting free traffic from Google would take you about have a year minimum, to start getting real traffic. So be patient. You’re doing the hard work now. But money will come for years to come from that initial work you’ve put in.

An Online Store With A Blog Or A Blog With An Online Store

The best method, in our opinion, is to have an affiliate marketing website first. (That you monetize with ads and also maybe with a product of your own.) And after your site will get the authority and grow big, you can add an e-commerce store that would be a lot more passive than just a store without a blog.

If you go the other way around and have a Shopify store and add a blog to it (you can have a blog section within your Shopify store.) Then it would be a lot tougher to rank on Google because you’ll focus most of your efforts on testing products and make ads. Doing both is extremely hard. It’s a lot easier to build a store on top of a successful blog than create a blog on top of a successful store.

Affiliate Marketing VS Dropshipping: In Conclusion

In conclusion, do both. Start with affiliate marketing, grow your website, and then launch a store at your site. Only start with e-commerce first, if you need fast cash. We hope we clarified and explained the difference between the two, well. Thank you very much for reading!

Share me 🙂

Sharing is caring!

Leave a Reply

Close Menu
shares