Affiliate Marketing vs Dropshipping: Pros and Cons (2025)

Affiliate marketing and dropshipping have low barriers to entry for those looking to make money online. Both come with low startup costs, and you don’t need to track inventory or rent warehouse space.

While both online business models can be sources of passive income, careful planning is necessary to build and grow affiliate marketing and dropshipping businesses. Read on to learn more about the pros and cons of each.

What is affiliate marketing?

Affiliate marketing is a program in which brands pay businesses and individuals—usually those with large followings—to mention their products on social media, blogs, or newsletters. Depending on the agreement, companies may pay partners based on the sales or web traffic the referrals generate. 

To get started as an affiliate marketer, you can sign up for brands’ affiliate programs. You can find brands that are seeking affiliate partners by searching within affiliate networks. Once you’ve selected a brand or product to promote, you can earn a commission by driving traffic to an affiliate link, which is a URL with a unique ID that attributes sales or traffic to you.

For example, a blogger who creates a listicle of recommended lifestyle books could be an affiliate marketer. Using an affiliate link for each entry, the blogger directs readers to an online bookshop where they can purchase the books. The post will also include a disclaimer that lets visitors know that their activity might earn the blogger a commission.

What is dropshipping?

Dropshipping allows you to sell products online without the need to manage inventory or shipping. Instead, dropshippers build ecommerce stores and select products that will appeal to a particular audience. They then work with third-party manufacturers who ship the products directly to customers. 

An influencer who sells workout clothing to fitness enthusiasts could be an example of a dropshipper. When a visitor makes a purchase through the influencer’s page or store, it’s the dropshipper’s partner who will take care of the logistics and make sure the product reaches its final destination.

 

Affiliate marketing vs. dropshipping

Affiliate marketing and dropshipping are both low-risk business models, but there are several key differences between the two:

Formation

• How they’re similar: It is fast and cheap to start both dropshipping and affiliate marketing. In some cases, there may not be any startup costs. 
• How they’re different: To start an affiliate business, you can apply to affiliate programs. Once approved, you can recommend products on your existing social media pages or blogs. For dropshipping, you need to find a third-party manufacturer before you start and open a shop on an ecommerce platform like Shopify.

Customers

• How they’re similar: In both cases, increasing your audience on social media can yield higher sales. The more people interact with your affiliate content or ecommerce shop, the better chance you have to sell products to customers. 
• How they’re different: Since affiliate marketers typically have an existing audience, they can use the trust their followers have in them to encourage purchases and earn them higher profits. For a dropshipping business, getting new customers may require a more active marketing approach, such as using search engine optimization (SEO) to generate store traffic.

Responsibilities 

• How they’re similar: With both models, you avoid tracking inventory or renting warehouse space. In that sense, both affiliate marketing and dropshipping are hands-off processes. 
• How they’re different: Affiliate marketers aim to get their followers to click on affiliate links to external websites where they can purchase products. Therefore, they do not have a responsibility past recommending items that their audiences will like. Dropshippers, however, still need to manage customer support and customer service if their visitors have questions about products or unexpected issues arise.

Pros of affiliate marketing

Affiliate marketing comes with several advantages that make it an attractive option for both beginners and experienced entrepreneurs.

Low startup costs

You can begin with just a social media account or simple website. While premium tools can help, they're not essential to get started. Most affiliate programs are free to join, and your main investment will be time rather than money.

No inventory management

Since you're just promoting products, you don't need to worry about storing inventory, packaging orders, or handling shipping logistics. This eliminates a huge operational headache.

Passive income potential

Once you've created content with affiliate links, it can continue generating revenue for months or even years. A blog post you write today could still be earning commissions three years from now.

Flexibility in what you promote

As an affiliate, you can recommend products across multiple categories or focus on a specific niche. If a product stops performing well, you can simply switch to promoting something else without major business disruptions.

Low risk

Without inventory investments or long-term contracts, your financial risk is minimal. This makes affiliate marketing ideal if you're testing the entrepreneurial waters.

🌟 Want to become an affiliate marketer but have limited funds? Learn how to start an affiliate marketing business with no money.

Cons of affiliate marketing

While affiliate marketing has plenty of upsides, it's important to also consider potential challenges.

No control over inventory

You're promoting someone else's products, which means you have no say in quality, pricing, or customer service. If a merchant provides a poor customer experience, it can reflect badly on your recommendations.

Commission fluctuations

Programs can change their commission structures with little notice. Amazon Associates, for example, has reduced commission rates several times over the years, significantly impacting affiliates' income.

An affiliate marketer’s reputation is at stake

A content creator’s reputation makes affiliate marketing possible. However, there are some downsides to this. An affiliate marketer must know a product well to recommend it. For example, if a YouTuber suggests a cream they used a few years ago but the formula changed since then, it could harm their credibility. 

It takes time to earn money

Building an audience that trusts your recommendations takes time. Unlike dropshipping, where you might make sales as soon as you drive traffic, affiliate marketing typically requires establishing credibility first.

Attribution issues

Most affiliate cookies have short lifespans (often 30 days or less). If someone clicks your link but purchases after the cookie expires, you won't receive credit for the sale.

Increasing competition

As more people recognize the potential of affiliate marketing, popular niches are becoming crowded, making it harder to stand out without a unique angle or extensive marketing.

Pros of dropshipping

The dropshipping business model is easy to set up and you can make money as you grow your customer base.

You don’t need a big audience to start

Whereas affiliate marketers can use their audiences to make sales, you don’t need a big audience to start dropshipping, making it a more accessible route. 

Brand ownership

Unlike affiliate marketing, dropshipping lets you build your own brand. You control the customer experience from website design to marketing messages, helping you create a business with long-term value.

Minimal startup costs

You don’t have to spend money on products or renting warehouse space, but you likely have to invest in an ecommerce platform.

Higher profit potential

While affiliates typically earn 5-15% commission on sales, dropshippers can set their own prices. With smart product selection and positioning, you can achieve profit margins of 20-40% for many products.

Finding third-party manufacturers is easy

Several resources can connect you to third-party suppliers. These supplier directories can help you search for and add dropshipping companies and help you come up with product ideas.

Ability to test and pivot quickly

If certain products aren't selling well, you can easily add new ones to your store without major investments. This flexibility allows you to respond to market trends faster than traditional retail businesses.

Cons of dropshipping

Before jumping into dropshipping, consider these potential challenges:

Lower profit margins on competitive products

For popular items with lots of sellers, competition can drive prices down, resulting in slimmer margins. This is especially true when dropshipping commodity products from marketplaces like AliExpress.

Customer service responsibilities

When a customer has questions or issues with their order, they'll come to you—not your supplier. This means you'll need systems in place to handle customer inquiries, returns, and complaints efficiently.

Less control over inventory and fulfillment

If your supplier runs out of stock or ships an order late, it impacts your business directly. These supply chain issues can be frustrating and difficult to resolve since they're outside your direct control.

More upfront work than affiliate marketing

Setting up a dropshipping store requires more initial effort—you'll need to create product listings, set up payment processing, and establish supplier relationships before making your first sale.

Which is more profitable: affiliate marketing or dropshipping?

Both affiliate marketing and dropshipping have the potential to be profitable business models, but dropshipping tends to have better profit margins. With affiliate marketing, the brand that hosts the affiliate program controls how much money you earn based on sales or traffic generated. Commissions have a wide range. To increase your revenue, you can work to grow your audience to earn more profit.

Dropshipping, on the other hand, gives you the potential for higher profit, because you set the retail price that appears on your website. Dropshipping profit margins can also vary depending on factors including audience, niche, and costs. Assess the competition when pricing your product to evaluate how high you can go.