Introduction to Dropshipping and Affiliate Marketing
I got a question from Jewel Jules, who says, “What is the difference between what you were doing, dropshipping, and affiliate marketing?” For people that don’t already know, they sound similar—you aren’t holding any inventory, you’re selling to people, and you’re getting paid. But what’s the difference between dropshipping and affiliate marketing? Not all dropshipping is bad; some forms are good and okay, while others are not so hot.
What is Dropshipping?
What I was doing involved going on Amazon and creating listings as if I were selling the item. When someone bought it, I would order it from Walmart.com or Lowes.com and input the customer’s shipping address instead of my own. I was essentially a middleman diverting people. This is frowned upon by Amazon and eBay because they can’t hold the seller accountable for mishaps in shipment or product defects.
Shopify Dropshipping: A Widely Accepted Form
There is a form of dropshipping that is widely used and acceptable: Shopify dropshipping. While not the focus here, Shopify dropshipping involves creating your own website and online store, filling it with products from a supplier. When someone buys through your website, your program orders the product and ships it directly to the end consumer. This is acceptable because you’ve built your own store and operate it as you please. Amazon and eBay, however, require you to sell the item yourself and not as your own if you’re not the actual seller.
What is Affiliate Marketing?
Affiliate marketing might seem similar, but it involves promoting a product while the buyer must click through to the seller’s website to order the item themselves. I’m an affiliate for Amazon Associates, Amazon’s affiliate program. Most content creators are affiliates for Amazon. If you check the descriptions, you’ll see Amazon short links (amzn.co) to products they promote. Clicking these links takes you to Amazon, where you can buy directly from the seller.
How Amazon Tracking Cookies Work
When you click on a link, an Amazon tracking cookie is placed on your computer, allowing Amazon to track the click’s origin. For example, in my case, if you find the 110-pound shipping scale I promote in the description, it’s one of my top-selling products. I use and own the AccuTech 110-pound shipping scale, which costs around $25. Clicking the link places a cookie on your computer, and if you buy it, Amazon rewards me a small commission.
Understanding Commission Percentages
Commission percentages are modest, typically four to five percent depending on the product. This costs the buyer nothing extra. When you buy an item from Amazon, the seller is charged a percentage based on the item. In this case, I earn four percent as the affiliate, meaning Amazon collects eight percent total. Without an affiliate, Amazon keeps the full eight percent. With an affiliate, Amazon splits the commission, giving four percent to the affiliate and keeping four percent. This cost is borne by the seller, not the buyer.
| Section | Subtopics |
| 1. Introduction | – Overview of Dropshipping vs. Affiliate Marketing |
| – Jewel Jules’ question: Key differences explained | |
| 2. Dropshipping Explained | – Basic definition and process |
| – Unethical Amazon/Walmart arbitrage vs. Shopify Dropshipping | |
| 3. Affiliate Marketing Explained | – Definition and process (e.g., Amazon Associates) |
| – Tracking cookies, commission structure (4-5%), ethical vs. unethical practices | |
| 4. Key Differences & Examples | – Dropshipping: Sell as your own vs. Affiliate: Redirect to seller |
| – Real-world examples (Orbitz, Kayak) and ClickBank critiques |
The Ethical Side of Affiliate Marketing
Affiliate marketing involves promoting products and earning a kickback from the company. I’m an affiliate for several services: Vendo, a cross-listing software I strongly believe in and use; Amazon Associates, where I promote products I regularly purchase; and Scoutly and Scout IQ, tools I used as an Amazon bookseller. I promote these because they are essential for booksellers, and when users sign up for free trials or purchase the apps, I receive a kickback.
Unethical Practices in Affiliate Marketing
There is an unethical side to affiliate marketing. Some marketers promote products solely for the commission, without genuine belief in the product. I only promote products, apps, and services I use or have used and fully believe in. Some websites allow marketers to pick up affiliate offers and promote them to their audience, often without any attachment to the product or service. While this can be ethical if done to provide value, it often isn’t.
ClickBank and Questionable Products
ClickBank is an affiliate network where people upload programs and info products. Some of these products are questionable, yet they have high sale rates. I view promoting such products as unethical because they aren’t beneficial to the end consumer. Most affiliate marketers, however, are ethical and promote products they genuinely believe in.
Dropshipping vs. Affiliate Marketing: Key Differences
Dropshipping involves selling an item as your own and ordering it from the actual seller to ship to the customer. Affiliate marketing involves promoting products and directing customers to the seller’s website. A good example of affiliate marketing is Orbitz, Kayak, or Priceline. These sites collect data to show prices for hotels, flights, and rental cars. When you click to book, you’re redirected to the company selling the ticket, which pays Orbitz, Kayak, or Priceline a commission for directing traffic to their site. This provides value by aggregating prices, and the companies pay a kickback for the referral.
Conclusion
Dropshipping and affiliate marketing both allow you to earn without holding inventory, but they operate differently. Dropshipping involves selling products as your own and shipping them directly to customers, while affiliate marketing focuses on promoting products and earning commissions from sales. Both have ethical and unethical practices, but success ultimately depends on transparency and genuine value for the customer.
