Two of the most popular ways to earn money from home are either through affiliate marketing or by selling items on Amazon.
While you can earn money through both methods, each has pros and cons you need to be aware of before jumping in.
Here I’m gonna give you an in-depth look at affiliate marketing vs Amazon FBA.
Let’s dive in.
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What is Affiliate Marketing?
Affiliate marketing is a form of internet marketing where affiliates promote other people’s products and earn a referral commission for doing so.
It’s probably the fastest way to make money online because you don’t need to create (or buy products for reselling) first before you can start marketing.
Affiliate marketing also has huge appeal because you can start this business without needing to invest money upfront. This also gives the affiliate a greater degree of comfort knowing that they don’t stand to lose money if their product doesn’t sell.
Many people who are new to affiliate marketing think they need to promote Amazon products. However, this is definitely not the case.
More than 80% of businesses have an affiliate program, so there is a huge amount of choice out there for affiliates. In fact, Amazon’s affiliate program only pays out tiny commissions to affiliates and offers a very short cookie life of only 24hrs.
On the other hand, many companies out there typically offer affiliates a 10% – 40% commission per sale. Having said that, I have also worked with some companies that offer 100% of the first sale.
In this case, the company then aims to make its money by selling more products to the same customer further down the line.
There are a number of commission structures that companies offer, including pay per lead. Some companies that sell products on a monthly or yearly subscription model may even pay you out again each month the customer renews their subscription.
This means the company will pay its affiliates a continual recurring payment for the lifetime of the customer.
If you decide that affiliate marketing is right for you then I encourage you to look beyond the Amazon affiliate program.
Pros of Affiliate Marketing
- Low barrier to entry
- You don’t need to own the product
- You don’t need to deal with customer issues
- You don’t need to worry about shipping
- You can get started for little or no money
- You can choose to promote any products you like
- There lots of great products out there to promote
- You can earn passive income
- You can work as much or as little as you like
- Some programs pay out huge commissions
- Some programs pay you a monthly, quarterly, or yearly recurring commission
- You can work from anywhere
- You are your own boss
- You call the shots in your business
- Lots of great courses available to learn affiliate marketing
Cons of Affiliate Marketing
- It can be difficult to find profitable products
- There is competition in many niches
- Sometimes programs change their terms
- Sometimes affiliate programs can shut down
What Do I Need To Start Affiliate Marketing?
There are many different ways to get started with affiliate marketing. However, the most important thing to do first is to get the right training. Without this, you’ll just be wasting your time.
One of the best courses for beginners is the Affiliate Secrets 3.0 course. This course is highly comprehensive and is responsible for creating several very successful affiliates. You can read my full review of Affiliate Secrets 3.0 here.
Then, you’re gonna want to sign up to an affiliate network like ClickBank or ShareASale, or Flex Offers and start looking for products to promote.
Once you’re signed up with a network, you can start to look for potential companies to partner with. Most will accept you straight away simply because you are a member of the same network.
However, some will also require you to fill out an additional application to their program. Once accepted, you will receive your affiliate link and you can get started promoting right away.
Each affiliate program you sign up with will usually provide you with a range of tools and services to help promote their products. This usually includes banner ads, promo videos, ad templates, and pre-written emails (known as email swipes). However, some affiliate companies don’t provide any marketing materials at all.
While you can start an affiliate business with no money, I recommend investing in a few tools straight away if you can. Starting with no money at all is possible, but it will be a lot harder and take more time.
Once you’re making a bit of money you’ll need to invest in a few tools anyway in order to grow. So if you can do this right at the beginning you’ll be able to earn a full-time income as an affiliate a lot faster.
The essential tools for an affiliate are:
- Email autoresponder
- Landing page and funnel builder
In my opinion, GetResponse is one of the best autoresponders for affiliates, and also comes with a landing page builder.
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Once you grow it is also important to be able to track your affiliate links, clicks, and sales. Most networks and some private affiliate programs will provide you with tracking, but on the whole, it’s not usually very reliable.
Instead, the better option is to use a dedicated link tracker software. I recommend ClickMagick for affiliates.
Again, link tracking is something that you want to do right from the beginning if you can afford to pay the extra (ClickMagick starts at $37 per month), but you can usually get by relying on free tracking if your affiliate program provides it.
Having said that, once your campaigns are up and running it can be very time-consuming to add dedicated tracking later. So I recommend using it straight away if you have the budget for it.
What is Amazon FBA?
Amazon FBA is a service that allows you to list your products on the Amazon marketplace and sell them for a profit. By leveraging Amazon’s market reach and logistics network you can potentially reach more customers and grow an eCommerce business at a faster rate.
This service can be very beneficial for a lot of sellers. Amazon FBA partners benefit from partner carrier rates and reduced shipping costs, and you don’t have to deal with daily order fulfillment.
In addition, you can sell more products than you can warehouse yourself, so you’ll have more inventory available to sell.
Pros of Amazon FBA
There are a number of benefits to using Amazon FBA.
As an e-commerce seller, you don’t have to sell products on your own to reap the benefits of a private-label brand. Instead, Amazon manages all logistics for you.
Your product will be shipped directly to the customer from Amazon’s warehouse. Once your product ships, the fulfillment center will also handle any returns on your behalf.
Here are the main pros of Amazon FBA:
- Logistics and shipping are handled for you
- You get discounted shipping rates
- Returns are managed for you
- Amazon handles the customer service
- Fast delivery
- More space to store your stock
- Multiple channel fulfillment (with Amazon’s MCF -Multi-channel fulfillment, you can still list your products on other platforms such as eBay or BigCommerce and let Amazon fulfill on your behalf
Cons of Amazon FBA
When you start selling products on Amazon, you’ll have to pay fees for storing, processing, and shipping. The fees are calculated based on the type of product and its weight.
If your items are large, you can opt for an Amazon-owned warehouse. However, this will, of course, cost you more money. All the Amazon FBA fees add up, so you’ll need to crunch the numbers carefully to ensure it will be a profitable venture for you.
Here are the main cons of Amazon FBA:
- Product costs – the initial upfront investment can be too expensive for some new entrepreneurs to get started. FBA makes financial sense for medium to high-cost items, but not for low-cost products. Use the FBA calculator to check if it will be profitable for you to sell your product via Amazon FBA. Once logged into your Amazon account, search for “FBA calculator”.
- Risk of your product not selling – if your product doesn’t sell then you will be down on your product investment + Amazon’s fees on top
- Increased returns – due to Amazon’s open return policy, some sellers see an increase in returns.
- Long-term storage fees – if your products don’t shift fast enough then Amazon will charge you additional fees. Be sure to factor this into your budget when deciding if FBA is right for you
- Amazon prep requirements for products – Amazon has a list of requirements for products to meet before they are sent to their fulfillment centers. You will need to follow their guidelines carefully, some of which can be tricky
- Sales tax – Taxes are charged at different rates depending on where you’re operating from, and in which state your products are being warehoused. This can be tricky to navigate. Fortunately, Amazon handles most of this for you.
- Amazon FBA Fees – Amazon collects payments from customers for you and will deduct any fees you owe to them before paying you. If your Amazon balance doesn’t cover the fees then you’ll need to use a credit card to pay your remaining balance
- Your business is entirely reliant on Amazon
What do I need to start Amazon FBA?
In a nutshell, the process of selling on Amazon involves creating a listing, promoting it, and fulfilling orders.
Once you have opened your Amazon FBA account, you can create your product listing to be featured on the Amazon marketplace and send your products to one of Amazon’s fulfillment centers.
Once your product listing is live on the marketplace, “Fulfilled by Amazon” will appear on your listing. This lets the customer know that Amazon will be handling all the logistics once they make the purchase.
When a customer purchases your product, Amazon will receive the order and handle all the packing, shipping, customer service, and any potential returns on your behalf.
As we all know, Amazon is first class at speedy order fulfillment. This gives both the customer and you as the seller peace of mind that the customer will receive their goods swiftly and professionally.
In short, you will need a product to sell, money to buy that product, an Amazon FBA account, and money to cover you in advance for the first few months of Amazon FBA fees.
As I mentioned in the Amazon FBA pros and cons section above, FBA makes sense if you’re selling medium to high-cost products. Be sure to use the FBA calculator to help you figure out if it’s a good move for you.
Be sure to also factor in additional potential fees in case your products need to be stored at Amazon for longer than expected.
Ultimately, choosing between affiliate marketing and Amazon FBA comes down to personal preference. Just because one method may potentially yield a higher ROI, doesn’t mean it’s better overall. You also need to enjoy the business model you’re working with.
Having said that, in my opinion, affiliate marketing wins hands down. Why do I say this?
You can get started straight away as an affiliate, you don’t need to be reliant on one platform or company, you can build passive income over time, and affiliate marketing brings more freedom. Affiliate marketing is also a much lower risk as you don’t have to invest capital upfront in a product that might not sell.
The key to successful affiliate marketing is having the right training from the beginning. However, if you’re just getting started then you may not have a lot of money to invest in a comprehensive training course right away.
That’s why I recommend beginners take this 15 day training course for $7.
This course is taught by one of the industry’s most successful and reputable marketers. In the training, he will teach you the core skills that make affiliate marketing work and help you get your business set up and live within 15 days.
That means by the end of day 15, you will have a system set up and ready to start making money.
You can sign up for the 15 day fast track affiliate business course here.
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