Affiliate Marketing and Amazon FBA are two of the leading styles of online entrepreneurship and ecommerce that, while quite different, have some crossover in the skills and abilities required to use them to make an online profit. In this comparison of Affiliate Marketing vs Amazon FBA, which is aimed at beginner entrepreneurs (of which you might be one!) I’m hoping I can clarify the similarities and differences between the two, and answer questions such as which of the two is easier, more profitable, best applicable to the current world situation, and most importantly which is best applicable to YOUR situation.
No comparison of this type can start without the basics, and here is a simple explanation of what Affiliate Marketing and Amazon FBA actually are and how they apply to the current digital marketing and online entrepreneurship sphere.
What is Affiliate Marketing?
Affiliate marketing is basically taking a commission for selling someone else’s product by way of a referral. In this form, Affiliate Marketing has been around for many, many years, really almost as long as sales and money themselves. The advent of the Information Age and the internet has supercharged the industry, and in online terms, Affiliate marketing is where you direct a visitor from your media to a vendor’s site, and if they buy something, you receive a commission. Think of yourself like an online traffic cop, directing web users and internet traffic to other sites according to your recommendations. The redirection is done via a link you have received from the vendor, and you have pasted onto your own media.
When a potential customer clicks on this link, they go through to the vendor website, and if they buy something, you receive a commission at the rate set by the vendor. One of the benefits most vendors offer affiliate is that when you direct someone to their site, they place a ‘cookie’ on the visitor, meaning that if the customer, say, visits again within a specified number of days, and then buys, you will still receive the commission. Typical age of cookies can be around 30 to 60 days, completely up to the vendors terms.
What is Amazon FBA?
Amazon FBA, or fulfillment by Amazon, is vaguely similar to Dropshipping (see my comparison of Dropshipping to Affiliate marketing also on this site), but leverages the internet behemoth that is Amazon, one of the world’s biggest companies. In simple terms, Amazon FBA is where you make a bulk order from a manufacturer – say of 500 dog collars, which you then get shipped to one of Amazon’s many warehouses in whichever target market you which to sell to. You list this product as for sale on Amazon, and when a unit is sold, Amazon, at their warehouse, packages and sends (fulfills) the order. Really, it’s a fantastic way to piggyback off one of the best business models in the world, being Amazon.
So where do you start? In the next two sections, I intend to show you that neither of these online business models are difficult to start and that the barriers to entry are by no means insurmountable.
What do I need to start Affiliate Marketing?
Obviously, Affiliate Marketing (and Amazon FBA) need a connection and familiarity with the internet. Though it would greatly help, having a website is by no means a necessity for Affiliate Marketing, as you can make recommendation posts on social media (be cautious of the rules of various platforms however) or on online forums, which merely require an email address and login to start.
Having said that, there is great benefit in having your own website or webpage, as you have so much more control over where and how your media and affiliate links are placed and portrayed. If you don’t think you’re technical enough to start a full blog style website, consider a page builder such as Instapage, Clickfunnels or Getresponse (my personal favourite, and offers so much more than just landing pages and email automation) which are fairly easy to use and can be whipped up in a jiffy after a short learning curve.
One of the big upsides of Affiliate Marketing is that it can be started with no or only a small financial outlay. The same can’t be said of Amazon FBA, which requires startup capital in every case to buy your initial inventory.
The platform you choose also depends greatly on the method of Affiliate Marketing you want to utilize, and it’s especially important to work out how you want to generate traffic. This is one of Affiliate Marketing’s tricky points, which Amazon FBA partially solves by being based on the gigantic ecommerce platform of Amazon. I’ll talk more about the skills you need to answer the questions that successful Affiliate Marketing poses.
What do I need to start Amazon FBA?
As alluded to earlier, Amazon FBA requires some startup capital (at a minimum around $2K), and carries a higher financial risk in that you really have to be willing to burn some cash to establish yourself on the Amazon marketplace and also to learn the lessons that ecommerce is only too willing to teach. Conversely, this is one of the upsides of Affiliate Marketing – as creating content, uploading affiliate links can be done by yourself at only the cost of your time, it can be financially less risky.
It’s almost certain as you do your research of potential products for Amazon FBA that you will require an analytical tool such as JungleScout to work out and find potential product types that it may be possible to profitably sell on Amazon. Like Google, Amazon also ranks its products according to algorithm, based on factors such as relevance, past sales and customer satisfaction, so you will need to get an understanding of this to be effective as an Amazon seller.
As you now have your own products, you also need to be able to handle shipping, dealing with manufacturers and Amazon, and customer service. It is definitely possible to outsource these, but of course again a cost may be involved.
What skills are required to be successful in Affiliate Marketing?
Success in Affiliate Marketing is based around the factors of traffic generation, content creation, conversion, and the sometimes overlooked factor of retention.
Traffic Generation requires the mastery of one or more traffic channels – think Google SEO, Google Ads, Facebook marketing both paid and organic, other social media channels, forums and many, many more. These forms of traffic generation can be separated into paid or ‘free’ – meaning that you pay, say for an Ad in Google Adwords, as opposed to SEO which appears on Google according to relevance and a myriad of other factors (see my SEO guide for Affiliates ). I say ‘free’ in quotation marks as obviously it is possible to pay people to improve your SEO ranking, and this goes for most other ‘free’ or organic forms of marketing.
Content Creation takes some skills say in copywriting, sales letter writing, video creation, social posts, graphic design or other. You want to be able to draw in your audience and ADD VALUE by giving them content that engages and educates them. If your content is bland and ambiguous you are unlikely to get either traffic or conversions.
Conversions, or the ability to get a visitor to take a certain action, is an art and a science online that could, and does fill many books. Persuasive copy, compelling calls to action in conjunction with split or A/B testing can give you great insight into how you can increase your sales conversions. Remember, an increase in conversion from 1% to 2% of all visitors represents a massive 100% increase.
Last but not least is customer retention – remember, once a customer clicks away from your site to a vendor offer, they are basically lost to you as a future customer unless you have somehow collected some information from them in order to contact them again such as an email address or facebook messenger id. How do you do this? See my post on lead magnets for more information.
What skills are needed to be successful in Amazon FBA?
Amazon FBA is a decent learning curve, if your first product is successful I would be most impressed! (Post below I’d love to hear about it.) You need to be able to analyze potential products for their profitability, which requires both skill and patience to be able to trawl through large numbers of candidate products trying to find a niche you can launch a successful product in.
Patience also comes to hand when dealing with manufacturers, who may be coming from a language background different to yours. Customer service is also required , and is a highly necessary capacity for any Amazon seller.
As well as this, it’s very important that you have some idea how to push your product up the Amazon rankings. If you’re on the 100th page for yoga mats you are unlikely to generate many sales. There are many ways to do this but it definitely helps to choose a less crowded product niche.
Whew! There’s a few skills required there. One thing I always recommend is to educate yourself on the subject; there’s many exceptional Amazon FBA courses out there, and when it comes to Affiliate Marketing I wrote a blog post on beginner affiliate courses to help you short circuit to profitability.
Which is better – Affiliate Marketing or Amazon FBA?
So I guess your choice boils down to a few important decision factors. I’ve created a quick summary in the table below.
|Affiliate Marketing||Amazon FBA|
|Upfront capital: Can start at $0||Upfront capital: You’ll need at least $2K to be serious|
|Learning Curve: Less complicated concept, but a working knowledge of websites, social media and digital marketing strongly helps||Learning curve: Several distinct areas such as Amazon marketing, analyzing niches, dealing with manufacturers and customers all need to be mastered|
|Time to making money: Depending on your method of traffic generation and time you put into learning can be around twelve months||Time to making money: Can be fairly quick once a product is launched, but you’ll most likely use the profits to buy more stock|
|Active/Passive: Up front you’ll be working hard to make content, but once this is achieved, the income can be quite passive||Active/Passive: If you want to make it a passive income once you launch a product, you’ll need to enlist people (try upwork or Fiverr) to help you out|
It really depends on what skills you already have, what you want to learn, and whether you have capital to risk. If you are particularly skilled at content creation and want to learn websites and digital marketing then it sounds like you are after Affiliate Marketing. If you have some capital to risk and want the fastest route to an income, then maybe Amazon FBA is more your style.
Thanks so much for reaching this point in my blog. I hope you got some value from this post, and if so, I’d love you to make a comment and tell me about your entrepreneurial endeavours. As I’m sure you can tell this log is about affiliate marketing, if you want a quick synopsis of some Affiliate Marketing Courses I recommend, check out the link.
Bonus: Is FBA dead?
It’s true that the Amazon marketplace is heavily saturated, particularly in the USA. However, I would argue it’s not dead, it just requires more effort upfront and a bit of ingenuity. There are still plenty of manufacturers out there apart from behemoths like AliBaba just waiting to be discovered. COVID-19 has pushed so many consumers online and this is a trend that is not going to reverse. If you’re prepared to get on the phone to manufacturers you are well ahead of the pack that merely sends email or trawls AliExpress. Make an effort, especially in your product research and you can make Amazon FBA a profitable reality for you.
Affiliate Disclaimer: In case you were in any sort of doubt, yes, I’m an Affiliate in some manner for some of these programs and products. I like to practice what I preach. If you are intending to utilise any of these offers I’d love if you went through one of these links to support my site.