If you’re looking to make some money online, you’ve probably come across both affiliate marketing and Amazon FBA. But which one should you go for? And is one business model better than the other?
Don’t worry, this article will break down the differences between the two options and help you figure out which one is the best fit for you.
What is Affiliate Marketing?
Affiliate marketing is basically where you earn a small commission for each sale made through a unique link that’s given to you by the company or network you signed up with. In other words, you make money by promoting other people’s products.
To get started, find an affiliate program or network that you like. Check out the products or services they offer, how you’ll get paid, and what commission you’ll receive. Once you’ve found one you like, sign up and wait for the approval. Then, you can start creating content and adding those custom links. When someone makes a purchase through your link, boom! You’ll earn a commission.
You can work with individual companies or sign up with an affiliate network, where you’ll have access to multiple programs in different categories. Start promoting your affiliate links on your website, social media, newsletters, or wherever you’re allowed to share links.
When you reach the minimum payment level, the network will send you your earnings. Payment options include PayPal, bank transfer, or a good old-fashioned check.
What is Amazon FBA?
Amazon FBA, also known as Fulfillment by Amazon, is a service that allows third-party sellers to store their products in Amazon’s warehouses and have Amazon handle the packing, shipping, returns, and customer service for you.
Not only does this make your products searchable on the Amazon Marketplace, but you can also offer free, unlimited shipping for Prime-eligible products. And the best part? This service isn’t limited to orders placed on Amazon. You can also use Amazon FBA to fulfill orders from your e-commerce website or other sales channels as long as your inventory is stored in an Amazon warehouse.
With Amazon FBA, you can focus on growing your business while Amazon takes care of the rest!
What is the Difference Between Affiliate Marketing and Amazon FBA?
Starting an online business? You’ll want to make sure you have the right tools for the job. Both Amazon FBA and Affiliate Marketing offer solid platforms to launch from, but they have some major differences to consider.
If you go with Amazon FBA, be prepared to keep a lot of inventory on hand. That means a lot of your capital will be tied up in stock. With affiliate marketing, on the other hand, you can earn money without having to carry any inventory or tie up your funds. Just promote and sell other people’s products!
Amazon FBA is a more active model, requiring a lot of research to find niche markets and evaluate the competition. Affiliate marketing, on the other hand, can be a more passive way to earn income – you can even make money while you sleep!
Whether you choose Amazon FBA or Affiliate Marketing, it’s worth investing in some training to really understand how it works. Look into online courses or boot camps to get up to speed, especially if you’re just starting out.
Amazon FBA: A Costly Investment
Starting an Amazon FBA business requires a considerable amount of capital. This model involves sourcing products, having them manufactured, and shipped to the Amazon warehouse for easy shipment.
Your landed costs, which include the costs of Amazon product research tool, Amazon PPC advertising, Amazon seller account, and GS1 product barcodes, are just the beginning. You should also set aside around 30% of the cost of your original product order for a re-order down payment as it takes time to receive revenue from your first product order.
The typical costs of starting with 300 to 500 units selling at $30 to $60 per unit, as estimated by Amazon guru Dan Rodgers, is between $5,000 to $10,000+. It’s essential to have money set aside for re-orders to avoid going out of stock.
In summary, Amazon FBA is not suitable for aspiring, bootstrapped entrepreneurs. For more information, you can read our guide on Amazon FBA startup costs.
Affiliate Marketing: A Cost-Effective Option
Affiliate marketing is a more cost-effective option for starting an online business as it eliminates product expenses and focuses on the promotion and sale of products. You could technically start with $0 by signing up for an affiliate program and putting your product links into free platforms like YouTube or social media.
However, most affiliate marketers recommend having some startup capital to create a website or landing page to increase conversions. A simple website can cost as little as $3 per month on an annual plan. There is also a vast suite of tools available to expand your opportunities, but they can be expensive. For example, Ahrefs, a popular SEO tool, costs $99 per month. To save money, you can consider Wealthy Affiliate. It is a comprehensive affiliate marketing training platform that offers you digital courses, websites, a hosting service, a keyword research tool, etc.
Finally, some courses might teach you to use paid advertising to make money with affiliate marketing. Paid ads allow you to put your product link in front of a targeted audience, with options such as Google ads or Facebook ads. However, I don’t think it’s cost-effective.
One of the most important things to consider when starting a business is its profitability.
You should make sure that the business venture will be rewarding before you invest time and money into it.
Amazon FBA Profit Potential
Are you thinking about starting an Amazon FBA business? It’s important to consider the potential for profitability before investing time and money.
According to a 2022 report from JungleScout, the majority (76%) of Amazon FBA sellers are profitable. The report found that 63% of sellers become profitable within their first year, and 60% of sellers with 3+ years of experience make over $100,000 in revenue.
Seller’s results vary, but JungleScout provides data showing that 45% of Amazon FBA sellers make between $1,000 to $25,000 per month in sales. On average, Amazon FBA sellers can expect to make anywhere from $160 to $12,500 in profit per month.
Affiliate Marketing Profit Potential
Affiliate marketing is another business venture that can be profitable, but incomes can vary. According to Scaleo, 48% of affiliate marketers earn around $20,000 per year.
While success stories from top earners like Pat Flynn and Kristy McCubbin can be inspiring, it’s important to keep in mind that only 3% of affiliates make over $150,000 per year. On average, middle-class affiliates earn $1,000 to $10,000 per month.
At the end of the day, it really depends on your skill level. I know a 21-year-old student from Wealthy Affiliate who earned $7,395 in just 1 week, which means he made more than $1k a day…all while using free traffic methods and affiliate marketing.
Pros and Cons
If you’re thinking about setting up an online store or marketplace, there are definitely a few things to consider. Every platform has its own pros and cons, so it’s important to weigh the options and see what fits best with your company and products.
Whether you’re looking at Affiliate Marketing or Amazon FBA, here’s a rundown of some of the benefits and drawbacks to keep in mind.
- Easy to Join: One of the biggest perks of affiliate marketing is that it’s incredibly easy to get started. There are no barriers to entry, so you can jump right in as soon as you decide to give it a shot. To get started, all you need to do is create an affiliate marketing website (or not, if you prefer), find a compelling niche, select a product or products to promote and sign up for an affiliate marketing program. It’s that simple!
- Low Operating Costs: Starting an affiliate marketing business has extremely low operating costs compared to other industries. You work online from the comfort of your home, so you only need to cover basic electricity and internet expenses. If you decide to set up a website, there may be additional costs for domain registration, web hosting, and design, but these are relatively minor expenses.
- Flexibility: One of the best things about affiliate marketing is that you don’t need to leave your current job to get started. You can work on it as a side project and see how it goes in the first few months. This makes it a great option for anyone who wants to start a business without quitting their day job.
- Multiple Campaigns: Another advantage of affiliate marketing is that you can run multiple campaigns at once. You can promote your affiliate links on different websites and landing pages, and then abandon the ones that aren’t performing well while optimizing the ones that are successful.
- No Customer Service Hassles: As an affiliate marketer, you don’t need to worry about retaining customers or handling customer service issues. When a customer has a post-sale question, you can simply pass it along to the merchant’s customer service team.
- Dependency on Merchant’s Rules: In affiliate marketing, you don’t own the program, so you have to rely on existing ones. This means you’re stuck with the merchant’s rules and have to play by their conditions.
- No Repeat Customers: Once someone makes a referral, they won’t come back to you for future purchases. Instead, they’ll go directly to the affiliate vendor. This is just how affiliate marketing works – you’re always on the hunt for new leads. The exception to this is if you find affiliate programs with recurring commissions, like some SaaS affiliate programs that offer recurring licenses and fixed payments.
- Effortless Delivery: Who wants to spend their time and energy on delivering products to customers? With Amazon FBA, you can sit back and relax because they’ll handle all the deliveries for you. This gives you more time to focus on what really matters – marketing your products.
- Awesome Customer Service: No more stress over dealing with difficult customers. With Amazon’s excellent customer service, they’ll handle it all for you. You can now focus on growing your business without the burden of direct customer communication.
- Amazon’s Global Reputation: Being a trusted brand by customers worldwide, Amazon is known for delivering products and having a seamless return process. This gives buyers peace of mind and helps increase their intent to purchase.
- Winning the Amazon Buy Box: By using Amazon FBA, you increase your chances of winning the coveted Buy Box on Amazon’s product pages. The Buy Box is the prominent “Add to Basket” button that shoppers click to make their purchases. With FBA being one of the factors that Amazon considers when evaluating a seller’s delivery processes, you have a better chance of winning the Buy Box against other sellers offering similar products.
- Cost of FBA: Starting a business with Amazon FBA can be an exciting prospect, but you need to be prepared for the costs involved. FBA is a useful service, but it comes at a price. There’s the storage fee, and then there’s the fulfillment fee, which can add up quickly. So, it’s essential to choose products that will sell easily and still leave you with a decent profit, even after these deductions.
- Rising Returns: Many sellers have noticed an increase in returns, which can be partly attributed to Amazon’s generous return policy. In the past, you would have to pay for returns to be shipped back to you, but now, Amazon is making adjustments to have returns sent directly to your warehouse. This is something to keep in mind when calculating your costs and profits.
- Strict Warehouse Regulations: When using FBA, you need to make sure that your products meet Amazon’s specifications for goods entering the warehouse. This means properly packing and labeling your goods before shipping them off to Amazon. This process can be challenging, especially if you’re new to it, so be prepared to put in the effort to get it right.
- Tax Uncertainty: Sales tax is a state-level issue, and if your company operates in one state but has its inventory stored in another, it can be challenging to know which tax rate to use. Fortunately, there are resources available to help you determine the tax situation, and Amazon will do most of the work for you. However, it’s still essential to understand the tax laws and regulations to ensure you’re complying with them.
Which One Is Best for You?
Still unsure whether Amazon FBA or affiliate marketing is right for you? Let’s break it down.
First things first, if you’re on a tight budget, affiliate marketing is your friend. You don’t need to spend any money on products like you would with Amazon FBA. You can even get started for free by setting up a YouTube channel or promoting products on social media. And if you’re really serious about making money through affiliate marketing, starting a blog can be a great way to drive organic traffic and generate more sales.
Now, if you have some cash to invest and you’re ready to put in the work, Amazon FBA could be a great option. But remember, just like any business, there are always risks involved, so make sure you do your research before diving in.
At the end of the day, the best business model for you depends on your goals, budget, and willingness to invest time and money. But either way, good luck on your entrepreneurial journey!
How to Get Started With Affiliate Marketing
If you’re just starting out with affiliate marketing, it’s important to make sure you’re learning from the best. It’s easy to get discouraged if you’re trying to promote a product in the wrong niche or using a method that just doesn’t work.
A lot of new affiliate marketers make the mistake of copying what’s worked for others, but the problem is that these experienced marketers know what does and doesn’t work. Don’t copy someone else’s strategy and end up with a bust.
The key to success in affiliate marketing is finding a program that teaches you step-by-step how to do it right. Once you find one, stick with it, and don’t give up too soon if you don’t see results right away. Affiliate marketing takes time and effort, but if you’re willing to put in the work, you can definitely make money with this business model.
Check out my list of the best affiliate marketing courses to learn more and get ahead in this exciting field.
If you’re not ready to invest in any course, you can check out my free guide “How To Make Money With Affiliate Marketing: 4 Simple Steps”.
How to Get Started With Amazon FBA
Thinking about starting with Amazon FBA but not sure where to begin? Well, listen up because I’ve got some insider tips for you!
First things first, if you’re gonna put your money into inventory, you want to make sure it’s worth it, right? That’s why I highly recommend getting some formal training before diving in. Trust me, there are a lot of moving parts to Amazon FBA and you don’t want to get lost in the maze without a roadmap.
Now, I know what you’re thinking, “Can’t I just figure it out on my own?” Sure, it’s possible. But why take the risk when there are experts who have already figured out the trade secrets and are willing to share them with you? A good Amazon FBA course can save you loads of money and frustration in the long run.
So, what are the best courses out there? Check out my list to see which one fits your needs. Don’t risk going at it alone, invest in your future and get properly trained!
If you don’t want to spend a penny, here’s my free guide “How To Sell On Amazon: 10 Proven Steps For Beginners” to help you get started.
So you’re still trying to decide whether to go for affiliate marketing or Amazon FBA? Well, let me tell you, I’m a fan of affiliate marketing and think it’s the way to go, but that’s just my two cents. Both have their pros and cons, so it’s important to weigh them out before making a decision.
Affiliate marketing, done right, can be a seriously sweet passive income stream. The earning potential is basically limitless. If you’re curious about giving affiliate marketing a shot, I’ve got a recommendation for you: Wealthy Affiliate. I’ve used it myself and found it super helpful.