While both of these can be viable ways to create wealth online, one of them is significantly better for someone who’s just beginning.
Affiliate Marketing vs Amazon FBA | Which One Should You Choose?
Depending on the level of risk you’re willing to take or the amount of money you’re looking to invest in starting an online business is all going to be a huge deciding factor when figuring out what is best for you.
Well, this article is going to cover the features of both of these business models, so you’re able to make an accurate choice of what one will fit into your plans best.
What Is Affiliate Marketing?
Affiliate marketing is merely a modern interpretation of a very old business model.
You promote someone else’s product and upon making a sale, you’ll receive a commission.
Very similar to how a real estate agent would be paid, or someone who sells insurance.
For example, almost anything sold on Amazon, you could promote as an affiliate and receive a commission upon someone purchasing through your unique link at no additional cost to the consumer.
Check out another article that I wrote about Affiliate Marketing: Is Affiliate Marketing A Scam? Debunking The Myth.
Want to learn even more about affiliate marketing? Check out this amazing course! Affiliate Secrets 2.0
What Is Amazon FBA?
Amazon FBA stands for Fulfillment By Amazon.
For those of you that aren’t aware, a good portion of the products sold on Amazon is actually sold by everyday people.
Amazon will process orders, ship them out, and store your product at their warehouse.
For a percentage of the profits of course.
Unlike the affiliate marketing business model, with Amazon FBA you’re selling your own products while Amazon fulfills your orders and returns.
It is a hands-off way of selling products online.
It is comprised of doing product research, purchasing inventory, and sending it to Amazon with the hopes that it’ll sell.
There is somewhat of an art to it, having to find a product that will consistently sell but not do too well.
As it happens very often that other Amazon sellers or even Amazon itself will launch jack your product.
And you won’t be able to compete with Amazon, especially if they put their name on a product similar to yours.
What’s the difference between the two?
The main difference between the two business models is that with Amazon FBA you’ll be branding your own product to sell online, with affiliate marketing you’ll be promoting someone else’s pre-existing product and receive payment upon purchase.
There will be a higher risk if you decide to go with Amazon FBA, as you’ll be required to buy a substantial amount of inventory upfront.
Which isn’t guaranteed to sell, so your investment can get hung up in holding stock. Amazon will also charge you based on the amount of space it takes up in their warehouse if the product isn’t selling fast enough.
With affiliate marketing, you can promote products that are already converting well and you aren’t required to purchase a bunch of inventory to actually start making sales.
For example, you could become an Amazon Associate and promote almost any product that is on their platform and receive a commission whenever someone makes a purchase without having to buy a bunch of products to sell or go through the process of branding your own stuff.
Affiliate Marketing Vs Amazon FBA | Pros & Cons
As with almost any business model, there are advantages and disadvantages to each.
While one advantage might be more prevalent in your circumstances and a disadvantage might be more significant to someone else’s.
Knowing the most common issues that come along with both business models will help you figure out the answer to your question: Affiliate Marketing Vs Amazon Fba?
And decide which business model aligns best with your plans!
Affiliate Marketing Pros:
- Beginner Friendly – Most affiliate programs and networks will provide you will images and emails that can be used to promote their products. You could potentially start turning a profit with affiliate marketing as soon as you start, as it isn’t going to require an upfront investment. It will mainly require you to figure out how to get people to your offers.
- Low To Zero Start-Up Cost – Unlike Amazon FBA where it’ll cost thousands of dollars to even begin selling products, there is virtually zero start-up cost if you plan on doing affiliate marketing. Depending on what type of traffic method you’re going to use, the cost could be as small as $30 to start a blog.
- Flexibility – The number of products that you could choose to promote is infinite, you’re not going to be restricted to any type of industry or niche. You can create a business around what you actually love and find affiliate products that align with that.
- Passive Income – You can create a passive income stream with affiliate marketing, promoting products that offer a recurring commission. This means if someone purchased through your affiliate link, you’d be paid every month for as long as they used that product. Get My Ultimate Recurring Affiliate Program List Here!
Affiliate Marketing Cons:
- Saturation – Certain programs and affiliate networks can be saturated as most are free to join and so are the resources that companies provide. So you’ll need to make yourself stand out if you’re looking to have a substantial amount of success. Whether that be adding your own bonuses or utilizing copywriting, you’ll need to do something that will make you stand out from the rest.
- Lack Of Control – As an affiliate marketer, you’re promoting someone else’s product which means you’re at the mercy of the owner of the company that you’re an affiliate for. If they decide to change their program or cut commissions you don’t have a say in it. This can be avoided if you diversify yourself and don’t rely on a single affiliate network to make all of your income. For example, a while back Amazon changed their commission structure and I know a lot of people that relied solely on their affiliate program for their business to survive. If they would have had a combination of affiliate programs and networks the negative impact wouldn’t have been as substantial if they didn’t rely on a single program.
Amazon FBA Pros:
- Shipping – Unlike other e-commerce platforms if you decide to sell products on Amazon, you’ll gain access to their entire network of shipping. This includes Prime, where you’ll be able to have your products shipped to customers fast and efficiently without any extra stress.
- Returns & Customer Service – Amazon handles the customer service and the returns, which if you’ve ever done any e-commerce before this alone can be very time-consuming.
- Trust – Unlike selling a product from a brand new site that no one has ever heard of you’re able to have your products listed on one of the most well-known brands around right now. For that fact alone your sales will increase because people are more likely to purchase for the pure fact that it’s from Amazon and is a trusted brand.
Amazon FBA Cons:
- Cost – All the efficiency and perks of selling on Amazon come with a substantial cost. This doesn’t include the cost of the actual product or units that you plan on shipping to a warehouse. You can expect to pay extra for all of the amenities that Amazon offers. As well as paying for the storage of your products. You will also be fined if your product sits for too long and isn’t selling units.
- That Your Selling On Amazon – Since you’re going to be selling on such an established brand that has been known to have very smooth shipping and return policy, you can expect people to return products more than they usually would if the process wasn’t so easy. Another thing that you need to be careful of is having a product that sells too well, it has happened throughout the seller community for people to launch jack products that are selling like crazy throughout various industries. Other sellers like yourself and Amazon will undercut you.
- Strict Guidelines – There are very strict guidelines when it comes to packaging and branding your products. If they aren’t correct upon arriving at an Amazon warehouse, they won’t ship your products out but you will be charged for them being stored. There are various minor details that can cause very big hiccups, which can be very overwhelming when you’re first starting.
- Inventory Management – This can be very tricky as you’ll have to order enough units that will be able to last just long enough without having to pay huge storage fees but at the same time not ordering so much that you’ll be in a hard spot if for some reason that your product stops selling. Knowing when not to buy or when to buy more units can make or break you as someone who sells on Amazon. You have a product that is selling and is at the top of the listings on the search term, but you run out of units. By the time you’re able to get a product to a warehouse, someone else will have taken that spot and it’ll be hard to get back to it.
- Trends – Will have to be careful to not sell a product or be in an industry that is heavily affected by trends or is a flash in the pants. A few years back people were making a killing selling those fidget spinners, so naturally, everyone is going to try to start selling them who is already selling products on Amazon. Which the fad fizzled out, leaving people sitting on a ton of units that they could no longer sell.
Related Post: The 6 Best Home Based Business Ideas
If you’re looking to create an online business or build a passive income stream online, then I would go with Affiliate Marketing.
The reason for this is because there are all of the benefits without all of the risk.
You’re not going to have to spend thousands of dollars branding a product and doing product research.
Just to buy a product and hope that it actually sells.
As an affiliate you can promote a pre-existing product, that someone else has spent time, and money testing.
You don’t have to do returns, deal with customer service, delegate shipping, or hold inventory.
You can start to join programs that offer a recurring commission, which is a very powerful way to create passive income.
It would be similar to me referring you Netflix and me getting a commission every month for as long as you use their service.
Want to learn even more about affiliate marketing? Check out Affiliate Secrets 2.0
Want a list of my favorite affiliate programs that offer recurring commissions? Get it here!
I am by no means saying that you can’t achieve a high level of success selling on Amazon, there is just a higher risk involved compared to affiliate marketing.