Should you start an affiliate marketing business or should you do Amazon? There really is no right or wrong answer here.
However, I want to give you a clearer perspective. And I believe I can only do that if I tell you the pros and cons of both.
Hopefully, after reading this article you can decide which is best for your business!
So, Affiliate Marketing VS Amazon FBA: which one wins?
Read on, and you decide!
Affiliate Marketing Pros
Pro 1: Low Cost but High Returns
Signing up for affiliate marketing is, most of the time, if not always, free. You don’t have to pay for anything, except for occasional fees for your platform like web hosting services, services’ monthly subscriptions, and other applications that you may need.
It is unusual for these to be expensive, so you can still expect a high profit after subtracting your expenses from your earnings.
Pro 2: Continuously Growing
According to Digital Global, the US’ affiliate marketing earning is expected to reach $6.8 billion in 2020. It was also found that since 2016, it has been increasing by 10.1% annually. This makes it an ideal business model to try out as it does not look like it’s phasing out soon.
Pro 3: Easy Startup
Because you are applying to be a marketer, you don’t have to make your own products. You do not need a big level of capital for inventory. You just have to find a program, sign up, and wait for your application to be approved. After that, you’re all set to go.
Pro 4: Source of Passive Income
Affiliate marketing is one of the best models to earn passive income. This is a good side job, along with your full-time work. You can earn from the comfort of your own home because sales get accumulated over time. This also isn’t prone to seasonal changes and trends.
Pro 5: Not Time-Consuming
Being an affiliate won’t take too much of your time. All you need to do is to promote the brand on your platform/s, convince your audience to purchase it through your affiliate link, and wait for sales.
This is easier said than done, and can be hard for newbies. But it will certainly take less time compared to building your own store.
Pro 6: Independent Marketing
Another advantage of being an affiliate is that you don’t have to have a team or staff of your own. Once you are accepted, you only need yourself and your platform. Although socializing will definitely help, it isn’t necessary for those who find it hard to build relationships.
Pro 7: Fully Accommodated Affiliates
If you have your own store, you need to take care of everything. This includes inventory management, financing, store advertisements, etc.
This is not the case for affiliate marketing, though. Almost all programs will provide you with all the marketing resources. You also don’t have to be bothered by customers’ concerns because the company will take care of this.
Pro 8: Performance-Based
Affiliate marketing is performance-based. This means that you get paid in accordance with how hard you are working. You don’t need to worry about being paid less than what you worked for. If you are a skilled affiliate marketer, you can make a lot of money here.
Pro 9: Wide Niche
Affiliate marketing is for everyone. It is not limited to one specific product. You can find a program for every niche out there. You can practically promote anything within this business model.
Affiliate Marketing Cons
Con 1: No Control Over Terms
A brand’s affiliate program is not a negotiation. You can’t modify the terms and conditions set by the merchant. This means that whatever they may allow and restrict is out of your hands. This is a disadvantage because you may be terminated immediately if you violate just one rule.
As Amazon affiliates recently found out, your commissions can be cut or even the whole affiliate program terminated with little to no warning.
Con 2: High Competition
Affiliate marketing has a low barrier to entry. It has a low startup cost and does not require experience. This is a good thing, but it can be a bad thing because of the ever-growing competition.
Con 3: Does Not Guarantee Income
The thing is, no matter how hard you work, earnings can’t be assured. Daily sales and eanrings are based wholly on your own skill and ability to promote a product. This is a great fit for those who want a passive income, but it may take time to replace your current day job. And good marketing skill is required to get to that point.
Con 4: Requires a Lot of Skills
Although signing up as an affiliate is easy, the real challenge comes when you start being one. You have to hone a lot of skills along the way. This includes creativity, marketing-related skills, data analysis, people skills, to name just a few. You may also need to be an expert in problem-solving, at some point.
Con 5: Needs Patience
Many people quit being an affiliate midway. Most of their reason is that they aren’t making as much money as they expected. This is because many people think that affiliate marketing is a get-rich-quick model, which it isn’t.
If you are thinking about being an affiliate, you have to be very patient. Most of the time, it will take you months before you land your first sale. Longer, if you want to regularly earn a decent income.
Con 6: No Stable Customer Base
The only connection you have is your relationship with your merchant. You are not directly acquainted with the customers. This means that it will be hard or even impossible for you to build a customer base. Moreover, you have to find new leads each time as it is unlikely that your customers will repeat their purchase through your link.
Although a good way around this is to build an email list with the customers you promote your products too.
Con 7: Prone to Fraud
Although uncommon, if you look for affiliate programs without proper research, you may land on a fraudulent program. In addition to that, there are some issues of hijacked affiliate links. These are affiliate links that were replaced. Instead of the commission getting to you, the commission goes to someone else.
Or simply a company may be badly run and go out of business before they pay you your affiliate commissions.
Con 8: Commission-Based
The negative of working in a commission-based market is that you don’t earn as much as selling your own products. You only get a part of the full price of the product you’re advertising. You are fully dependent on the percentage set by the merchant.
Con 9: May Get Overwhelming
If you are one of the people who easily gets overwhelmed, then starting out in this business can be hard for you. Like what is stated before, affiliate marketing covers a broad set of niches. Choosing one can be confusing. There is also a possibility that you can’t start at all because of the overwhelming feeling. Paralysis by analysis is what a lot of experts call this!
Amazon FBA Pros
Pro 1: Hassle-Free
Amazon FBA will be responsible for storing your products, packing them, and getting them ready for the process of shipping and delivery. It will act both as your own warehouse and factory. This means that you will have less work and errands on your plate. This also means fewer worries.
Pro 2: Flexible
The good thing about Amazon FBA is that it isn’t limited to Amazon’s platform only. It has a multichannel feature, so you can also avail its benefits for your products in other e-commerce sites. Its functions stay the same, no matter the channel. Yes, you need an Amazon account, but selling in Amazon, itself, is not required.
Pro 3: Buy Box Priority
Amazon’s Buy Box refers to the small space in Amazon that is designated to high-ranking sellers. Most buyers tend to look at the products listed here first before others. Using Amazon FBA guarantees that you can win the Buy Box, and have access to its advantages.
Pro 4: Access to Prime Shipping
Prime Shipping is one of the features of being a Prime member. This offers an exclusive next day delivery, which is a good deal for customers who are in a rush. This allows your product to be shipped immediately for free. Moreover, this is set under the product category of “Get by Tomorrow”. This is also available along with Amazon FBA.
Making products simple and easy to ship should make them convert more easily, with you taking the benefits.
Pro 5: Increases Trust Rating
Being an FBA seller also means being recognized by the platform. You are officially verified, and the customers can see that you are one of Amazon’s recommended sellers. As most customers are wary of online transactions, this can help you establish a good reputation as a seller.
Pro 6: Customer Service is Provided
Amazon will be responsible for managing your customers’ concerns. May it be an inquiry about a product, or they are seeking a recommendation, asking for updates, they will be the one to handle it. Because of this, you don’t have to be bothered about cutting your time in half for repeated concerns.
Pro 7: Saves Time For Other Activities
Because Amazon FBA does almost all of your tasks for you, you have more time to spare. You can use this for brainstorming, coming up with new marketing strategies, managing your products’ status, monitoring your inventory, and anything, really, that you may need to do.
Pro 8: Improves Sales Volume
Being able to sell under the Amazon umbrella, or even just being able to utilize their services, comes with great benefits for the seller. For example, just being on the Amazon platform can bring a lot of traffic and potential for sales. Amazon.com usually gets over 2 million visitors a day!
Pro 9: Amazon Manages Returns
Apart from answering queries and managing customer concerns for you, Amazon is also the one who will take care of product returns. Their goal is to establish an efficient process of returns and make your store as customer-friendly as possible. That’s another major headache taken off your hands!
Amazon FBA Cons
Con 1: Hard to Monitor Inventory
Because of the fact that Amazon FBA acts wholly as a warehouse, they are the ones responsible for managing your products. This can make it difficult for you to keep track of your inventory and can lead to possible misinformation.
Con 2: Can be Costly
As you may have known by now, Amazon FBA is not free. You can consider its benefits as an investment, and investments are meant to be paid. Specifically, you have to pay for its shipping services, marketing resources, and others. If you don’t make a lot, this can be a huge drawback to your earnings.
You get the best out of Amazon FBA if you have a scalable business with good volume.
Con 3: High Standards for Products
As you will be carrying Amazon’s brand, they take extra measures into making sure that a seller’s product adheres to their requirements. You can’t just put out any product that has low quality and expect it to sell because of being an FBA seller.
Con 4: No Control over Deliveries
Although Amazon guarantees a fast shipping process, in the form of Prime Shipping, it does not promise that it will be fulfilled at all times. When peak seasons come, deliveries can be delayed due to overflowing orders from numerous stores. If this happens, you cannot contact the courier as you don’t control the process of shipping, Amazon does!
Con 5: Difficulty to Establish Brand Identity
Amazon is the one who packs your products and slaps their brand on it! This means that the packaging promotes the Amazon brand and not your own. This is the first thing that your customers will see. This can make it hard for you to make your brand recognized to the fullest.
Con 6: Small Chance to Engage with Customers
As Amazon is mostly responsible for communicating with your customers regarding their issues, there are only rare opportunities that you can use to build a strong relationship with your customers.
You also can’t send personalized marketing messages to your Amazon FBA customers or easily use them to build email lists, making it hard to sell to them further.
Con 7: High Competition
According to Statista, 75% of Amazon sellers residing in the United States, alone, are FBA sellers. This means that you should be prepared to fight against high competition.
Con 8: Storage Fees
Most of the time, storage fees do not take too much from your budget. However, if you let your products be stocked in Amazon’s warehouse for a long time, the fees and costs will accumulate.
Con 9: Easy Return Process
Amazon’s easy return process may be an advantage for the customers, but it can reflect negatively for you, as the seller. If customers find it too easy to return a product to a store, there is a higher possibility that they will often return, even if their reason is a mere change of mind.
They might have the view that they are dealing with a billion dollar business in Amazon that can take ‘the hit’ of a return. In reality, you are the one taking this hit!
So Which is Better, Affiliate Marketing or Amazon FBA?
No business model is perfect. But if I were you, I would go for affiliate marketing because you are not limited to Amazon affiliate marketing. It is one of the few businesses where you can earn a lot of money without a large amount of capital. I also like it that affiliate marketing does not require an inventory—you are merely promoting someone else’s products.
Having said all of this, different business types suit different people and their personalities. You need to find the business opportunity that best suits yours. Now that you know some of the main pros and cons, it should be easier for you to choose!