Amazon FBA vs. Affiliate Marketing: Which Side Hustle is Best for You In 2023?
It's Brian Zabierek, and today, I want to discuss the top two ways newbies can make money online. But before we dive in, here's a little about myself.
My twin brother Arek and I are Amazon startup coaches helping students gain confidence in their business ideas and grow sustainable brands. We offer insightful tips, foolproof strategies, and personalized tactics to ensure your business heads in the right direction. Our website and coaching program offer the resources you need to learn a practical approach to creating an e-commerce brand in 2023.
Research by IBIS World reveals that up to 25.4% of all business happens online, and the number will increase by a whopping 3.6% in 2023. It means e-commerce is the Land of Opportunity, providing newbies countless options for business growth. There are also several ways to start making money online in this digital era, including dropshipping, Amazon FBA, and affiliate marketing.
The question is, how can you start making money online? To get started, you must first choose the ideal business model. While there are various online models, we'll focus on the top two: Amazon FBA and affiliate marketing. Below we compare these two business models to help you make an educated decision. You can also click on my video, where I dive deep into the pros and cons of Amazon and affiliate marketing.
Amazon FBA vs. Affiliate Marketing: Which Business Model is Perfect for Newbies?
Over 4.5 million new businesses start in the U.S. annually, and up to 36% of all companies make sales online. Therefore, if you're planning to kick-start your online business, you can rest assured e-commerce is flooding with opportunities.
But to take advantage of the online market's potential, you must choose the perfect business model. In this article, I'll discuss the differences between Amazon FBA and affiliate marketing to help you make an informed decision. I'll also discuss their pros and cons to ensure you choose a business model matching your goals, budget, and preferences.
P.S. If reading articles isn't your favorite pastime, you can watch the video edition of this article here.
A Quick Glance at Amazon FBA
Amazon FBA eases the online selling of products and earning a revenue online through its robust infrastructure. All sellers must do is find a product and deliver it to Amazon's fulfillment center. Once your shipment arrives at its distribution warehouse, Amazon will store and pack items for shipping.
Furthermore, Amazon's employees will package and deliver your products to customers and handle returns and refunds. In short, the e-commerce platform alleviates your responsibilities, thus allowing you to focus on your brand's creative and marketing aspects.
Now let's discuss its pros and cons:
- Less time-consuming
- Customer service management
- Expensive startup costs
- Difficulty tracking inventory
- Finding winning products can be tricky
A Quick Glance at Affiliate Marketing
Affiliate marketing is another fantastic e-commerce business for newbies. According to research, over 80% of brands use affiliate marketing, and 20% of marketers rank it as the "most important" customer acquisition channel.
Affiliate marketing involves generating and driving traffic to sell a product or service of other brands to earn a commission. Typically, the merchant or company provides you with a code or offer to place on your website, blog, or videos to attract qualified leads and motivate them to take the desired action.
The affiliate network tracks the sales generated through your link to calculate your monthly revenue. You can join any affiliate program to get access to products and services to promote and start making money. For instance, you can join Amazon's Associates and digital brands or even backlink your offers on blogs or YouTube videos.
Here are the pros and cons of affiliate marketing:
- Requires no expertise
- Low investment costs
- Zero customer service
- Affiliates may offer a poor commission
- No control over competition
- Challenging to establish your customer base
It's never a good idea to delve into any online business before assessing startup costs. Let's compare the startup capital you'll need for Amazon and affiliate marketing:
Creating an Amazon FBA business requires sourcing products as inventory in Amazon's distribution network for shipment. You'll have to get products manufactured, shipped, and listed.
In addition, you need to consider the cost of hunting and advertising Amazon products and creating your seller account. You'll also have to put aside money to run quality control checks and maintain customer service.
Conversely, affiliate marketing requires $0 to get started! Here, you don't have to worry about product expenses.
Furthermore, you can add product links to free platforms like your blogs, social media, and YouTube channel. With affiliate marketing, you can generate qualified traffic for years through evergreen content.
When choosing a business venture, profitability potential is the number one thing on your mind. After all, if you're investing time and money into something, it's important to expect a positive outcome.
Amazon FBA provides new sellers with a 20 to 40% profit margin alongside a fantastic exit opportunity. Moreover, Jungle Scout reveals that 63% of sellers achieve profitability within a year!
In addition, 60% of sellers earn $100,000 annually within three years.
Like Amazon, affiliate marketing's revenue also varies. But this ranges from 5 to 30%, which is comparatively less.
On the bright side, affiliate marketing experiences an annual growth of 10%. Moreover, up to 80% of advertisers allocate 10% of their budget for affiliate marketing.
Creating and targeting your ideal customer isn't always easy. Let's discuss how this task varies based on the business model you choose:
One fantastic advantage of Amazon FBA is that sellers can tap into an engaged customer base. You can quickly enter a pool of loyal customers with high buyer intent without additional effort.
Additionally, the platform offers fast shipping, returns and refunds, and high-quality customer service- things every customer wants. Therefore, Amazon FBA allows you to drive organic traffic to your product listing quickly and efficiently.
Affiliate marketers must spend considerable time creating a clear affiliate marketing audience to target. Since your ICP varies depending on the brand or advertisers you collaborate with, you'll have to learn about the product/service, its benefits, and what pain points it solves.
You might also have to evaluate your competition and assess buyer demographics to ensure you drive traffic to the brand or merchant's website.
If you're planning to juggle affiliate marketing or Amazon FBA as a side hustle with your 9-to-5, you'll want less time-consuming.
Amazon FBA requires considerably less time than the typical business. In fact, a survey by Jungle Scout reveals that only 28% of sellers spend 30 hours weekly building their Amazon store.
Therefore, it's much easier to kick start your business on Amazon while working 9-to-5.
In affiliate marketing, you rely on organic leads through content creation to earn revenue. Therefore, you'll have to invest long hours before building a business with a steady revenue stream.
You might have to invest 30 to 40 hours weekly to gain traction on your blog or videos and start making passive income.
The Bottom Line
Overall, Amazon FBA and affiliate marketing are excellent business models for building your brand and earning financial freedom. So, which one do you think is better?
Personally, I think Amazon FBA is the superior business model. It can help turn your passive income into a million-dollar brand with time and effort. And there are countless tools and free resources you can leverage to help you grow your online business.
If you think Amazon FBA is the ideal business model, you can use discount code "ZAB6M" or "THEZABTWINS10" to enjoy a 20% discount for six months or 10% forever, respectively. And if you're ready to build your brand on Amazon FBA, you can book a call with Arek and me. Or you can visit our YouTube channel to learn the ins and outs of Amazon.