Last Updated on February 14, 2023 by Andrew Shih
Having an online business where you can work from the comfort of your home is a dream come true for many aspiring entrepreneurs.
Amazon FBA (Fulfillment by Amazon) and Affiliate Marketing are two popular options regarding side hustles. Both offer advantages and disadvantages when starting a business from home, but which one is better for you?
Let’s take a deep dive to help you understand what they are and the processes. Then we will compare key features and differences to help you make this decision.
Affiliate Marketing vs Amazon FBA: What Is It?
What is Affiliate Marketing?
Affiliate marketing is performance-based marketing in which a business rewards affiliates for each customer brought by the affiliate’s marketing efforts.
Affiliates generate leads and sales through their websites and other digital channels. You may work with multiple brands to promote products or services as an affiliate.
It works by the affiliate prote and refer a customer to a company’s website via an unique affiliate link. The company then pays the affiliate for each successful sale or lead generated by the affiliate.
You don’t need to do anything but sell products or services. You don’t need to create your products, maintain an inventory, handle customer service, etc.
Clients will often pay you either a fixed fee or a percentage of the sales price for each successful sale or lead you generate.
What is Amazon FBA?
Amazon FBA (Fulfillment by Amazon) is an online business model in which products are sold through the Amazon platform. This means you don’t have to worry about the physical aspects of running your business, such as shipping products, handling customer service, and returns.
To take advantage of Amazon FBA, you must first sign up for a seller account. After that, you need to purchase the items you want to sell and send them to Amazon fulfillment centers. From there, Amazon will handle all aspects of fulfilling orders.
Amazon handles all the marketing for you, making it easier to get sales. The downside is that Amazon charges a fee for each sale you make.
Affiliate Marketing vs Amazon FBA: How to get started?
How to start with Affiliate Marketing
#1: Identify products and services
You can start by looking around and creating a list of the product or services you already use for work or personal use. Since you are already using the product, you are naturally a good spokesperson.
#2: Finding the Company’s Affiliate Programs
Once you have the list, you will need to find out if the company making the product or providing the service has an affiliate program. Typically, you can Google “[Company] Affiliate Program.”
Most companies with an affiliate program will have an affiliate page with instructions on signing up.
What happens if you cannot find the company’s affiliate program online?
It is still a possibility that a company may still be open to affiliate opportunities. However, it is not for beginners. It will only make sense if you are established and have a large audience so that you can bring immediate value and ask to become an affiliate.
#3: Have a plan to promote the product
Before joining the affiliate program, you should consider how you plan to promote the product. It’s helpful if you already have social media followers, a YouTube channel, or a blog site.
You can start by promoting to your friends and family using social media such as Facebook, but you will need to grow the audience to become a successful affiliate. One common approach is to start a blog or a digital channel such as YouTube.
You should be aware that many companies prohibit promoting via email due to possible spam. Don’t rely on spamming techniques that will get you in trouble.
#4: Sign up as an affiliate
Most companies use an affiliate network, such as ShareASale, Impact, CJ, Rakuten Advertising, etc., whereas some run their own affiliate program in-house.
Once you are on the company affiliate page, it will take you to the signup page. On the signup page, you’ll need to create a new account. In addition to the typical username, password email, and address, it may also ask how you plan to promote the product and SSN for tax purposes.
#5: Receive affiliate approval
You are not an affiliate until the company approves your application. Some companies are willing to accept anyone who applies to become an affiliate, whereas some companies are very selective. It may take days or weeks to receive the application status.
If you are a beginner and the company rejects your affiliate request, you should move on and try another one until you receive the approval. However, you can also ask the company to reconsider, if you use the product or more to offer that is not included in the application.
#6: Start promoting and selling
Once a company approves and lets you join the affiliate program, you will have access to the affiliate dashboard to access your unique affiliate links, tracking, and reports. You will use the unique affiliate link whenever you promote the product or service.
You will earn a commission when people make a purchase using your link.
How to start with Amazon FBA
Understanding the Amazon FBA business models
Amazon FBA supports several business models. You should understand each business model and decide which one you want to pursue.:
- Private Label: Have the manufacturer create the product with your logo and brand.
- Wholesale: Buy products from distributors with extra inventory and then sell them on Amazon with FBA.
- Reselling/Arbitrage: Buy products at a lower price from another retail or online and resell them at a higher price on Amazon.
- Handmade: Create your product and sell it on Amazon.
#1: Product research
The first and most crucial step is to research the products with high demand and low competition on Amazon, which will likely yield the most profitable opportunity.
There are a few ways to do product research:
- Use Google Trends, search for “Google Shopping Trends,” or research the best sellers in your category on Amazon.
- Search for a keyword like “best selling items” or “most profitable items” in the search bar at the top of any Amazon page and then click “Best Sellers” in the left sidebar menu. If you want more specific results, use filters like “Prime Eligible” or “Top Rated.”
- Research “Best Seller Rank” and Reviews. For each product, Amazon provides the “Best Seller Rank” and Reviews in the Product Information section. A higher ranking means the product sells well.
- Because this process can be time-consuming and costly if you get it wrong, many sellers use a trusted tool such as JungleScout can help you filter and quickly find the most profitable opportunity to get started.
#2: Product Sourcing
Once you have identified the product you want to sell, it’s time to find the manufacturer or the supplier. You want to find a manufacturer or supplier with good ratings and trustworthiness. The supplier can usually ship your product directly to Amazon’s warehouses.
There are a few key steps
- Research Supplier/Manufacturer: You can use Alibaba, or directly from JungleScout. Try to find 5 to 10 companies with good ratings, at least 3 years of history, offer quality products, and at a price you can still make a good profit.
- Contact the supplier. Reach out to the suppliers and find out if you can communicate with them and if they are easy to work with.
- Order samples. Before you commit to bulk orders, you should order a sample from the potential suppliers and evaluate the quality.
- Ship the product to Amazon’s warehouses. Once you are happy with the sample and have determined the supplier, it’s time to work ship the product to Amazon’s warehouses.
#3: Product listing on Amazon Seller Central
With your product heading to the Amazon warehouse, it’s time to work on your listing on Amazon Seller Central.
There are a few key steps.
- Research keywords to include in the listing. You can extract keywords from the top competitors’ listings or use JungleScout’s Keyword Scout for your keyword research.
- Purchase UPC bar code. You can purchase UPC barcodes directly from GS1. GS1 is the global organization that standardizes these codes. You will need UPC code to list your product on seller central.
- List your product on Seller Central. Create your attractive listing with a title, brand, keywords, good-quality images, product descriptions, and feature bullet points.
#4: Promotion and sell your product
To be successful, you should strive to start making sales as soon as your list goes live to help boost your best seller rank. You will need to ensure you have sufficient inventory and get as many reviews as possible.
Affiliate Marketing vs Amazon FBA: Which One is Easier for Beginners?
Affiliate marketing is a fairly straightforward way to make money.
Essentially, you promote products from other companies on your website or blog and earn a commission on any sales you generate.
One of the main benefits of this approach is that it doesn’t require a lot of upfront investment. You don’t need to create your products, so you don’t need to worry about things like manufacturing and shipping. All you need to do is find a good affiliate program and start promoting products.
Amazon FBA is more complicated than Affiliate marketing, but it can still be an excellent option for beginners.
With this approach, you either source the product from a third-party provider or create your products and then ship them to Amazon. Amazon will then store your products in their warehouses and handle all the shipping and customer service for you. This can be a great way to start e-commerce without having to deal with all the logistics yourself.
However, it’s important to note that you will need to invest some money upfront to get started with Amazon FBA.
Affiliate marketing is much easier because it has a lower entry barrier.
Promoting products and making affiliate sales requires little to no upfront investment. On the other hand, there is a lot more involved in choosing, sourcing, and shipping the product to the Amazon warehouse and floating the inventory before you can start selling on Amazon.
Overall, both can be great options for beginners. It comes down to personal preference and what type of business model you’re looking for.
Affiliate Marketing vs Amazon FBA: What is the startup cost?
Affiliate Marketing Startup Cost
You can start with affiliate marketing for as low as zero dollars.
For example, you can start promoting on Facebook to your friends and family. You can use your mobile phone to record and publish videos such as “open the box” videos to review and promote the product.
Most people also start a blog to promote affiliate products. In this case, you will likely be subject to the following feeds:
Monthly web hosting fee: $5 to $10/month
Domain registration fee: $12/year
While it is optional, it is beneficial to get SEO tools such as Ahrefs or Semrush. The keyword tool will help you find and target the right keywords so that you are not wasting time and effort creating content that won’t get ranked or has low traffic. The tool costs about $100/month.
Amazon FBA Startup Cost
There are many costs associated with Amazon’s FBA business model, including fixed and variable costs.
UPC code: The first UPC code starts at $30. It becomes cheaper if you order more.
Sample orders: Price varies depending on several factors, such as the cost of the product and manufacturer. Estimate $50 to $150 per sample.
Amazon Professional or Individual Seller Central fee: The Amazon individual plan costs $0.99 per item sold, or you can get the professional account with a $39.99 monthly fee with no quantity limit.
While it is optional, it is extremely useful to get JungleScout to help you with the product research, keyword research, and finding providers & manufacturers. It’s a tremendous money and time-saver. The most popular plan costs $49/month if you pay annually.
There are several variable costs, depending on the number of units. There are inventory, storage, and shipping costs for using the Amazon FBA service.
Amazon charges a referral fee for every item sold, depending on the product category. If you use Amazon FBA, there is an additional storage and fulfillment fee based on the weight and dimension of your product.
Private Label & Wholesale Model
To keep the unit price low, you will need to order bulk with the supplier and incur higher upfront costs.
As a quick rule of thumb, 1/3 of the cost will be the inventory and shipment to Amazon, 1/3 will be Amazon fees, and about 1/3 will be your profit.
Let’s assume you have a profit margin of 30% and have 70% to cover all the costs. A $20 item will cost $14. If you make a bulk order of 500 items, your estimated cost will be $7000 ($14 × 500) for one product.
If you want to carry more products, you will have to lay out more cash upfront, which can be challenging for many people. To bootstrap and grow your Amazon FBA business, you will need to reinvest the profit and expand the product line and inventory.
For price arbitrage, you can buy the inventory from other retail or online stores based on your budget. It can be as low as $500. You can resell it on Amazon at a higher price. Because you have less inventory, the cost and profit potential will be lower.
If you make a product manually, you will incur the cost of the source material. You can create as many units as your budget allows.
While Amazon FBA supports different business models, affiliate marketing has a much lower cost to get started without the cost of carrying inventory and all the fees.
Affiliate Marketing vs Amazon FBA: What is more profitable?
Is affiliate marketing profitable?
Because of the low cost associated with affiliate marketing, every dollar you make is nearly a pure profit. Any affiliate sales you make are an infinite return if you just record videos and upload them to YouTube at zero cost.
If you host a website, you do incur a small monthly hosting fee. Anything you make above the hosting fee will be your profit.
Is Amazon FBA profitable?
There are several costs and fees with Amazon FBA, including inventory, shipping, UPC code fee, and all the Amazon fees. The typical profit margin is between 20% to 30%.
Affiliate marketing is hands down the business model with higher profitability.
Affiliate Marketing vs Amazon FBA: Which one makes money faster?
To be successful and make money with affiliate marketing, you will need an sizeable audience. Building an audience and getting traffic is the most complex challenge, and it will take time.
Building a website from scratch to promote affiliate products can easily take at least six months or longer to get some traffic from Google, even if you are doing everything right.
Suppose you are actively learning and building your Amazon FBA business. In that case, you should be able to get your product to the Amazon warehouse and have the product listing go live on Amazon, and start making sales within the first three months.
While you have plenty of competitors on the Amazon marketplace, you can immediately tap into millions of shoppers on Amazon. If you have a good product listing with a high-demand product, you should have no problem making sales.
Unless you are an influencer or have a large audience to promote affiliate products, building an audience will take time.
With Amazon FBA, you can immediately access millions of customers on Amazon and take advantage of Prime delivery. For most people, Amazon FBA is the winner for a start to make money quickly.
Affiliate Marketing vs Amazon FBA: Which One Makes More Money?
While there is little cost and no limit on the inventory, you will need to be able to build an audience and traffic to make a significant amount of money with affiliate marketing.
Depending on your niche, you may be able to target high-ticket items with each sale to generate lucrative commissions. Some merchants that offer subscription models may pay affiliate commissions monthly as long as the customer keeps paying.
Steady monthly commission helps build a steady cash flow, instead of one-time commission.
By contrast, with Amazon FBA, you only profit from the products you sell. Your earnings are limited by the number of products in your inventory and the profit margin. Additionally, Amazon takes a cut of each sale, further reducing your earnings.
However, you have immediate access to millions of customers on Amazon. As long as you can compete for high-demand products and keep the inventory flowing, you can also make a lot of money on Amazon. There is no shortage of successful sellers making a living selling on Amazon.
There is no clear winner for which one will make more money.
You can find very successful bloggers and influencers making jaw-dropping amounts of money with affiliate marketing, and many Amazon sellers make excellent livings using Amazon FBA.
Likewise, according to Ahref, 90% of the websites do not get organic traffic from Google, and there are plenty of struggling sellers on Amazon.
You can make money with affiliate marketing and Amazon FBA, but it will be competitive, and success isn’t guaranteed.
Affiliate Marketing vs Amazon FBA: Which one is more passive?
Passive income means you are not trading time for money. You have to put in the hard work upfront so that the money will come in without being physically present to do the work.
Affiliate Marketing passive income
With affiliate marketing, you have to build the channel, find affiliate partners, and build an audience. Once you have steady traffic, you will have a reliable passive income stream to rely on.
You will likely want to grow the traffic, follower, and audience by continuing to build content by offering more valuable information.
Amazon FBA passive income
Once you work hard and create the Amazon FBA business, you will have to manage the inventory and relationship with the merchants.
If you do not have inventory, you are not making sales with Amazon FBA. You need to regularly monitor the inventories, put in the bulk order, monitor the quality and review, and ensure the shipment arrives at Amazon FBA on time.
Affiliate marketing wins this round because you do not need to worry about inventory availability and actively manage the merchant and monitor quality and feedback in the case with Amazon FBA.
Affiliate Marketing vs Amazon FBA: What is riskier?
The primary risk for affiliate marketing is violating the terms of service, and your affiliate relationship gets terminated.
A merchant may reduce the commission rate, terminate the affiliate program, or even go out of business.
You may be in a trendy niche that has become outdated. Imagine you created a crypto blog site, and it goes busted.
There are several risks you should consider before you start an Amazon FBA business:
You may need to spend a significant amount of money upfront to buy the inventory. You will need to sell the merchandise at a profit; otherwise, you will take a loss.
Legal and liability risk
When you source the product, you need to ensure you do not violate intellectual property rights and that the product is safe.
It is crucial to conduct due diligence and do product research considering these risk factors.
There are several operational risks to consider.
Amazon FBA businesses are entirely dependent on Amazon. While Amazon is currently the dominant eCommerce platform, there’s no guarantee that this will always be the case. If it disappears tomorrow, all businesses that rely on it will vanish.
If Amazon decides to increase the FBA fees, your options would be either paying the higher fee or opting for fulfillment by the merchant. A higher cost means you may need to raise the price of the goods, possibly making your product more expensive than other eCommerce sellers on eBay, Etsy, or Shopify.
Your seller account can get suspended or terminated if you violate Amazon policy. It’s crucial to follow Amazon’s rules.
With sanctions, tariffs, trade wars, and unpredictable market conditions, getting shipments to Amazon’s warehouse may not always be easy. However, you can try to diversify and have multiple product lines.
Affiliate marketing is a much safer business model. You can minimize the financial, operational, legal, and liability risks with Amazon FBA if you do proper planning and research ahead.
Affiliate Marketing vs Amazon FBA: Which one is more flexible and last longer?
Affiliate marketing is not tied to any company and can quickly adapt to changes.
You can always change a web hosting plan or company if you need a better service. You can join and promote other products that pay higher commissions. You can expand vertically and horizontally for the niche you cover.
With Amazon FBA, your livelihood is tied to Amazon. You want Amazon to continue to dominate the eCommerce market and keeps the platform profitable for the seller.
If anything goes wrong with Amazon or the market condition changes, it will likely be harder to adjust.
Affiliate marketing comes out on top regarding flexibility and adaptability to changes. With Amazon FBA, you are relying on customers shopping on Amazon and playing by Amazon’s rules.
You can change just about anything with affiliate marketing, including hosting companies, digital channels, and affiliated companies.
Affiliate Marketing vs Amazon FBA: What Are the Pros and Cons?
- Virtually no risk
- Get started as low as zero dollars
- High return on investment
- Flexible and not tied to a platform or affiliate merchant.
- Residual passive income, even if you do minimum upkeeping.
- Difficult to build and grow an audience.
- It takes longer to rank on search engines and make money
- Earn money more quickly.
- Immediate access to millions of customers on Amazon
- Take advantage of Amazon prime and fulfillment service
- No income if you don’t upkeep your Amazon FBA store
- Need more money to start the FBA business
- Higher cost and lower profit margin
- Higher financial, operational, legal, and liability risks
Affiliate Marketing vs Amazon FBA: Summary
Here is a quick summary of the winner in each category.
There is no clear winner for the “make more money” category because too many factors are involved, and success isn’t guaranteed.
Which side hustle should you start? It depends on your situation and goals.
Amazon FBA may be right for you, if:
- You are willing to put in the hard work and able to manage the risks of running an online store.
- You want to earn money more quickly
- You prefer selling your own product, instead of promoting other people’s product.
- You prefer manage inventory, intead of creating contents.
- You enjoy the hands-on process of buying low and selling high.
If you feel Amazon FBA is right for you, Jungle Scout has the tools and is the trusted resource to help you launch the Amazon FBA business.
Affiliate marketing may be right for you, if:
- You do not have money to float the inventory or minimize cost
- You are risk-averse
- You want higher profit margin
- You are willing to take time and effort to build content and grow the audience to earn passive income.
If you feel affiliate marketing is a better fit, the next step is to explore and find a profitable niche with low competition.
No matter which business model you choose, the best you can do is to get started, learn from your mistakes, and preserve and continue to improve. Sooner or later, you will find your success.
What is the difference between Amazon affiliate and Amazon seller?
As an Amazon affiliate, you can make a commission from Amazon by promoting products and helping Amazon make sales.
As an Amazon seller, you are a merchant on Amazon trying to sell products and makes a profit by selling your own item.
What is better than affiliate marketing?
While there is a lot of buzzes that affiliate marketing is the best way to make passive income, it’s not for everyone. Building a sizable audience and earning domain authority with Google takes a lot of time and effort. Not everyone can wait for months or years without income and hope for rewards later.
If you want to make money immediately, you may want to get a job or explore other side hustles that enable you to make money immediately. Generally, these opportunities will require you to trade your time for money.
Is drop shipping allowed in the Amazon store?
If your business meets Amazon’s criteria, you can use drop shipping to sell in the Amazon store. You don’t need to carry any inventory – just search for products and add them to your store. Once the buyer makes an order on Amazon, you will order from the manufacturer and ship directly to the customer.
To use Amazon’s dropshipping services for your business, you must:
- Identify yourself as the seller of the product, invoices, and packaging.
- Responsible and handled customer returns
Make sure you follow the Amazon drop shipping policy to avoid getting your Amazon terminated.