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Affiliate vs. Amazon Marketplace: Which one is Right for Your Brand
Quick Summary
Understanding affiliate marketing vs. Amazon FBA is key to choosing the right strategy for your business. While Amazon Associates vs. affiliate programs offer opportunities for passive income, the level of control, scalability, and access to customer data varies. Learn the advantages, costs, and risks associated with each approach to make an informed decision for your brand.
Why donโt I just sell on Amazon? Thatโs a question we hear all the time from prospective clients who want to know why they need an affiliate marketing campaign when they can just put their product on one of the largest e-commerce retail platforms in the world.
And the thing is, maybe you should. Amazon is a trusted brand with a global reach and its most peopleโs first stop when theyโre thinking about buying a new product.
But before you launch your account, itโs worth digging behind the numbers to understand what youโre really signing up for when you become a member of Amazonโs marketplace.
Commission
According to the latest analytic data, Amazon was the fourth-most visited website in the United States and it received 2.4 billion page visits in October alone. Thatโs a massive audience, but thereโs a real price to be paid for tapping into it.
If you fully enroll in Amazonโs seller program, you can easily pay a commission rate of over 30% on every item you sell, leaving you with razor-thin profit margins (thereโs a reason Jeff Bezos owns a rocketship and a yacht).
In affiliate marketing, your commission rate and incentive structure are entirely negotiable. That means you can find affiliates who will work within your budget and generally speaking, most affiliates will usually charge a commission thatโs closer to the 10% range.
Data
One of the most valuable parts of working with an affiliate is that theyโll push your customers directly to your website. This means that not only do you collect money from all of your sales but youโll also own all of your own sales data.
Itโs impossible to optimize your sales strategy if you donโt have essential information about who your customers are, how they found your product and what deals theyโre most likely to respond to.
But when you sell on Amazon, theyโll tell you when you make a saleโฆand thatโs it. All of your sales data goes into a black box that you will never see. They own it forever.
So every time you sell a product, Amazon isnโt just taking a commission, theyโre also taking your customersโ information as well.
Cost-Per-Acquisition
Cost-Per-Acquisition is a key metric in sales that tells you what it costs to acquire a new customer. A major appliance brand we work with was shocked when our CFO John M explained to them the difference between Amazon and affiliate CPA rates.
โI was speaking with a client about the costs associated with different marketing channels and they said that once they totaled up all of their fees, they were paying around 30% in CPA costs for every product they sold on Amazon. I showed them that by working through affiliate marketing partners, they could get that number down to 7%. They were blown away by the savings and the affiliate program that we set up for them is now doing over $5 million a month.โ
Ok, so maybe weโre a little (a lot) biased. But the simple fact is that the numbers speak for themselves. If you want to keep more of your money and all of your data (which, yes, you definitely do) then an affiliate marketing campaign will deliver the most value for your brand.
On the other hand, if the reason you started your business is so that you could pay to fuel up a billionaireโs spaceship, then maybe give Amazon a closer look.
FAQs
Affiliate marketing offers a low-risk, high-reward opportunity for brands and individuals. With affiliate marketing, you only pay for actual results like sales, leads, or clicks. This model allows for scalable growth without upfront advertising costs.
Affiliates help brands reach new audiences, and individuals can earn passive income through content like blogs, social media, and email campaigns.
Selling on Amazon Marketplace, through Amazon Associates vs. affiliate programs, allows you to tap into one of the largest online audiences globally. Amazon offers a built-in customer base and trusted platform, making it easier to attract buyers.
While affiliate marketing vs. Amazon FBA allows affiliates to promote products from various companies, Amazon gives sellers access to a massive, ready-made marketplace.
However, Amazon takes a commission on every sale, and sellers may face higher competition and lower profit margins compared to running their own affiliate programs.
Affiliate marketing typically offers better profit margins since you only pay affiliates based on performance, with commission rates usually around 5-10%.
In contrast, selling on Amazon can involve significant fees, including commissions of up to 30% per sale, which can cut into your profit margins. Selling on Amazon also requires investing in inventory and handling shipping, while affiliate marketing requires no upfront costs.
In affiliate marketing, you retain full control over your branding, pricing, and customer data. You can directly engage with your audience and adjust strategies as needed.
On the other hand, selling through Amazon Marketplace means you lose control over certain aspects, including customer interactions and data, as Amazon owns that relationship, making it harder to build long-term customer loyalty.
Affiliate marketing has lower risk since you pay affiliates based on their performance, and thereโs no need to worry about inventory or shipping. In contrast, selling on Amazon carries higher risks due to upfront costs, including production, shipping, and Amazon fees.
Moreover, managing an Amazon store requires ongoing effort in customer service, returns, and inventory management.
Affiliate marketing is the better option if you have minimal investment. You can start promoting products with little to no upfront costs and scale as you gain traffic and conversions.
But selling on Amazon requires a larger investment in inventory and fulfillment. This makes affiliate marketing a more accessible choice for newcomers with limited funds.
If your goal is to build a brand and own customer relationships and data, affiliate marketing vs. Amazon FBA gives you the upper hand.
With affiliate marketing, you maintain full control over your brand, your audience, and your customer data. You can grow your own email list, track customer behavior, and market directly to them.
In contrast, selling on Amazon, especially through Amazon Associates vs. affiliate programs, means you are limited in your ability to control branding, access customer data, and establish direct relationships with your buyers. Amazon owns that connection.
Affiliate marketing is inherently scalable because you can work with multiple affiliates to promote your products or services. You only need to manage the relationships, while your affiliates do the marketing, which can result in exponential growth.
As for affiliate marketing vs. Amazon FBA, scaling on Amazon requires investing in more inventory, dealing with additional fulfillment costs, and handling an increased workload for customer service and returns.
However, Amazonโs built-in customer base makes it easier to scale faster, especially if your products start to perform well in the marketplace.
