It’s 2020, and we are all struggling to find ways of making that extra dollar. Across the globe, millions of websites are launched on a daily basis. Up to 95% of them will soon be abandoned by their dejected creators. For those thinking about starting their own businesses, the task may appear to be rather daunting. The marketplace is crowded and chances are high that there are already established players in whatever field that you are venturing in. So, how do you get the breakthrough that you are looking for? How do you promote your brand in this overcrowded arena? Hi, my name is Francisco, and I am the owner of Planet Marketing, a Digital Marketing Agency. My company specializes in Facebook Advertising, Google Ads and Remarketing. I have been in business for over a decade, so the topic; “fba vs affiliate marketing,” is one that I am very familiar with. Not only am I an affiliate for various brands, but I also run my own affiliate marketing program in-house. On top of that, I have had a number of clients over the years who I have helped with their FBA campaigns. In this article, I am going to;
- Help you understand what Affiliate Marketing.
- Define Fulfilment by Amazon (FBA) and how it works.
- Make a comparison of the two.
- Help you choose the best option for your business.
FBA vs Affiliate Marketing: A living example
Let’s assume that you are a digital marketing specialist (like me) and you are asked by one of your clients to help come up with a digital marketing strategy that would help push a product that the company is selling. Now, you know that there is nothing revolutionary about the product. It’s one of those wristwatches that also monitor one’s heart rate. And it’s made in China, though it bears your client’s brand.
Those kind of gadgets can be found a dime a dozen. Anyway, it’s a pretty useful device. Target audience; people over 50 who may be beginning to worry about their long term health. Marketing channels…well, this is where you come in. So, what are the options? If you are a company that’s about to launch a product such as the one that I have just mentioned above, you will have two options; FBA and affiliate marketing. Admittedly, those are not the only options.
What is Affiliate Marketing
So, my hypothetical client is trying to sell branded heart monitoring devices. As far as I am concerned, they could either advertise directly, maybe via Google Ads or Facebook Ads, in order to reach their target audience; or they go with either affiliate marketing or FBA. So, what is affiliate marketing?
Affiliate marketing can be defined as a marketing model where a company/brand/merchant/vendor uses affiliates/publishers to sell products or services at a commission.
The basic components of affiliate marketing
Affiliate Marketing has 3 basic components;
1. The product/service:
First, there is the product or service. In the example that I am using in this article, that’s a heart monitoring device. The product/service can be anything. I have already noted that I am an affiliate for other brands, whose products I sell through my website, planetmarketing.com. The strategy that I use there is content marketing. I pretty much write reviews about these products and services, and people can choose whether or not to sign up using my affiliate links. I also produce YouTube videos. Here, the aim is still the same; to get people to sign up using my link. The products that I sell via this website include the following;
- Web hosting packages: My own website is hosted by Kinsta. The company is great, and if you are thinking about migrating or if you are launching a new website, this is a company that you should consider. (See, I am already trying to sell you something. That’s affiliate marketing for you!)
- Rank tracking companies: These companies help bloggers and website owners keep track of their performance on Google and other search engines in terms of rankings. You can check out some of the companies that I have reviewed in by following this link.
- Online review companies: Online review companies are another type of company for which I am an affiliate. I have been an affiliate for companies such as Shopper Approved for a long time. In fact, I use Shopper Approved, so feel free to sign up using my affiliate marketing link if you are interested in getting product and seller ratings.
The above are just a few examples of the kinds of services that can be sold via affiliate marketing. In fact, there is no limit to the goods and services that can be pushed this way! Anyway, the product is probably the most important component when it comes to affiliate marketing. You want to make sure, as a company, that whatever it is that you are selling is up to scratch. Otherwise, you will be exposing both you brand and your affiliates to a lot of anger from dissatisfied customers. I have previously written an article in which I compared affiliate marketing and MLM. One of the points that I made there was that MLM can become divorced from the product. People become so concerned with getting others to sign up and become members that they forget all about the product. That’s not the case with affiliate marketing. In affiliate marketing, the product IS the big deal.
2. The brand/vendor/merchant
This is the second component of affiliate marketing. In the example that I am using in this article, the company wishes to market a branded gadget for monitoring a person’s heart rate. It doesn’t matter that the company in question does not actually make the device in question. It doesn’t matter that the gadget is made in China. Well, pretty much everything is made in China these days. Anyway, what matters in this case is that the gadget bears the company’s brand. It’s their product, and they are looking for ways through which they can put it onto the market.
3. The affiliate
Now, the affiliate is what gives affiliate marketing its name. Should you choose to go the affiliate marketing route for selling your products and services, you will have to deal with affiliates. In today’s world, the affiliate is usually the tech-savvy individual running some blog or the other. But affiliates don’t really need to be sophisticated. There is no University out there that teaches you how to become an affiliate. All that you need is a little imagination, perseverance and you will be good to go. Affiliates have connections to the ordinary man and woman on the street and they use these connections to sell various products and services. The way they do it is somewhat subtle. Most affiliates do not come out in the open saying; “please buy this product using my affiliate link so I may get a commission.”
Were they to do so, they would probably be laughed out of business. And yes, being an affiliate can be a business. A lot of people actually make a living through affiliate marketing. And the beauty of it is that it can become a source of passive income. Once you have created your content, you can go on reaping the rewards for years. Anyway, direct advertising is not how affiliates operate. I mean, the brand whose products and services they are selling probably forbids it anyway. Instead of taking out ads on Google Ads or Facebook, affiliates produce content that tries to answer the questions that people may or may not be harboring.
One of the products that I specialize in through my company, Planet Marketing, is Facebook Advertising. I actually have a course that I sell, which teaches people how to get started creating Facebook Ads. Now, I run my own in-house affiliate marketing program, as already stated. People sign up and this is one of the products that they sell on my behalf. I don’t allow them to sell via Google Ads. I mean, I am already doing it myself! So, the way they do it is they write articles in which they talk about Facebook advertisements. This content may be for their own blogs or for some other blogs. In there, they throw in the fact that there is this great Facebook Ads Marketing Course that they should check out. And they put in the affiliate link that I gave them. Should that produce a sale, I then pay them the agreed to commission! So, what channels do affiliate to reach out to people? I have already mentioned some of these. Just to list them;
- Social Media
Fulfilment by Amazon (FBA)
Okay, now we move on to FBA. FBA stands for Fulfilment by Amazon. It’s another option for those that are looking to sell their products. FBA probably doesn’t apply if you are selling a service. There is no way that Amazon is going to store a web hosting package, as an example, in its warehouse! But I get ahead of myself.
Anyway, Amazon is a behemoth, as far as online selling is concerned. The platform handle millions of products across the globe on a daily basis. One thing to note is that Amazon has an extensive network of warehouses in which they stock the products that they sell. They have also become masters of the process of packaging and shipping goods to people around the world. I mean, it gets them in trouble with the unions sometimes, but Amazon pretty much has all the systems in place.
The good news, if you have something that you are selling, such as the heart monitoring device that we are using in our example, is that you also have access to this huge Amazon shipping network. That’s FBA. Under this program, companies ship out their products to Amazon. The inventory does not actually belong to Amazon. In our example, the wristwatches would actually remain yours.
What Amazon does is handle storage of your goods. And when a customer buys one of your products, Amazon also handles all the elements of shipment. This includes packaging and everything else. But, what happens, you may be asking, if a customer returns a product? Well, Amazon, through the FBA program, handles returns and customer related issues as well. So, they pretty much have everything handled, other than the fact that the inventory remains yours.
FBA vs Affiliate Marketing: The Differences
Okay, now that we have defined both affiliate marketing and FBA, it’s time to compare the two. What is it that’s differentiates FBA and Affiliate marketing? Well, just consider the following;
- Under affiliate marketing, other people market your products on your behalf: The goal, as far as affiliate marketing is concerned, is to get as many people as is possible to sign up to market a product or service. I mean, you are probably already doing some content marketing of your own via your blog or your YouTube channel. You also probably have a Facebook Page on which you are desperately trying to engage your customers. But yours is a lone voice in the wilderness. There is only so far that you are going to be able to reach this way. This is where affiliate marketing comes into play. Let’s assume that you have managed to sign up a thousand content producers. What this means is that you are going to have a thousand people talking about your brand across various content marketing channels.
- With FBA, you do your own marketing: This is the first major difference between FBA and affiliate marketing. With FBA, Amazon does not do marketing on your behalf. Okay, it can be argued that an FBA tag is a form of marketing, but that’s as far as it goes. You are pretty much responsible for marketing your own products. Amazon’s part is to handle storage, shipments and customer services.
- Affiliates do not carry any inventory: Here I am looking at this topic from the point of view of the affiliate. If you, like me, are into affiliate marketing, the beauty of it is that you do not need to carry any inventory. All that you do is carry out marketing on behalf of other people. Responsibility for shipments and other customer related issues rests with the company whose product or service you are selling.
- FBA ties up money as stock: This is another difference between affiliate marketing and FBA. With FBA, you are required to stock large quantities of the products in Amazon’s warehouses. So, in the case of our example, the company that’s selling heartbeat monitoring devices would probably order thousands from their manufacturers in China. From there, the goods will then be shipped to Amazon’s warehouses. Now, the end result is that you will have vast amounts of money tied up in stock. This is not always a viable option, particularly for small businesses.
- FBA is risky: Here is another thing; FBA tends to be riskier when compared to affiliate marketing. Let’s assume that you are a small business that’s looking for ways of making money. With affiliate marketing, the risk rests with the company that produces the product or services. Of course, there is always a risk that you will get in trouble with your audience should you convince them to buy a dud. But the risk, in terms of inventory, remains with the owner of the product or service. With FBA, on the other hand, the risk becomes yours. Amazon does not take responsibility should you fail to sell any of your products. So, if you have ordered laptops or Smartphones and none get sold, then the loss will be all yours.
- You need to be active to make sales under FBA: This is a fact that I have already alluded to in the above discussion. With FBA, Amazon does not do any marketing on your behalf. So, you need to actively go out there to promote your products. Otherwise they will not be sold. So, your success depends on your ability to convince people to try out your products. This is actually an ongoing process. Of course, there are some products that sell themselves; but for most, there is need for continuous active marketing.
- Affiliate marketing can become a passive income source: One of the major reasons why content producers love to become affiliates is the fact that it can become a passive source of income. Some of the services that I sell for other companies via this website actually have recurring income models. What this means is that once you have convinced someone to sign up, you will continue to get paid for as long as they keep on making their subscriptions. Today, I get income via Shopper Approved, as an example, from people that I convinced to sign up years and years ago!
FBA vs affiliate marketing: Which one should you go for?
We come to the final segment of our article. Having compared affiliate marketing and FBA, it’s time to determine which one is a better business model. Again, this question can be looked at from both the point of view of the brand and from the point of view of the affiliate. If you are an individual who is looking to start a business, and if you have no money to talk about to invest in your business, then affiliate marketing is the way to go. All that you need is money to establish your marketing channel, such as creating a website, and you will be good to go.
Of course, things are not that simple. The market tends to be rather saturated and you are probably going to need years before you can reap the fruits of affiliate marketing. I mean, you need to engage in such things and SEO, and SEO takes years to bring results. With a little money to invest, you can actually get earlier returns via FBA. All that you need to do to make it work is order your inventory and have it shipped to Amazon’s warehouses. From there, you will then begin marketing your goods. So, FBA is for those that have the money that is needed for the initial investment.
Speaking from the point of view of the brand, affiliate marketing also tends to be a rather roundabout way of getting sales. In the examples of the heartbeat monitoring device that we are using in our example, the company in question will probably get earlier returns through FBA. However, there is nothing really stopping anyone from using both FBA and affiliate marketing. In fact, this is the approach that most businesses need to take. You can, as an example, sell your heartbeat monitors via Amazon, while also having a troop of affiliates do further marketing on your behalf elsewhere.