For those who know me, they know that I make most of my money as an Amazon Affiliate. Post-Panda, it has started to become taboo to be an Amazon Affiliate. While I have been looking at various options to diversify my business, I will continue to be an Amazon Affiliate for a multitude of reasons, but I will get to those in a minute.
Setting up e-commerce stores has become popular, and if that is an option you want to take, then head on over to Grabapple.com because Dave knows his stuff when it comes to e-commerce. Read his blog for the free information or buy his book for the in-depth, step-by-step guide to setting up a successful e-commerce store. But, the more and more I looked into e-commerce for my own personal business, the more and more I realized I much prefer to be an Amazon affiliate.
Here are some of the reasons:
- Looking over my portfolio to see if any would be a good candidate for an e-commerce site, I seem to pick niches with a very diverse amount of products. The more different products in my niches, the more and more suppliers/dropshippers I need to find. While that is not prohibitive, it does require a bit more work, and coordination to get all of these products into my stores. But, even if I could, I can’t stock as many different items as Amazon does.
- Someone who recently started an e-commerce site on the Keyword Academy forums mentioned that he increased his earnings-per-product by switching from being an Amazon Affiliate to running his own e-commerce store with a dropshipper for the product. While Amazon has the highest overall affiliate % in the non-info product business online, it’s still only 7%-8.5% (and really, if you aren’t doing enough volume to hit 7% on Amazon, you shouldn’t be doing Amazon). So, it definitely is easier to get higher rates by finding a supplier for an e-commerce store, but that profit margin is deceiving, and here are a couple of reasons:
- Missed sales: Amazon has spent many thousands of dollars to perfect their sales funnel on their websites. If you shop Amazon often, you’ll notice that things change slightly on the product pages, which means they are continually running tests to see what increases sales. As an affiliate, you benefit from that continued work from Amazon to streamline their sales & shopping experience. If you start an e-commerce store, all of the testing/funneling/etc. is on you. And while, you may earn more per product, if you lose any sales because of how your website is setup, it’s a lost sale, which means less money.
- Customer Service/Returns: If everything goes smoothly, it’s simply e-mailing your dropshipper with the order and credit card information and that isn’t too much more than being an affiliate, though it does require you (or a paid staff member) to be available daily to process orders whereas being an affiliate is a much more hands-off approach. But, that minimal work requirement is under the assumption that everything went according to plan. What happens when you have an upset customer? You end up spending more time, and possibly losing out on money because of returns, etc. So, that is another cost that you do not notice until it happens.
- People buying additional products: This is the biggest oversight people have when comparing e-commerce websites to Amazon affiliate sites. Yes, you will often make a larger commission with an e-commerce store over the same product as an Amazon affiliate, but you will also miss out on the additional products people buy. Maybe I am just lucky, and I haven’t seen anyone else’s detailed Amazon stats, but 40% of the products that I make money on via my Amazon affiliate sites have nothing at all to do with my niche. That means I am selling an additional 40% of products that would be ridiculous to feature in an e-commerce store, because they are unrelated to what the e-commerce store niche is. You can’t stock every single product, but Amazon can and they do, and as an affiliate you can make money off of all of those products when people buy them after coming from your affiliate link. 40% may not seem like a lot, but one December, 74% of the products I sold, had absolutely nothing at all to do with my niche. The number would be even higher if I counted all of the products related to my niche, but that I didn’t even feature on my affiliate sites. Not only do all of those extra products increase my commission %, but they are additional income that I would not have earned had I setup an e-commerce site instead of an Amazon affiliate site, and really, this is my biggest reason for remaining an affiliate of Amazon, instead of starting my own e-commerce store.
- What about Google hating “thin affiliate sites” now with these Panda algorithm changes? The phrase “thin affiliate sites” isn’t new at all to Google, and certainly isn’t a new development because of Panda. In fact, the phrase “thin affiliate sites” has been in Google’s do’s and don’ts since I started internet marketing almost 4 years ago. This practice I am about to describe is a lot more foreign these days, but 4 years ago it was a fairly popular practice which is why Google was cracking down on it. Here’s what was happening: An info-product, or an MLM type product, or various products that were being sold on the internet via sales pages were setting up websites for their affiliates, selling people on the idea that they could have their own website and make money from it. The problem was, the website that these affiliates were receiving, was the EXACT same website as the main company that had the product, and so Google called them “thin affiliate sites.” Only as the years have progressed and members of internet marketing communities experience setbacks in their business, has the term “thin affiliate sites” been used to mean Amazon affiliate websites, or other sites promoting affiliate products. I have never seen any indication from Google (either in their blogs, videos, or frankly, in the evidence in their algorithm) that Google is cracking down on “thin affiliate sites” meaning Amazon sites. Yes, I sell custom Amazon themes so I have a vested interest to combat this idea, but I also use these same themes, and aside from the 2-year running pre-Christmas shuffle putting amazon/walmart/target/toysrus above my sites, I am experiencing #1 rankings with what people would say are “thin affiliate sites”, even after being manually reviewed. The sites that have been dinged by manual reviews or the algorithm have simply been because of over-optimization, too many similar posts, or other issues un-related to how many affiliate links. Once I made those changes, leaving the same amount of affiliate links on my site, and I applied for a re-evaluation, my sites went back to their high rankings. While I spent a lot of time on this particular issue, it is one of the biggest arguments for not doing Amazon Affiliate sites that I have seen in internet marketing communities, and from the background of the term “affiliate sites” and the anecdotal evidence I have seen across many niches, Google isn’t targeting affiliate sites.
- For further proof, check out the PR 8 Gifts.com … their website pages are huge lists of affiliate product after affiliate product, and Google doesn’t just give them a PR 8 for nothing, they also rank in the top 3 for almost every single gift keyword in existence, despite there being a massive amount of affiliate links on each page.
Really, when it comes down to it, it’s personal preference and what works best for you in your business. Personally, I like not even thinking about a site for months, but continuing to make money from the site in that time frame. I am not a customer service type of guy, so that’s another drawback for me.
Will I be adding an e-commerce site to my business? There’s a 95% chance that I definitely will in 2012. Will I be converting all of my niche sites to e-commerce sites? There’s a 100% chance that I will not. There are just too many benefits to being an Amazon affiliate that an e-commerce store simply cannot replace.
Like I started out the article with, e-commerce is definitely a valid business plan and if you want to learn more about this aspect of internet marketing, then Grabapple.com should be your first stop. I just wanted to provide an alternative view, and to show people why I am still an Amazon affiliate, even though affiliate sites have become vilified by some internet marketing circles post-Panda.
