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.

Yes, I know it’s March, and it pisses me off when stores are putting up Christmas stuff as early as September.  But our business is different.  Our business takes time.

According to Kantar Retail, 63.7% of online gift shoppers shopped Amazon.com during the 2010 holiday season.  33.4% shopped at Walmart.com.  While there was probably some overlap, an overwhelming majority of shoppers checked out from Amazon.  How did they get there?  Did they get there through your site?  If not, why not?

Yes, it is only March, but you need to start thinking about what sites you want ranking well 8 months from now.  Are you going to create new ones and start linking to them?  Are you going to boost up the links to your sites that did decent last Christmas season?  If you wait until summer or fall to start sending links, you may feel a sense of desperation, send too many links, and get your site sandboxed for the entire holiday shopping season. (Trust me, it sucks.)  Start on those projects now… send a link or two (or ten) a day to these sites, so that you are well positioned to reap the rewards come Christmas time.

Picking products to feature on your website can be a daunting task.  I usually try to go with the products that are bestsellers when I do the search for my keyword.  I know people are buying them, so it increases the chances they’ll be buying after clicking my affiliate link.

What types of products should you avoid on Amazon?  One of them is products that are only available at an external website.  Do not confuse this with the additional sellers Amazon offers where you can buy the product but still check out through Amazon.  You still get paid a commission on those.

This is the type of product I am talking about:

http://www.amazon.com/Fireplace-Heater-Clearance-Fireplace-4-Blower/dp/B001Q92ZWU/ref=sr_1_19?s=home-garden&ie=UTF8&qid=1297466746&sr=1-19

It says “Available at external website” near the top area where the price is.  You will not get paid with any type of product that says that.  It’s okay if it’s available from another seller, and it checks out through Amazon, but if it sends them to another website, you don’t get the commission.

Just something to look out for when picking products.

After failing to pass similar bills over the past few years, the California legislators are once again trying to pass a bill to require Amazon to collect sales tax from California shoppers because they have affiliates (like me) in the state, and they consider that a physical presence.

In other states that have passed this bill, Amazon has ended their affiliate relationships in that state, so not only did the states who passed a similar bill NOT get Amazon to collect sales tax, they also lost out on the income tax that the affiliates in that state were paying. These states lost money!

Don’t let this happen to California! I love California! But I will move if such a law passes because I love my Amazon income more.

Go here to sign the petition which goes straight to your legislators and let them know that such a bill will cause California to lose even more money:
http://www.performancemarketingassociation.com/advocacy/active-grassroots-campaigns/california/

EDIT: Here is the full bill:

http://www.leginfo.ca.gov/pub/11-12/bill/asm/ab_0151-0200/ab_153_bill_20110118_introduced.pdf

EDIT: Go here to find your legislator, and write to them personally.

http://www.legislature.ca.gov/port-zipsearch.html

Happy New Year! I hope the Christmas shopping season was as good for you and your sites as it was for me. I love December when it comes to affiliate marketing with Amazon. As the number of people who go online to do their Christmas shopping increases each and every year, why shouldn’t you be getting a piece of the pie?

A lot of people like to wait until September or October to get their “Christmas niches” rocking at full force, but you won’t be able to maximize your ranking in that short amount of time. Start now! Today! You will have 12 months to maximize your rankings for as many keywords as you could think of. Do not wait, and get those niches started now, or if they are already created, make sure that you are working on them throughout the year to maximize your earnings come December.

Why December? I love December because people who are browsing to buy stuff will end up buying many more items, and with Amazon, you get paid for all of those extra items in the order, even if you don’t have niches remotely related to those items. One year, 74% of the items I sold in December had nothing at all to do with my niche.

In an internet marketing community that I belong to, I am often asked “What is a good Amazon affiliate conversion rate?”  People want to know if they stack up well.  There are a few problems with analyzing Amazon associates conversion rates because a lot of internet marketers use their Adsense CTR as a gauge for other monetization methods, but they are not at all similar.  Here are a few of the issues that affect Amazon Associates conversion rates:

• There are many different types of Amazon links. You can use the standard link, their various kinds of widgets, their banners, etc.  You can even create your own links.  Each of these different types will appeal to visitors differently, so how many people you get from your site onto Amazon will vary depending on what type of ads you use.  Which one is best?  I have had good luck with the Amazon carousel widgets, as well as just making a clear link for them to click onto Amazon to buy the product, or browse all of a specific type of product.
• Amazon calculates their conversions differently than Adsense CTR is calculated. While they are two totally different programs, a lot of marketers who are just getting into Amazon come from an Adsense background, so they think those two numbers are the same and they really are not.  Adsense calculates the number of clicks compared to the number of ad impressions (pageviews), which gives you your Adsense CTR.  Since you get paid when someone clicks your Adsense ad, that method makes sense.  With affiliate programs like Amazon, you don’t get paid when they click through, you get paid when they buy something, so the people have to both click through AND then buy something.  So you have  CTR (similar to Adsense) but that is just how many people actually clicked through to Amazon.  The Conversion number that Amazon shows is how many items were ordered, compared to how many people clicked through to Amazon.
• Since Amazon counts by “number of items ordered” it throws off the statistics. How many items were ordered is not the same as how many orders there were.  If everyone only ordered 1 item, they’d essentially be the same, but the beauty of Amazon is that people buy more than just 1 item often, and you get paid for everything they buy.  I had 147% conversion rate on Amazon the other day for some of my Hubs because someone bought like 27 items and that hub only sent a handful of visitors, simply because more items were bought than there were visitors.
• Some niches are full of people browsing, significantly lowering your conversion rate. There are some niches that are just filled with people browsing.  Niches aimed at kids toys are especially notorious for this because the kids are browsing but they are not at all in the buying mood.  Clothing and furniture niches are also the same.  So, comparing your conversion rate vs someone else’s doesn’t do too much good.

What to take away from this?

• Establish a base line. Knowing what your average weekly and monthly Amazon conversion rates are gives you a baseline to know where you can improve.  Are you starting to dip below that baseline?  Maybe you got a better ranking for a keyword that doesn’t convert as well.  Or, maybe you lost a ranking for a good converting keyword.
• Pre sell products. One of the best things that you can do if you are selling Amazon products, is to pre sell the item on your website.  Tell your visitors why they should buy the product (or why not, and offer another product they should buy).  More people will be willing to buy being armed with that information before they click through to Amazon.
• Get people onto Amazon. If you begin to have a higher conversion rate compared to the baseline you set, then feature Amazon ads more prominently on your site.  If you’re converting well, your main goal should be simply getting people onto Amazon.  Amazon has spent millions on conversion rate optimization.  Look at the various areas of a product page.  ”Buy this plus two other items and save a dollar or two.”, “People who were looking at this product ultimately bought these products.”, “People who bought this, also bought this.”  ”Here’s some other related items.”  Amazon is in the selling business… get people onto Amazon.
• Don’t try to compare your conversion rate with others. I know people want a sense of validation to see if what they are doing compares well with what other people are doing, but every single niche is different and there are so many factors involved that the comparisons would be useless and could give you false hope or false insecurity about your own conversion rate.  Focus on figuring out your baseline and finding ways to improve it.  Get more traffic for more keywords, pre sell the products, and get people onto Amazon.
• BONUS:  Start ranking for “buying keywords”. If you really want to improve your Amazon conversions, then start ranking for buying keywords.  These types of keywords signify that people are ready to buy, so they will convert a lot better and will require a lot less convincing.  ”Buy __________”  ”Where to buy _________”  ”Cheap __________”  ”_______ reviews”, “Best _________” should all convert better than your current keywords.

Good luck, establish your own baselines, and work to improve your conversion rate using those baselines as your jumping off point.

Test, test, test.

Hubpages is awesome for making money with both Adsense and Amazon.  Unfortunately, when it comes to adding Amazon links that are not part of the Hub modules, you can have some issues.  Some browser combinations cut off the long links generated by Amazon, cutting off your affiliate code (hindering your chances to make money).  Also, if you post affiliate links to Amazon search result pages using the “Link to the page” link generator, if someone bookmarks that page, your affiliate is removed and so if they come back at a later point, you don’t get paid.

I have created a simple web app to help you to generate nice and clean Amazon product affiliate links as well as Amazon search result links with your affiliate code in them that stick around when someone bookmarks them, and that does not get deleted by Hubpages on some browsers.

Here is the URL:

http://searchenginewhisperer.com/tools/cleanamazon.php

Enjoy!  And subscribe to my RSS feed or bookmark my site for tons of great Amazon affiliate tips.

-Breakaway (The Search Engine Whisperer).