When it comes to passive income, affiliate marketing is at the top of most online "gurus" lists. From experience, nothing is as easy as it sounds, and making passive income through affiliate marketing takes work.
I have been making Amazon websites for the better part of 6 years, so I would consider myself well versed on the program itself. If you're considering starting an Amazon Affiliate business, this article will give you a real-world analysis of the benefits and drawbacks of partnering with Amazon.
Getting Started With Affiliate Marketing Through Amazon Associates Affiliate Program
Amazon controls most of the affiliate marketing world, hands-down. While there are many other programs out there, most people choose to start with Amazon. There are many reasons for this ranging from ease of use, familiarity with Amazon, and decent payouts.
Let's dig a bit deeper into why Amazon has managed to build out their affiliate program as well as they have.
Pros Of Amazon Associates Affiliate Program
The biggest draw to the Amazon Associates platform is the sheer mass of Amazon itself as a company. When you opt to promote their products, you get to piggyback off of their established trust as an online market-place, their "Amazon Prime" program which encourages users to only buy through Amazon, and their selection of products included in the affiliate program.
Pre-Established Buyer Trust
When it comes to buying products online, people generally like to buy from a company where they feel their purchase will be protected, and they will ultimately get what they pay for.
By joining the Amazon Associates program, you get to piggyback off of the trust that Amazon has built among its users. This makes it easier to push consumers through the purchase process.
Commissions Are Not Limited to Only Products You Promote
As an Amazon affiliate, all you have to do is get a user from your website to Amazon. From there, you will earn a commission on a variety of qualifying purchases, whether or not they are related to what you're promoting. This means that if you launch a website about dog treats, and a user goes to Amazon via one of your affiliate links and ends up buying a $3000 DSLR camera, you get a commission even though the product the user purchased is not even remotely related to the product you're promoting.
Extensive Conversion Optimization
You can make a website that converts fantastically (someone who clicks on your affiliate link to go to a vendor's site), but from there, you have to rely on the vendor to turn that visitor into a sale. Amazon, being the biggest online retailer in the world, has done extensive A/B testing to optimize user experience and encourage sales. This means that you get to benefit from Amazon's world-famous user experience.
For example, Amazon is known for very successfully up-selling users. They have a "frequently bought together" section at the bottom of every product page that tells users what other people tend to package along with the product they are looking at. This means more potential sales revenues for everyone involved.
Just About Everything Is On Amazon
Choosing the correct niche can have a dramatic impact on how much money your website makes. Niches are nearly limitless with Amazon, with the exclusion of products such as weapons, drugs, and a few other prohibited categories.
With an Amazon affiliate website, you can get into just about any niche you want to. This means that you aren't tied down to creating a website about a topic you loathe just to make money online.
Sales Tracking and Payout Process Is Straightforward
Another key benefit to the Amazon Associates affiliate program is its payment system. The payments are consistent and on time every time. If you choose to build an affiliate empire off of Amazon Affiliate sites, you likely won't have to worry about Amazon being late on a payout.
Their sales tracking system is also great. They show you how much money you've made on intervals as small as daily. This means you can keep an eye on sales in real time as they come in. This gives you the ability to gauge how much your website is making in real time and make adjustments as needed.
>> Related Content: 5 Tips For Building A Successful Amazon Affiliate Website
Cons of The Amazon Affiliate Program
Nothing is perfect. In fact, the Amazon Affiliate program is far from perfect. It is what people usually start with, but not everyone ends up relying on full time. Here's all the negatives about the Amazon Associates program that you should know about.
Amazon Doesn't Care About You (Sorry)
Ouch. Yeah, I said it. Amazon doesn't care about you as much as you care about them. Since their affiliate program is enormous, they have a reputation of pulling the rug out from under their affiliates in the past without so much as second thought. No matter what, Amazon will likely continue to be the most popular affiliate program in existence. If you rely on Amazon, you're forfeiting the benefits of having a personal relationship with vendors, and run the risk of being "just another number" to a large corporation.
You're At The Mercy Of Their Commission Structure
When you sign up to be an Amazon Affiliate, you agree to their terms and service. Part of which (be sure to check for yourself, as this can change at any time) includes wording to the effect of "we can change our commission structures at any time, without notice or consent." This means that one day a product can bring in a hefty 8% commission, and the next day it could drop down to 4%.
In fact, in 2017 Amazon made significant changes to their commission structure which cut earnings dramatically for many high-volume affiliates. Up until the 2017 revision, commissions were based on volume. Commission rates were determined by sales volume, which was capped at 8.5% for the highest level. This meant that the websites that were driving a large number of sales to Amazon were making more per transaction than smaller websites.
Now, commissions are based on product categories, ranging from 1%-10%. These category commission rates are fixed, no matter how much volume you produce. If you were one of the unlucky website owners making 8.5% pre-2017 because of the amount of volume you were pushing, and your website was allocated to a lower commission category after the change, say the catchall 4% category, your income was more than halved in an instant.
This change was good news for smaller websites though, now they could make higher commissions sooner, and without having to push as much volume.
However, the moral of the story is this -- you're at the mercy of Amazon. Be it good or bad; you have zero control over their changes to commission structures, and by choosing their affiliate program, you're inheriting a risk of potentially unpredictable commissions.
Low Commission Rates
The price you pay for piggybacking off of the trust Amazon has built is a comparably low commission rate. The highest realistic commission category in my humble opinion is 8%. The only 10% commission categories are Digital Video Games, Luxury Beauty, and Amazon Coins.
With the right strategy, you can create a website that takes advantage of this 10% commission rate, but your options are fairly limited. Digital Video Games are a feasible niche, but the industry is crowded and hard to break into, luxury beauty products are generally boutique, expensive products that require brand loyalty to convert...and who has heard of Amazon Coins?
Amazon is also not very clear about what products fall under what category, making you vulnerable to trying to target an 8% commission category and instead of falling into the 4% catchall category instead. The names of the commission categories often don't match up to the categories you see on the Amazon website, making it a bit of a guessing game when deciding on what to target.
With 10% being the absolute highest you can earn on Amazon, there's something to be said for other affiliate programs that average 15%-20% on products. These other programs may not convert as well, and may not have the product selection of Amazon, but they do give you a far more significant piece of the pie. If you manage to find an affiliate partner who has a high-converting website and a high commission rate, you can easily double or triple what you would earn on Amazon.
Horror Stories Of Banned Accounts
As part of their terms of service, Amazon reserves the right to cancel your account for any reason, at any time. This makes most affiliates an anxious wreck. Personally, I try to fly under the Amazon radar and am a stickler for making sure my websites comply with their guidelines 100%.
Amazon is incredibly picky about what you can and cannot say, and what you can and cannot imply on your website if you want to be a part of their program. To name a few things, you can't say Amazon endorses you, you can't display prices, you can't pretend to be Amazon, you can't claim Amazon has the best prices, and you can't even use custom designed buttons with the Amazon logo. All of these things seem somewhat harmless but can get your account banned. It is advisable to read over the Amazon terms and conditions thoroughly before starting your website design. If Amazon gets wind of you violating their terms (which can change at any time) you could get that dreadful email saying your account is banned and all unpaid earnings are forfeited.
There have been stories of Amazon affiliates getting their accounts banned even though they followed all the guidelines. Also, Amazon takes 60 days to pay out commissions, so any unpaid earnings are not paid out if your account is canceled or banned.
My Overall Take on The Amazon Affiliate Program
If there were a better alternative to Amazon, I would use it, but for now, I personally feel the benefits of riding the wave of trust that Amazon has built provides enough of an advantage to outweigh the drawbacks of their program.
Ultimately, the choice is up to you. What do you think about the Amazon affiliate program? Let us know in the comments section below!