The Amazon Affiliate Business Model Explained
Amazon was one of (if not THE) first affiliate programs offered online. Affiliate programs are a business arrangement whereby you can sign up to sell someone else’s product. When you sell their product, the company who makes or provides it gives you a cut of the profits for your work.
In other words, you are a salesperson moving products. Instead of doing it door to door or in a retail store, you are doing it online through blogs, websites, and other media.
While there are thousands of affiliate programs today, Amazon deserves its own mention because it is a very different beast when compared to traditional affiliate marketing programs.
What Is an Amazon Affiliate?
As mentioned earlier, to become an Amazon affiliate you must go to their Associates Program page where you can sign up for free. Typically, they want you to already have a website (though the website can be almost anything) before they will approve you, but in general, everyone is approved.
Once you are approved, you will be given a backoffice that you can log in to.
This is the headquarters for every Amazon affiliate. You can see all of your analytics, how many sales you’ve made, what you’ve sold, and a whole lot more. This is also where you can create tracking links — an important step to successful sales, which we will talk about below.
As an Amazon affiliate, you can sell any product that Amazon sells, and Amazon will give you a cut of the profits.
You can learn more about the Amazon affiliate business model, how affiliate marketing works and get an action plant hat can help you start making money by watching our Youtube video below:
How Do You Earn Money Promoting Amazon Products as an Affiliate?
The process of promoting Amazon products is pretty simple. When you get approved for your Amazon affiliate account, all you need to do is log in to your backoffice and search for the product you want to promote.
An easier way to find the right product for your website is to just use Amazon.com, as you would when you are normally shopping on the platform.
When you see an item you want to promote, just scroll down until you see the ASIN number (every Amazon product has one). Just copy and paste that ASIN into your affiliate backoffice, and that product will pop up and allow you to get a special affiliate link.
Once you have the ASIN, you just plug it into the Quick Product search bar:
Press “Enter” and your product will show up right beneath it. You will want to click on the yellow “Get Link” button to get your actual affiliate link.
This will lead you to the option where you can choose a “Text and Image,” “Text Only,” or “Image Only” link. Personally, I just go for the “Text Only” option because all I really want is the affiliate link to put on my Amazon affiliate website, which links to the actual Amazon product listing.
You can tell which part of the HTML here is your affiliate link because it will show you a tracking link based off your account name.
This is the link that you will use on your actual money website to link to this product. When your website visitors click this link and they go to Amazon, they will be cookied by Amazon. The Amazon affiliate cookie duration is 24 hours.
This means that even if the visitor did not buy the product you were linking to, but decided to buy something else, you will still get paid money for the duration of the 24-hour cookie.
The more people you get to click your affiliate link, the more people become “cookied” and the more sales you are likely to make.
Amazon then pays you on a sliding scale, based off how many general products you have sold that month. There are a few product categories that do not fall into the “general” category. Electronics, for example, are paid at a flat 4 percent rate.
Here is a useful table for showing you what Amazon’s commission structure looks like:
The more products you sell, the higher your commission will be. When you sell over six products, you move from a 4 percent commission to a 6 percent commission. This sliding scale is important because it also gives you retroactive earnings. If you sold six products for the first 25 days of the month and then sold the seventh on the 26th, all of the products you have sold for the month will be retroactively slid up to the next commission bracket. Instead of earning 4 percent on the first 6 products, you now will earn the 6 percent on all seven products and for anything else you sell within that month.
That is how you earn money with Amazon. Get targeted traffic to click your affiliate link (the more traffic the better), and Amazon does the rest of the work for you.
Examples of Amazon Affiliate Sites
Niche Pursuits has done some pretty great write-ups on Amazon affiliate sites, and they can serve as good examples for you.
While these websites are not live anymore or shared with the public, the case studies can still provide you with a lot of benefit. Here are a couple of case studies that focus on some Amazon affiliate niche sites:
Here is another niche site project that Spencer Haws and his partner Perrin Carrell (who just recently retired from being an employee to a full-time entrepreneur) created for their Niche Pursuits audience. This site also no longer exists, but, at its peak, it was doing right around $4,000 per month. This is a great case study where you can learn some very valuable lessons, as well as get tips on how to avoid some costly mistakes as you go about building your own Amazon niche affiliate sites. One of the costly mistakes that killed this niche site’s earnings was the PBN that was used. If you are unfamiliar with PBNs, click the link to read up on the case study in its entirety.
For an absolute monster-sized Amazon site, you can check out SurvivalLife.com. It does right around $1 million in gross revenue a month. While the site makes money from more than just Amazon affiliate links, it’s still a good place to grab inspiration of how an affiliate site can be set up in such a way as to grow into an authority site.
Survival Life is an intriguing website, as it has an entire content team dedicated to writing for it. It also focused on becoming more than just an affiliate site as it grew, into now also selling products that they built from the ground up for their audience.
Affiliate Marketing vs. Amazon FBA
One of the hang ups many people have when they get started in an online business involving Amazon is the differences in the models. A lot of people want clarification on Amazon FBA vs. affiliate marketing.
Let’s take a minute to set the record straight. Although they both involve Amazon to some degree, there’s a world of difference between the two business models.
We’ve already covered how affiliate marketing works, and we’ve got an entire article dedicated to the Amazon FBA model. But the crux of it is that Amazon FBA involves selling your own products, while affiliate marketing is selling other peoples products.
In the debate on affiliate marketing vs. Amazon FBA, the ultimate decision rests with whether you want to invest in inventory and what your ideal business model looks like.
Let’s take a closer look at the pros and cons of affiliate marketing to help you make an informed decision.
The Pros of the Amazon Affiliate Business Model
There are a lot of benefits to going full throttle with building an Amazon niche site empire. First of all, people trust Amazon. They have been around for years. As far as the internet is concerned, Amazon is ancient.
Because of this, Amazon garners a lot of trust from its customers. Most people that go from a niche site (which might not look very trustworthy), and find themselves on Amazon will feel relieved to buy the product there because, while they may not trust the niche site explicitly, they do trust Amazon.
The other really great thing about Amazon — like the Google AdSense business model — is that it allows you to be pretty passive while still keeping your income rolling in. All the work is up front on an Amazon affiliate site, meaning you do all the work at the start to get it off the ground.
Once the website is earning money, it is pretty much hands-off.
It’s for this reason that many people choose to build massive networks of Amazon affiliate sites.
Amazon also split tests their conversions. They are always looking to improve their website and to convert more of their traffic into customers. As the affiliate, you get to benefit from this, because people will be seeing the winning split test that converts the most amount of traffic into paying customers.
Since Amazon sells mainly physical products, you (the affiliate) benefit from this as well. Unlike information products which typically take huge sales letters to market successfully, physical products are often no-brainers for people if it is what they are looking for.
When you do get someone onto Amazon from your affiliate link, it is okay if they do not buy that specific product you are selling. They might still end up buying something from Amazon, and as long as they are within that 24 hour Amazon affiliate cookie duration, you will get a commission.
I have seen Amazon affiliates selling $10 dice that ended up selling $400 watches via their Amazon cookie. While the cookie is a lot shorter than most affiliate programs, it is still a major benefit to the affiliate.
After all, very few affiliate programs convert as much traffic into customers as Amazon does.
Once you sign up for the program, you’ll also have access to Amazon Affiliate reports. These golden nuggets can identify problems, such as getting Amazon affiliate clicks but no earnings and cases where your Amazon affiliate links aren’t working at all.
Amazon affiliate reports are a great tool to scale your site as you target your highest-converting products and see where you could improve your CTR and on-page CRO.
Last but certainly not least, being an Amazon affiliate business means that you can track the most popular product on your website. Who is buying what and for how much? If the product works with your niche, then you might be able to roll your Amazon affiliate website into an Amazon FBA business model.
You will want to read about the Amazon FBA business model before you do that. Thanks to the data from your affiliate site, you will have a much more informed opinion on whether you should or should not do this since in the backoffice.
The Cons of an Amazon Affiliate Model
There are a lot of benefits to running an Amazon affiliate business. However, it would be dismissive to say there are not some risks involved. Some of them are pretty serious, and you should take them into account before you dive deep into building a ton of different Amazon websites.
The first hurdles are the commissions. Most affiliate programs are going to pay out better commissions than Amazon. Some products on Clickbank, for instance, will pay out as much as 80% per sale, and some of those products are several hundred dollars as well.
When you are promoting an Amazon affiliate model, you also need to have a great deal of targeted traffic. Furthermore, this traffic needs to be as close as possible to the end of the buying cycle.
This means you want to rank for keywords like “best XXXX” or “XXXX review,” since people searching terms like these are more likely to buy whatever it is they are searching for.
However, these keywords are often more competitive precisely because they are targeting traffic that is towards the end of the buying cycle.
You need to become very good at keyword research, and really understand it, if you hope to make good money with the Amazon affiliate program.
There’s also a chance you could run into technical issues that could take some time to resolve and could be beyond your control. For example, you could end up with Amazon Affiliate clicks but no earnings. Or you could spend time building out your site to discover your Amazon affiliate links aren’t working at all.
A more significant risk is that your account could get banned. If this happens, it will likely be for reasons you will not understand or for oversights in your reading of their Terms of Service (ToS).
One thing to watch out for that might not seem obvious with these sites is that the affiliate should never state the actual price of the item. Amazon does not allow their affiliates to do this unless they pull from their API, since the prices can be adjusted on Amazon, so your prices might be out of date.
It is best to avoid ever stating a price, number of reviews, or even their review rating if you can. While it might hurt conversions of traffic to customers, it is better to err on the side of safety.
Once your Amazon account gets banned, it is very difficult to ever get it back and even starting a new one can be difficult, as Amazon might just close down your account again.
If you build up an entire portfolio of Amazon affiliate sites, you risk putting all of your eggs in one basket — something we strongly advise you to diversify against by investing in more sites than just Amazon affiliate sites.
What Buyers Need to Know
Nevertheless, Amazon affiliate sites are a fantastic way for someone just getting started in online businesses. Amazon is similar to AdSense in this regard as they are both very starter-friendly.
You know you are going to get paid by Amazon, and there is no offer caps you have to worry about or monitor.
As a buyer, the key thing you need to know going in is that you will require very targeted traffic. If you plan on using search engine optimized (SEO) organic traffic as your main traffic source, make sure you are going after keywords typically used by people who are intending to buy, not just browse. We’ll call these terms “buyer keywords.”
Keywords are what people type in the search query on Google. As already mentioned, Amazon affiliates want to be targeting people that are near or at the end of a buyer cycle — the buyers.
For example, a buyer keyword for a shirt might be:
“Buy red shirt”
But a buyer keyword that is even better would be:
“Buy red Fox Racing shirt”
The second one is going to have way less search volume, but the search traffic is so specific that these people are actively looking to spend money on this brand and color of shirt.
Other examples of buyer keywords are:
“Where to buy XXXX”
“XXXX versus YYYY” (in this case it is a product comparison post that pits two competing products against each other)
Keyword research is beyond the scope of this post, but a great tool to use for keyword research is Ahrefs.
Outside of keyword research, an Amazon affiliate site buyer should try to maximize their Amazon earnings by getting the highest percentage they can on the sliding pay scale. The best way to do this is to have both low-ticket and high-ticket products for sale.
Offering products that are very cheap to buy will make your site a launch pad for an impulse buy for the visitor. If you couple these cheap products with expensive products, you will both help to meet the quantity of items you need to be selling on Amazon as well as selling expensive items to get the most out of the added percentage of commission.
If you’re in the market, make sure to register for a free account on our marketplace to start finding Amazon Associates sites that are already generating profit month after month.
What Sellers Need to Know
One of the awesome benefits of selling Amazon affiliate sites is that they sell very quickly. Buyers love these websites for all the reasons mentioned above, but here’s a quick recap:
- Newbie-friendly and great for people just starting out
- Easy to manage once the work is done, so fairly passive
- Great websites to add to an active portfolio of websites
In addition, these sites are very simple for migration to the new owner. This is because all you have to do is change the affiliate links to the new Amazon associate account, which is typically a pretty easy process.
Because buyers love these sites so much, they tend to be sold for list price on the marketplace rather than negotiated down.
All that being said, buyers still want to see a year of data and strong earnings. The reasoning for this interest is that most Amazon affiliate sites are powered by organic search traffic. Having good earnings for over a year shows that the website has likely survived several Google algorithm updates and can weather any storm that comes its way.
What Buyer Persona Best Fits the Amazon Affiliate Business Model?
Similar to the AdSense model, Lifestyle Larry loves Amazon affiliate sites, as very little work has to be done to the websites once they are making money. He can add more content or sit back and relax, getting steady profits month in and month out without having to do anything.
Portfolio Paul loves these kinds of sites because they are easy to manage. He is not dealing with any kind of shady CPA network that might be shaving off his leads or sales. In addition, these sites are usually easier to manage in terms of the actual time they take up.
DIY Dave and Newbie Norm
For a DIY Dave just starting out or a Newbie Norm who is brand new to this whole online world, Amazon sites make sense for all the reasons above. It is a safe spot to learn internet marketing and to dump some real work into growing the website with more content, reviews, and consumer guides.
One nice thing about Amazon affiliate sites is that, with enough work, you can grow this income stream into a real juggernaut of profits. There are many Amazon affiliate sites earning $7,000 to $10,000 per month.
As you grow your skills with building online businesses, you will also to be able to multiply your Amazon affiliate income by using some of these growth strategies.
The first strategy is to have multiple sites. By being in several different niches, you can build high-quality content that is all relevant to selling a few different kinds of products. If you structure the website correctly, these websites can become authority sites all on their own, which tend to earn a lot more income.
Sell Low and High-Ticket Items
Outside of multiple sites, the next Amazon affiliate tip is to maximize your earning potential by selling both low-priced and high-priced items. The low-priced items will help you get over the quantity requirements that Amazon has for each tier, which will allow you to earn a significantly larger income on the more expensive items since the sliding commission scale is retroactive.
Build an Email List
Amazon affiliate site owners that want to take their game to the next level can build an email list to keep bringing traffic back to their website. It helps if your website has room to grow into a true authority site, rather than just be a thin five to ten-paged website.
When you build an email list, make sure you entertain potential customers with highly valuable posts and not just reviews of different products.
One of the best reasons to build an email list for your Amazon affiliate niche sites is that you can take advantage of special events. These might be a large sale going on for the main products your site sells, or it may be the holiday season and people are looking to spend money on gifts for friends and family.
By having an email list, you can also send out specialized content such as consumer guides or product cheat sheets.
This can be a huge income multiplier for you, but again it is only a good idea if you are planning on growing your niche site into an actual authority site since it does take some work to get this going.
Just remember that it’s against Amazon’s ToS to promote affiliate links via email, so make sure you do not do this. Instead, promote blog posts or pages with your Amazon reviews to your email list to avoid breaking Amazon’s affiliate agreement.
Paid traffic requires you to pay attention to your daily spending and your daily earning. Also, you have to remember that Amazon pays out 60 days after you earned the commission.
Don’t go crazy and spend all your money before you start getting a few commission checks from Amazon.
That being said, becoming proficient with paid traffic is like turning a water faucet on and flooding your website with potential conversions. Paid traffic can help you with SEO, especially if you start using paid sources like Facebook and Twitter to drive social traffic to your website.
Learn how to optimize a paid campaign where you make a profit, and you can scale your Amazon site to become a very large revenue stream.
Amazon FBA Potential
With Amazon affiliate sites, you have the opportunity to grow your website in many different ways. We’ve already talked a bit about Amazon FBA vs. affiliate marketing, but it doesn’t have to be an all-or-nothing shot.
For people looking at getting started with an Amazon FBA business, one of the better routes might be to first buy or create an Amazon affiliate site in the Amazon FBA niche you are looking to explore.
If your affiliate site starts to sell the main product you want to turn into an Amazon FBA business, you have some real data to show that people want this product.
Plus, once your product is up on Amazon, you can just replace your affiliate links with your Amazon FBA listing and with an affiliate link.
Now you get to benefit from having a website that is getting traffic that will be able to pump up your Amazon product sales. Also, if you had decided to build an email list with your affiliate site, you now have something really cool to tell them about while driving them to your Amazon product listing.
By having these initial sales, you could even boost your Amazon FBA product to where it triggers Amazon’s algorithm.
In other words, Amazon will start promoting your product for free because you have shown them that people are hungry for it — and Amazon loves to promote winning products.
Resources to Learn More
There are a lot of resources out there when it comes to growing an Amazon affiliate site. If you are looking for some of the best minds on the subject, then we recommend taking Cloud Living’s AMZ Affiliate Bootcamp course, which you can get here.
Cloud Living has a case study Amazon affiliate site currently doing around $3,000 per a month in income, solely from Amazon.
It’s also very newbie friendly, so someone wanting to really learn this stuff but fear they might not be technical enough, would love this course. We’ve personally gone through it ourselves and vetted the product to make sure it is the highest quality possible (as we only want to recommend the best).
If you want to skip the guesswork and buy an Amazon niche site that is already producing profit, click here to see our current website listings.
Or maybe you already have an Amazon affiliate site and you want to turn it into a nice big payday; in that case, you can click here to sell your site with us.