For some affiliate marketers, 2020 has been extra cruel.
If you’re part of that number, you’ve got a couple of options. Either stay put and accept less money in your pocket, or look for a pivot to regain what was lost.
In this post, we’re going to introduce a couple of options if you were hit by the commission cuts. In particular, how you can diversify your business and sell physical products with Amazon FBA.
Amazon Associates’ 2020 Commission Changes
First, a short introduction to the aforementioned commission cuts.
As of April 21, 2020, the rates for most product categories were altered pretty dramatically. Among the hardest hit:
- Furniture, Home, Home Improvement, Lawn & Garden, Pets, Pantry all went from 8% commission to 3%
- Headphones, Beauty, Musical Instruments, Business & Industrial supplies from 6% to 3%.
- Grocery from 5% to 1%
- Health & Personal Care from 4.5% to 1%
You can imagine the impact for a site making all or most of its revenue through affiliate commissions for products in these categories.
The reception from affected affiliates has been as you’d expect. Some even went so far as to launch a petition to reverse the rate change, which as of writing, gathered nearly 20,000 signatures.
Along with a drop in revenue, this correlates to a drop in sale value for sites which rely on Amazon Associates’ commissions. So cutting bait and getting out of the game won’t nearly be as profitable as it once was.
Alternatives to Amazon Associates
While Amazon may be a one of the most popular and accessible affiliate networks, it’s by far the only one. It’s also not the only monetization method for a niche or authority site.
Other affiliate networks are one place to look for a pivot. There are competing online marketplaces, such as Walmart, eBay and Target, all of whom are challenging Amazon’s hold over the e-commerce game, and will be eager to pick up on some of the disgruntled Amazon Associates marketers.
Then there are affiliate networks that put you more in touch with brands themselves, as opposed to a marketplace. These networks include ShareASale, CJ and Rakuten. The advantage of these affiliate programs is often a substantially higher commission compared to Amazon Associates, even before the rate cuts.
The downside is you have less variety than Amazon – you may not be able to find all the best products in your niche with their own affiliate program. Many programs also don’t have the site-wide cookie that Amazon does, which allows you to earn commissions even when someone buys a product several clicks in.
Many affiliate sites are already making money by serving ads. However, if you’re not, and your income was primarily through Amazon Associates, it’s something to seriously consider.
Google AdSense is one of the biggest and most notable ad programs, currently used by more than 10 million websites.
Ad platforms like AdSense or Ezoic are popular because all you have to do is paste a bit of code on your site, and they will optimize and run ads, and you get paid for it. It’s a low-effort way to start monetizing your site traffic.
The major downside is that it takes away some control over the look and feel of your site. Some site owners would rather not show ads, which can look spammy and out of place. It can also have a negative impact on site speed, again hurting customer experience and potentially SEO.
Sell Your Own Products via FBA
Another alternative is to move from only promoting other peoples’ products, to selling your own.
This is obviously a bigger pivot than the previous options. Switching to another affiliate network just requires you to find new affiliate programs, swap out some links, and potentially re-write some content. While signing up to AdSense or Ezoic requires just a change in site design.
Selling your own products requires more work to get rolling, but has the payoff of higher revenue and more control over your business in the end.
What is FBA?
FBA is Fulfilled By Amazon, Amazon’s fulfillment network for the third-party marketplace. It presents a convenient shortcut for anyone who wants to start selling products online, by taking care of a lot of the cumbersome tasks involved in taking products from Point A (supplier/manufacturer) to Point B (the customer).
With FBA, you arrange for products to be shipped to Amazon’s warehouses, where they handle storage, packing, picking, shipping to the customer, as well as returns and customer service.
This allows you to focus on marketing and getting your products in front of people – much like affiliate marketing, except you have much more control over, and return from the revenue stream.
So why would you want to pivot and sell your own products?
To start with, there’s no need to choose one or the other. You can absolutely monetize your site with a mix of both. There’s nothing wrong with having a bunch of articles reviewing products that you earn affiliate commissions on, as well as having your own product(s) you promote.
This is actually an extremely effective way to run your business. It gives you a much more diversified source of revenue. Anyone whose eggs were all in the Amazon Associates basket prior to April will surely know the value of diversification.
Selling your own products gives you more control over your business. It gives you something to promote that you actually own, rather than renting part of the revenue from someone else (Amazon, for example).
Affiliate revenue is great because of the low overhead and passive income, but it’s smart to supplement that with a more solid revenue model.
As for why FBA and Amazon in particular, over selling directly on your site? One reason is the ease at which you can sell products online with FBA. You almost certainly need to hire a team to manage sales and fulfillment if you’re responsible for the whole package, from storage to order management and shipping.
But with all that Amazon takes care of for you with FBA, you can often operate as a solopreneur, as many affiliate marketers are already.
Another plus is the customer base Amazon has. This is why FBA, at its core, is very much like running an affiliate site. The hardest part is getting initial traction. Once you do, whether it’s ranking in Google Search or Amazon Search, people are going to find you by themselves, and you’ll make money passively. No need to worry about customer acquisition.
Why Affiliate Marketers Are in the Perfect Position to Launch on Amazon
Pivoting or diversifying to selling FBA products is particularly interesting for people running niche sites, as they’re in the perfect position to get quick traction on Amazon.
The biggest problem for FBA sellers, and the reason many people struggle to get off the ground, is getting traffic to products.
When you first launch a product, it has zero visibility. In order to get your product to rank and sell, you need sales in the first place. Which you can’t get if no one can see your product.
For most sellers, this means pumping a large sum of money into Amazon Ads, Facebook Ads, Google Ads, or full-price rebates to get the initial sales kick needed to start selling organically. Launches are not cheap – the days of starting an Amazon business with $200 and a dream are over.
Now imagine you have a successful website that already gets a lot of organic traffic. You’re in a unique position to launch products on Amazon, because you already have a customer base.
No need for huge advertising costs for your product launch – simply put your product in front of the people who are already coming to your site.
Even better if you have an email list, a targeted Facebook audience, or any other assets you can use to drive traffic.
This is a position that other Amazon sellers dream about, while they’re sinking thousands of dollars into every product launch, just to scrape the sales necessary to get to the front page.
How to Start Selling on Amazon FBA
There are some steps to start selling products with FBA that are different to what you’re used to, but it’s not as big a learning curve as you’d think.
The biggest step is sourcing your products and dealing with suppliers – however, if you’ve been running a site for a while and outsourcing content, this isn’t too much different to ordering content and dealing with writers. The fundamentals are all the same.
Here are the broad strokes to starting out with physical products on FBA.
Pick the right products
First thing is, you need to choose what to sell.
Obviously you’ll want to sell something that’s part of your niche. Ideally it will also be something you have a decent amount of content on.
For example, let’s say you’re going to sell testosterone supplements. If you have content that ranks well about testosterone and testosterone supplements, you can pivot your content to promote your own product. You’re well-positioned since you have a targeted audience looking for what you have to sell already.
You’ll also want to do a little market research. Sure you may be ranking for “best [product name]”, but if there are a lot of well-known products here by big brands, it’s going to be hard to get much traction for your product.
Use an Amazon product research tool to check the demand for products on Amazon search. You’ll want to make sure that the product(s) you choose have keywords with a lot of search volume, and that the products ranking for these keywords aren’t too ingrained in the SERP.
Reviews are a good indicator of competitiveness. If you’re up against products with thousands of reviews, it will be tough going.
If you can find a category with high sales potential and products ranking have low reviews, you’re on to a winner.
Source your products
Next, and probably the task with the most effort required, is sourcing a manufacturer for your product.
The most common way to find people to supply products is SaleHoo or Alibaba. These marketplaces have just about every kind of product available in wholesale, direct from the manufacturer or supplier.
The first step is to search for the kind of product you want to sell. You’ll see the cost per unit for each product, as well as minimum order quantities.
From here you can contact the supplier to make an order, as well as discuss alterations to your product.
A few things you want to keep in mind when sourcing products are:
- Cost: you need to ensure that, after shipping costs and all Amazon fees are applied, you still have a healthy profit margin while selling your product at a competitive price.
- MOQ (minimum order quantities): some products might look like they have a really attractive price, until you realize you need to order at least 10,000 units. Low minimum order quantities means less risk, and less overhead required.
- Check the supplier’s history and ratings, to ensure you’re getting something from an experienced and qualified supplier.
You should order a sample before committing to an order, so you can see for yourself what you’re going to get, and what changes may need to be made. Additionally, pay for an inspection service when you make an order, to ensure the products that get shipped to Amazon are top quality.
Use your knowledge of the niche to make the next best-seller
There’s one more product creation step after deciding what to sell and finding someone to make it for you – differentiating yourself from the competition.
You don’t have to create something completely new from scratch, but you also don’t want to sell something right off Alibaba with your label slapped on it. Chances are, someone else on Amazon is selling the exact same thing.
What you want to do is come up with a small improvement or two and have your supplier make the changes. This is another area you’re in a great position to launch your own product.
If you’ve been producing and publishing content related to your product already, you’ll be aware of some of the common pros and cons for competing problems. Find a common thread in the negatives column of all your product reviews? There you go, you’ve got a great idea for a selling point over the competition.
List & optimize for Amazon search
Once you have your product ready to go, you’ll need to list your product on Amazon.
A big part of creating your product listing is optimizing your keywords for Amazon search. Again, if you’ve been running a site and optimizing for Google SEO, this won’t be an unfamiliar process.
Much like Google SEO, you want to sprinkle keywords throughout your listing copy, so the search engine knows what your product is about. The highest-volume, most targeted keywords should be featured most prominently – your product title is the most valuable real estate.
Don’t forget to research as many long-tail keywords as you can, and include these throughout your product listing. Doing so will help you appear for more searches, leading to more organic traffic and sales.
There are many keyword research tools out there to help you find and prioritize keywords. You can most likely use the same tool you used for product research to decide which keywords to target high up in your listing copy, as well as to find long tails.
Promote your product launch
Finally, you need to let people know about your product. Relatively speaking, this is the easy part for affiliate marketers.
Most sellers don’t have traffic streams at their disposal for product launches. Even seasoned sellers. That leads to needing to spend a huge chunk of money to get in front of people.
With a niche site getting traffic, this is not a worry. You’ve got the traffic, now you just need to send them to your product.
A great idea is to add a popup to your site (or to a collection of pages, depending how niche your product is), offering a discount to your audience to purchase your product on Amazon.
If you have an email list, send out a couple of blasts to your list.
Of course you’ll also want to mention your product in any related content. Have a “top 10 [x]” post for your product? Put yours at #1.
These are ways you can start generating sales right away on Amazon while still breaking even. Most Amazon sellers only dream of product launches that are also profitable.
If you want to go all-in on your product launch, and you’ve had a Facebook Pixel on your site collecting data, you can run a Facebook Ads campaign to promote your launch as well. Facebook Ads can take a lot of money to run, but if you’ve already got a targeted collection of data (such as Pixel data or an email list), this cost is cut down significantly.
To sum up, Amazon is a great traffic source for selling products online. The problem is that, usually, it costs a lot to launch a product and rank high enough to be able to tap into that traffic source.
This is why affiliate sites are perfectly positioned to start selling their own products via Amazon FBA. You have your own way to generate traffic (which the majority of Amazon sellers don’t), as well as knowledge of the niche and related topics.
By using one traffic source (your site’s traffic) to tap into another (Amazon search), you’ll multiply your earning power, while building a more diversified business that isn’t at risk so much from snap changes like Amazon’s affiliate commission cuts.
During COVID, Affiliate Marketing Is Emerging As a Cost-effective Channel For Brands
Opinions expressed by Entrepreneur contributors are their own.
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With the outbreak of the pandemic, going for performance-oriented channels has become a prerequisite for stability. Several advertisers are struggling with low marketing budgets and a pressure to drive return on investment (RoI) through limited spends, especially owing to current times. The most common dilemma for companies is to decide where to focus their marketing budgets on, after investing in one’s own in-house paid channels. “Affiliate channels’ often provide desirable solutions, as the performance of such activities can be assessed and paid for. When the budgets are lower, investing on a marketing channel where one gets to pay per lead or pay per transaction, could be the safest bet during the current crisis compared with other marketing channels.
With the ongoing challenges of customer acquisition and the pressure to get RoIs, the advertisers have tried to come up with the online business approaches in order to depend less on offline means.
Despite the evolution of marketing practices and strategies, amid the big quantum of content available online today, brands are finding it difficult to reach out to their target audiences in an effective manner. Taking the current health crisis into consideration, customers are more concerned about health and safety, thereby influencing their choices with respect to financial services such as in the insurance segment, over the others.
This holds especially true for brands operating in niche segments, such as the banking and financial services sector which offer specialized products and services. Their marketing content, essentially, is about communicating “what’ the brand is offering, “why’ the customer must opt for it and “how’ can the customer acquire the same. It’s not easy to convince people to trust someone to deal with their money and life’s savings.
Why companies in the BFSI sector must opt for affiliate marketing
FinTech has transformed the BFSI sector drastically. From payments, loan applications to insurance, almost every service in the banking sector is going digital at a rapid pace. Apps, banking services and products are also updated regularly to enhance user experience, and make financial services easier and more convenient for consumers. The digital shift reflects prominently in the adoption of digital payments as well. A 2019 KPMG report showed that non-cash transactions are growing at a CAGR of 12.7 per cent. The number of merchants accepting digital payments has also skyrocketed, growing from around 1.5 million in 2016-17 to 10 million in 2019.
However, due to COVID-19, investor sentiments are at an all-time low and this is likely to cause severe disruptions in the banking industry all over the world. Banks will now have to regroup their departments and teams to chalk out counter-strategies to maintain good assets and earnings.
To tap into the growing digital opportunity, BFSI brands must leverage innovative marketing strategies in order to increase their sales by targeting the right customers. Working on an affiliate marketing strategy could be one of those options which could aid the financial services sector with cost-effective solutions, while driving up traffic. In an affiliate marketing setup, publishers cannot treat the BFSI brands’ products and services like other commodities.
As all of their offerings revolve around money, it is integral for brands to prioritise generating a need for these services among their target audiences. The key to effective brand communication, in the BFSI domain, is transparency in information delivery. To cater to this marketing requisite, opting for affiliate marketing can prove to be highly useful for the BFSI sector. By signing up relevant publishers as affiliates, BFSI advertisers can reach out to their target consumers in a trust-based ecosystem for communicating their key brand messages.
Affiliate with whom and where?
For affiliate marketing programmes, BFSI brands require those publishers who have the required ingenuity for curating relevant information in the right category of the sector. With everything going online from doorstep delivery of daily groceries through just a click, to getting the health checkup or tests done at home, users are now more aware about such needs. The probability that they will go searching online for services and also transact online is very high. It would be an opportune decision to reach out to the target audience in such a manner, as it is likely to generate faster results and direct interaction with a user looking for a service.
Furthermore, countless other possibilities open as affiliate networks facilitate revenue sharing mechanisms between the service provider and a publisher when one’s link gets clicked. Compared to several other digital marketing options which depend on user accessibility and high costs between corporations for using certain platforms, affiliate marketing’s targeted content is more likely to fetch dividends. The post-pandemic growth reality will be a difficult pill to swallow and affiliate marketing solutions can make the changes positive and palatable. This will not only be an economical option, it will also help companies acquire customers who are looking for a particular service, while simultaneously incentivizing the publisher too. Beyond sales and on-boarding of new customers, the average time spent by an Indian working professional or Internet user has increased multifold due to pandemic. This goes to show that people will continue to look for their necessities online across multiple websites and portals. It shall open up opportunities for brands to increase awareness about one’s services across several sectors without the need to remain confined to one’s own market segment. Below are some of the platforms where companies in the financial sector can join affiliates to target more consumers:
Blogs: Online blogs are one of the most trusted platforms for the BFSI sector. Specialized content publishers who demystify financial services and products such as loans, insurance, credit cards, overdraft protection for consumers, are the most sought-after ones for the BFSI brands in affiliate marketing. They cater to an audience that actively seeks out experts’ advice before making all financial decisions. Bloggers also get an opportunity to drive traffic to specific services offered by different BFSI verticals. Bringing publishers on board who operate in this domain helps the brands drive high-impact marketing campaigns which deliver fast results. Some of the websites that feature such content are Cashoverflow.com and Goodreturns.in.
Business news websites offering guidance on personal finance: Various news portals such as NDTV Profit, CNBC TV-18, etc., feature content that consumers can avail to manage personal finance, insurance policies, etc. These websites are regularly accessed by keen observers on finance and banking, who are one of the primary target audiences for brands in the BFSI sector.
Comparison sites: Comparison sites invite immense traffic of consumers who are interested in getting the right deals in financial services which are most suitable for them from the budget and consumption point of view. Brands dealing with financial services such as personal banking, insurance policies, credit card policies can avail these sites to target potential customers.
Contextual advertising: Contextual advertising is a marketing model where affiliates or publishers can target consumers based on their specific interests. These platforms provide relevant content, targeting a particular set of audience for whom unnecessary features are eliminated based on their past browsing behavior, making it one of the most effective platforms for brands in the BFSI sector. The companies can also get their products featured in specialized content meant to meet specific ends.
E-mail inventories: Brands can supply relevant information to potential and current consumers via newsletters in their email inboxes. Information on latest offers, new updates on products and useful information on services can be relayed to the customers who otherwise find ads, SMS-marketing intrusive and use ad-blockers on their devices. BFSI companies can tie up with content affiliate sites that send out value-based articles and ideas with other exciting information about the brands, promoting more subscriptions and sales.
A win-win for both: the brands and the affiliates
By making the most of the growing digital presence of consumers, affiliate partnerships can prove to be one of the most cost-effective ways for banks and financial institutions to convert consumers online. The fast and approved online transactions help the BFSI brands acquire more control over their businesses than the other conventional marketing practices. Moreover, in creating affiliate marketing campaigns for the brands in the BFSI sector, the publishers also have more opportunities to earn big commissions compared to the other e-commerce campaigns. Brands operating in the BFSI sectors generate more sales and earn more profits on their products and services as compared to the non-financial brands. For every customer gained, the publisher gets an opportunity to earn a couple of times more commission on it than it can from, say, when a consumer buys a stationery product. Big banks pay commission basis the pay-per-scale model. Most financial institutions offer commission of this type to bloggers.
And last but not least, players in the BFSI sectors can get a fair chance to incorporate multiple marketing tactics and test innovative strategies in an affiliate marketing programme without the slightest worry, since rewards are paid only on a performance basis which is well accounted for.
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