5.5% 3% commissions and marginal costs it’s quite likely on some of your products, these savvy SEO focused marketers are making more profit than you!
They have more agility to move around and gain more income from the entire product category – even parts of the product category you don’t sell products in.
Who’s the mug?
Well, the answer is MANY, MANY private label sellers.
Better to be an Amazon Affiliate or Amazon FBA Seller?
Table of Contents
Necessity is The Mother of Invention – creating systems for low cost traffic
Through necessity, these Amazon affiliates have MASTERED low cost marketing techniques that make you, the Amazon Seller dribble uncontrollably
I bet you think these are “influencers” making a few quid here and there?
So many (so so many) of these guys are taking in 5 figures a month in affiliate commissions – getting valuations on Empire Flippers that are simply astonishing to a Private Labeller.
These guys have got lower revenue, but massive margin.
They’ve got cost control down to a fine art – and they’re kicking our assess in the ROI and general sales and marketing stakes.
When 2 worlds collide…
Private label plus the affiliate model is going to be THE dominant business format for sellers exploiting the amazon platform in years to come.
This is because it aligns with the Sales-Traffic Paradigm Shift currently underway.
Full priced sales. Traffic generated by content. At the tenth of the cost of “Paid advertising”. With cumulative, long term impact.
There’s so much goodness in those few short sentences!
But only if you’re moving in that direction. If you’re over-invested in Facebook Ads education, systems and software – those sentences will be a sour taste in the back of your mouth.
So how much are the affiliates making?
We’ve done a few exercises, budgets and calculations to demonstrate the value of the model. Equally, there are well documented examples from the likes of Spencer Haws at Niche Pursuits.
But let’s do some maths from a private labeller’s perspective.
Amazon Affiliate Site Revenue Potential Calculation
If an affiliate got 100,000 visitors to their site in a month.
40% click an affiliate link.
10% of clickers purchase.
The average basket total when purchasing is $50
The affiliate is shifting $200,000 worth of product a month!
That’s $2.4 Million worth of product a year!
Now they get about
5% 3% commission*
So you can calm down. That’s only
$10,000 $6,000 in cold hard cash a month income…
*the commission rate for Amazon Associates pretty much unilaterally dropped to 3% in April 2020, but the upside of this is that despite the drop, the sites generated that much cashflow, profit and ROI that the business model is very much still in tact, viable and highly profitable (just a little less so than it was!)
Amazon Niche Site Costs and Net Profit Calculation
What’s the cost of driving this traffic organically?
Let’s call it $80,000 to setup
And say $10,000 a year to maintain after the first year
In the first year that’s about 10% ROI in terms of cash back in their hands
$8,000 clear profit
But heading into year 2 that’s about $5,000+ a month profit
So they could sell the site and get about a 36 x Monthly net profit for it on Empire Flippers.
Yes that would be them selling their business for over $186,000 having invested $80,000 (that’s a 233% ROI on the sale alone)
No stock issues.
No sales tax issues.
Not a great deal of hassle…
(Not even mentioning the potential Ad revenue per month of $1,000-$3,000 that’s NOT reliant on Amazon AND the potential other affiliate programmes they could join with even higher commission rates. Only possible because they own the traffic. They have the attention of the market.)
If you want validation of these numbers, you can find a number of Affiliate Marketers who picked up MY Calculated numbers and wrote about them, created online calculators and more. It’s because it made sense!
Here’s an article from Jon Dykstra over at Fat Stacks Blog validating how to calculate how much money you can make with affiliate marketing and content sites – Job generates more than $70,000 a MONTH in profit from his sites.
The Unpopular Truth – Amazon Affiliates Work Less & Make More (Better EHR)
This is an unpopular truth. Your equivalent hourly rate (EHR) is probably a LOT less than most successful Amazon Affiliate site business owners who operate their sites as businesses. I can guarantee Jon Dykstras EHR is a lot higher than most!
Amazon affiliates are kicking the private labeller’s ass.
Especially those who think bigger than “niche websites”.
You as the product developer, shipper, inventory manager, brand manager, PPC manager, Amazon Seller…
You’re getting a smaller part of the Amazon pie than you deserve.
But what if you could combine the pies?
Make a MEGA pie?
That’s what we do here at Future State Media.
We’ve blended business models to uniquely serve Amazon Sellers who see the Amazon Affiliate programme as an opportunity.
And more than that. See Organic Traffic as the long term solution to their business success on the Amazon Marketplaces.
Speak to us today. Apply to be a client now. We’re picky, so we screen our clients to make sure we’re compatible – that you’re a seller that has what it takes to implement and win.