I made $22 in Amazon Affiliates on a >$7K investment

23It’s one of the most accessible paths to entrepreneurship, a darling of r/JustStart, and has made people like Spencer at Niche Pursuits into millionaires. It’s also a business model that you can skip as you start your entrepreneurial journey. I’m talking about, of course, Amazon Affiliate marketing.

My goal here is not to dissuade you from trying to make money with Amazon Affiliates. Instead, I’m hoping to provide you with an objective view so you can make an informed decision on whether or not to proceed. This post should be relatively fair because I’m not a “Guru” with a rented Lambo trying to sell you a course for $997.

My goal for this post is to help you answer a simple question: Should I invest in Amazon Associates?

This post will also be similar to my post on why dropshipping doesn’t work and why you shouldn’t do Amazon KDP to make money.

Do not use Amazon Associates to make money

In this post, I’ll do my best to break down Amazon Associates into it’s purest form and highlight some of the critical questions you should be thinking about as you decide whether or not you would like to go into Amazon Affiliate marketing.

The sections of this post will include:

  • What is Amazon Affiliate Marketing, and Affiliate Marketing in general
  • Why it has become a popular passive income strategy
  • The three times I’ve tried Amazon Affiliate Marketing (and the detailed numbers behind it)
  • Why Amazon Affiliate requires a more significant investment than you think
  • If you could make KDP work for you (if you wanted too!)
  • Why I’m not going to invest this way, and suggest you don’t either

Let’s get started!

What is Amazon Affiliate Marketing?

We can fly through this section very quickly as there are fantastic resources online that dive into this topic in detail. I’ll just give a brief description of it.

At it’s purest form, affiliate marketing is telling someone to buy a product and then getting a cut of that purchase price. A perfect comparison is a realtor. They ask you to buy a house, and then if you do, they get a cut of the purchase price.

An Amazon Affiliate marketer is very similar. They will create a website, very frequently about a particular topic. This website, Sawingpros.com, is an excellent Amazon Affiliate site. Let’s walk through an example here.

INSERT IMAGE OF SAWING PROS.

The first clue that this is an Affiliate site is because it’s hyper-focused on a particular product and reviews on this specific topic. If I scroll down and click on the chainsaw, we see a “Buying Guide” page that looks like this.

INSERT BUYING GUIDE IMAGE OF SAWING PROS.

These product tables are another clue this site is an Amazon Affiliate site. It’s actually against Amazon’s rules to explicitly say the price of any product, so most websites will have a button that says “Check Price.” This button is a dead giveaway that this is an Affiliate site.

The goal of the site owner here is to make you click on one of these “Check Price” buttons. That brings you to the Amazon product page. Look at the URL here, where it ends in a particular “Tag.”

INSERT IMAGE OF THE TAG.

The tag is how Amazon tracks that my visit on their site is because of Sawing Pros. This is what my screen looks like as I think about whether or not I want to buy this chainsaw.

INSERT IMAGE OF THE CHAINSAW.

Let’s say I do decide to buy the chainsaw. It’s summer when I’m writing this, and a couple of trees have fallen in the back yard. I want to clear those dead trees out. I’m moving ahead and buying this chainsaw for $580.

Amazon pays a flat rate commission percentage for products, which is highlighted below. I guess that this chainsaw would fit into the “Lawn & Garden” or “Tools” section. Either way, that’s a 3% commission.

INSERT IMAGE OF THE CHAINSAW.

At 3% commission, that means Amazon will pay the people behind Sawing Pros $580 X 3% or $17.40 for this sale!

Why do people do Amazon affiliate marketing?

One word: money. That example might have gotten you excited about the idea of Amazon Affiliate marketing. I saw a model like this a  few years ago, and it got me excited as well.

Think about it: the people behind Sawing Pros have a great deal:

  • They could have been sleeping, eating, or watching Netflix. They still earned $17.40 for that sale.
  • Many affiliate sites, such as this one, can make a couple of grand per month. Sawing Pros probably makes a similar amount each month.

Said plainly, there are a lot of people making good money through Amazon affiliates.

Why does Amazon have an affiliate program?

This is a harder question to answer.

Many amazing companies you’ve probably heard of have an affiliate program, like Hubspot, Shopify, Kinsta, and more. It’s more uncommon than you would think not to have an Affiliate program.

You could very quickly say that Amazon is giant enough that they don’t need to have a program.

But put yourself in their shoes: why not have one?

There are two million Amazon associates out there and what looks like 17,000 Amazon employees who work for in the Associate’s department.

INSERT PICTURE FROM LINKEDIN SALES NAVIGATOR

Amazon’s topline revenue was $87B in 2019. The median Amazon employee made $28K on the year, but that includes hourly warehouse work. Since software engineers make more, let’s round that $28K up to $50K.

Assuming those 17,000 people make $50,000 each, that means Amazon is paying $850M and ~3% of the purchase price of products to have 2 million websites talking about how fantastic their products are.

Said differently, they are spending about .97%  ($850M/$87B) of their topline revenue on a massive advertising source for them.

The ROI is undoubtedly worth it for them at those numbers.

Now that we’ve talked about what Amazon Affiliate marketing is let’s dig into why this is such a popular strategy to make money, especially amongst the entrepreneurial crowd online.

Why Amazon Associates is a popular passive income stream

I hinted at this before when discussing the SawingPros example. There are a couple of fascinating pros to Amazon Associates that has led to a lot of interest.

There are thousands of “niches” that allow for possible SEO domination.

To make money in Amazon Associates, you need to have people on your website who then click one of your links over to Amazon. That means your website needs to be the #1 authority for a particular topic online. If someone Googles the product you talk about, then your website needs to come up first.

For example, trying to build an affiliate site for “best running shoes” is going to be extremely difficult. You will need your website to rank higher in SEO than Nike, Strava, and Under Armour. Good luck!

However, you could build an Affiliate site about “best cast-iron pancake pan.” That is a lot more specific and a lot easier to rank #1 for.

If you sit down for 10 minutes, you could come up with a list of dozens of different niche ideas you could theoretically rank very high for. Some examples could be:

  • Ice Makers
  • Window-Mounted Air Conditioners
  • Sleeper Sofas
  • Loft Bed Frame
  • Home office Desk
  • TV stand
  • Bed Headboards
  • Garbage Disposals

The startup costs could be less than  $100

A big calling card of Amazon Associates is that it is theoretically “free” to get started. In practice, you’ll need a cheap domain and hosting from Bluehost at a bare minimum to get started.

If you do this cheap, you could get going for a $10 domain and <$5/month hosting. Later on, I’ll talk about why this doesn’t make a lot of sense.

The income could be mostly passive, and several thousand dollars per month.

Once you have a site that is making money, then you could theoretically put it on “autopilot.” If the site is ranking well and sending visitors over to Amazon, then you don’t need to do much. No more writing and adding posts means you can sleep and check your bank account each month.

Websites eventually “die” after a few years if you don’t update them, but you’ll work a lot less those years than you would be a corporate employee with a 9-5.

You could have multiple sites that all make several thousand dollars per month.

If you have the skillset to build one site, then you could build others. Creating a network of 5-10 websites that each make $2,000 a month could mean making very good money each month from Amazon.

There is a huge market for selling Affiliate sites for a considerable premium.

If you check out Empire Flippers, where you buy and sell websites, you can easily see dozens of sites for sale at prices north of $100K. There are even four sites worth more than $1M for sale.

INSERT IMAGE OF EMPIRE FLIPPERS 

The key thing to highlight here is the multiple. Most affiliate sites sell for ~30X their monthly income.

For example, a site that makes $1,000 a month would probably sell for $30,000.

That’s pretty exciting. $1,000 is a lot easier (just based on pure math!) to make than $30,000. But, in affiliate sites, they are mainly the same thing.

Post-Mortem: the money I invested into Amazon Associates and the return I made

I’ve tried Amazon Associates two different times. Both times, I lost money. Both times, I went into it without totally knowing what I was doing. I figured out halfway through the second attempt precisely what the problem was.

Affiliate site #1: The Business Site

INSERT PICTURE OF THE NUMBERS FROM THE FIRST SITE

This site was dedicated to “business” products, so I wrote about notebooks and office supplies that would be helpful for people to decide what they would need best for their day at work.

I blindly followed some guides that I found online. I bought a domain with Bluehost and used Ahrefs and Surfer SEO to do my keyword research. I still worked at BCG at the time, so I would wake up early, write an article about notebooks, and then go into the office.

What I made:

Exactly $0

After a year with exactly zero income, I decided to pull the plug and give up after nearly $3,000 invested that didn’t lead to anything,

What I thought the problem was at the time:

At the time, I thought my issue was poor keyword research and a slow website. I kept on making tweaks to make my sites faster and thought about buying Kinsta hosting to speed things up. I watched all of Ahrefs YouTube videos as well to get better at SEO (Sam Oh-you the man!)

Affiliate site #2: The “Legit” site

INSERT PHOTOS OF THE SECOND SITE

This time around, I didn’t fuck around. I wanted to make Amazon Affiliate Marketing work, and I put money into it to make it happen.

Starting on the right foot, I bought a done-for-you site from BrandBuilders for  $1,395 to get started on the right foot. This site had research done, hosting and domain taken care of was entirely built, and had ~30,000  words of content.

I still used Ahrefs and Surfer SEO. At that point, I had invested about ~$2K  into the site and about three months. I had been writing articles myself and adding to the site. However, I had started consulting at this point and was making too much money to waste time writing. So, I spent more than $3 grand to outsource a lot of the writing to sites like iWriter and others. I also bought some likes from RhinoRank to help get some link juice going.

Did all of that investment pay off?

INSERT PICTURE OF AMAZON AFFILIATE EARNINGS

All in, I made about $22 in commissions over three months. It wasn’t a high return on a $5,000 investment, to say the least.

At this point, I had done a lot more research and figured out exactly why my sites weren’t making money. I ran the numbers (that I’ll show in the next section) and decided it was time for me to leave the space.

I described my site in detail on a Facebook group for buying websites and had someone reach out to me. I took the first offer I got, which was $2,500.

My  final Amazon Associates P&L

INSERT PICTURE OF AMAZON AFFILIATE P&L

All in, I lost more than $5,000 over a multi-year period on Amazon Associates affiliate program, even including a multi-thousand dollar “exit” to the websites. This isn’t a success story. $10K a day at 30 is about highlighting what works and doesn’t for me on the way to making $10,000 a day by the time I’m 30.

I hate “entrepreneurs” who show the flashy life on Instagram and don’t accurately show what life was like to get to that point. I hate the criticism of billionaires who “didn’t work hard” and “got lucky.”

Entrepreneurship sucks. It’s long, painful, and a lot of shit isn’t going to work for you. You’re going to lose money when you try different things. I lost money.

I want to give you the real picture.

Why you need to invest money to make Amazon Associates work

The first time, I incorrectly assumed that my problem was I simply did not do keyword research correctly. The second time, I figured out why that was wrong.

The short answer is this:

  1. You need significant traffic to make money on Amazon Associates.
  2. You need a ton of content to get significant traffic.
  3. A ton of content takes a ton of time or costs a ton of money.

Let me break down each of these points.

You need significant traffic to make money on Amazon Associates.

Let’s create a quick Excel that shows the math behind a website making $3,000 a month on Amazon Associates. For this example, we’ll assume a standard conversion rate (~25% from your website to Amazon, 10% of Amazon visitors end up purchasing). We’ll also assume your average product value is $50 and that you make a commission of 5% on that $50.

Here’s how that math shakes out:

INSERT PICTURE ON AMAZON AFFILIATE MARKETING

If you do a bottoms-up analysis where you build up from a $3,000/month income, you get to a number where you realize you need 48,000 visitors per month to make that much money.

Anyone who has ever built a website can tell you that ~50k visitors a month is a fuckload of traffic. Ezoic, a top advertising technology, considers your site valuable from an advertising perspective once you hit 10,000 visitors a month. This math is showing us that you need nearly 5X that amount to make $3,000 a month.

So we’ve established now that you need a lot of traffic to make $3,000 a month. Now let’s look at the “ton of content piece” behind getting a lot of traffic.

You need a ton of content to get significant traffic.

Before you bite my head off: yes, it is possible to get a lot of traffic with limited posts. You can do that with social traffic, paid traffic, and organic traffic if you are a bad-ass at SEO and link building.

I’m not a bad-ass at SEEO link building, so instead, I’ll just quote bad-asses at SEO.

Brian Dean from Backlinko is widely viewed as an SEO expert. In a recent post, he wrote: “I realized that it was pretty much impossible to grow a blog past a certain point with only 10-12 posts per year.”

Neil Patel is another SEO pro. He said: “My experience of working with 20 of the top 100 blogs showed that if we published 3 pieces of content each day (21 pieces a week), we could easily get our traffic to over a million visits a month over time.”

Again, you won’t see a ton of traffic without a ton of content.

A good rule of thumb is that you need one million words of content to get one million visitors for your website per year (83,000) per month. At that traffic number, you’ll make a couple grand per month.

But is the ROI worth it? For contextthe entire Harry Potter series is 1,084,170 words. 

Let’s dig into that ROI component now.

A ton of content takes a ton of time or costs a ton of money.

Earlier in the post, I talked about how you could get started with Amazon Associates with limited money. That’s true, but it means you need to write one million words yourself.

Assume it takes 1 hour to write a decent 1,000-word post. For context, this post is more than 3,000 words, but it’s taken close to five hours to write.

At 1 hour per 1,000 words, you will need to spend 1,000 hours writing. That’s nearly 3 hours a day, every day, for a year.

You could pay to save time writing.

As you can see in my numbers for attempt #2, I realized that the quantity of content was my issue. I started paying to have people write content for me to accelerate things.

But, exactly how much does it cost?

Online writers and writing services typically charge on a per-word basis. You could hire someone who is a horrible writer and doesn’t speak English well for roughly $0.10 per word.

However, you don’t get backlinks for poorly written content. Much safer to assume $0.15 per word.

But at 1,000,000 words, that is a $150,000 investment.

When I realized that, I decided it was time to sell my sites and permanently leave the Amazon Affiliate game.

If you wanted to, here is how you could make Amazon Associates work for you.

If you were deadset on Amazon Affiliate Marketing, you could make it work. Here’s how I would recommend doing it. However, keep in mind that I don’t recommend doing it at all!

#1: Buy an existing site from a reputable source

Starting a site from scratch takes time, brings the Google Sandbox into play, and requires a substantial investment of either time or money.

Save yourself that upfront investment by buying an existing site from Empire Flippers or Motion Invest. This purchase may run you $5,000-$50,000, but it will almost definitely be cheaper than starting from scratch

#2: Invest in content (at a fixed rate)

Here’s a trick: don’t pay for content at a per-word price. It adds up too quickly.

Instead, hire someone full time via UpWork or OnlineJobs.ph. Hiring freelancers is tough, but if you can find someone suitable, then you are golden.

Most freelancers are interested in full-time work. If you offer someone a guaranteed contract of $500 per month, and they write 50,000  words per month, you can get the same quality content but at 10X lower prices. However, it’s also 10X better for the freelancer because they have a full-time job!

I’ve done this multiple times and cannot recommend it enough from a win-win perspective.

#3: Prepare for Amazon to kill your site

I’m a Jeff Bezos fanboy and think Amazon is a phenomenal business. I know plenty of people who work there, and plenty of Wharton grads end up there.

I know how they think: the same professors trained us.

At some point, Amazon is going to kill their affiliate program. They’ve already cut their commission rates. The reality is that Amazon Associates isn’t going to be in their long term plans because they won’t need the program forever.

I know I said earlier that affiliate marketing is a low-cost way for Amazon to get millions of people saying positive things about them online. That’s still true, but at some point, Amazon won’t need that.

There are two different directions Amazon can go over the next few years.

Option #1: They grow so big they don’t need affiliates

At some size, Amazon just doesn’t need affiliates. Whether that’s today, or that’s at 99.99% market share, there is a point where affiliates are an unnecessary expense.

If Amazon is the best and only place to shop online, then why do they need affiliates? They are no other options consumers could consider buying from.

Option #2: They decline in size that they need the extra capital

All good things end. Just as IBM, or Sears or GE, all the “Amazons” of their day.

At some point, Amazon will go out of business. Bezos himself has predicted this will happen in the next 30 years. When Amazon starts declining, and they need the capital, cutting the Associates program is a great way to get another few percentage points of margin back and earn excess money.

Under either scenario, Amazon’s affiliates will be eliminated.

Do you want to put capital into a business that will be eliminated, without warning, and without your control?

I don’t, which is why I sold my sites and wrote this post. I invest my money differently.

How I invest otherwise

I want to build assets: real assets that I have 100% control over.

My fiancee and I put a lot of money into multi-family apartment buildings. We are mid 20’s, but we have 60+ tenants paying us each month. We could have 15+ tenants move out, and we’d still have enough rent coming in to cover expenses.

We also try to buy properties spread throughout the entirety of the country. If one region of the country has a decline in population due to job loss or similar, it’s okay because the other properties will prevent us from going down.

I have a consulting business that made me more than $150K, all on the side and all in my first year. It’s business income that’s stable. Better yet, I outsource most of it.

I have a detailed plan to start a business that will generate $50K a month within the first year.

I plan to buy more businesses.

These are businesses I can control 100%. These are businesses I don’t need to write a Harry Potter series worth of content for.

Should I invest in Amazon Associates?

At the start of this post, I mentioned how this would be the critical question that I hoped this post would answer. We’ve walked through a little about what Amazon Associates is, how the money flows, and why I don’t think the numbers make a lot of sense.

If you still want to invest in Amazon Associates, then my hat is off to you and good luck. At least you will be going into it with your eyes wide open, and you didn’t pay a “guru” $997 for a course about it.

Otherwise, I’d recommend looking into starting an actual business. Don’t focus on creating the next Uber or Airbnb.

Your goal to get into business is to figure out how to make $1. If you can figure out how to make $1, then it’s a lot easier to figure out how to make $10.

Then $100

Then $100,000

Then, retirement at age 30.

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