Affiliate Marketing vs Dropshipping vs Amazon FBA : Which Is Best ?

Ecommerce is booming, with global sales projected to hit $5.4 trillion in 2022. As more people shop online, opportunities are available for solo entrepreneurs looking to build an online business. 

Three popular ecommerce models are affiliate marketing, dropshipping, and Amazon’s Fulfilled by Amazon (FBA) program.

Affiliate Marketing vs Dropshipping vs Amazon FBA is the most common questions asked by many new entrepreneurs.

 But which is best for you? Here’s an in-depth look at the pros and cons of each.

Affiliate Marketing

Affiliate marketing is a business model where you earn commissions promoting other companies’ products. 

As an affiliate, you place affiliate links on your website, social media, YouTube, or other channels. 

When someone clicks your link and buys the product, you get a percentage of the sale.

Some key benefits of affiliate marketing:

• Low startup costs. You don’t need to create or stock inventory.
• Recurring revenue. You earn commissions on repeat purchases.
• Global reach. You can promote products worldwide.
• Flexible model. Work full-time or part-time.
• Diverse opportunities. Promote physical, digital, or service products.
• Performance-based. You only get paid for results.

However, there are some downsides to consider:

• Reliant on others. If a merchant goes out of business, you lose those commissions.
• Commission rates vary. Some offers pay 5-10%, some up to 75%.
• Need traffic. It takes work to build an audience and get clicks/sales.

Some top affiliate marketing niches include software, online courses, web hosting, VPNs, and finance products. 

Top affiliate programs include Amazon Associates, ClickBank, ShareASale, CJ Affiliate, and more. 

With hard work, six-figure incomes are possible in affiliate marketing.

Dropshipping

With dropshipping, you set up an online store but don’t keep inventory. 

When a customer orders a product, you purchase it from a third party and have it shipped directly to the customer. 

Read More: How to Start Dropshipping

This lets you sell products without upfront inventory costs.

Benefits of dropshipping include:

• Low startup costs. You can launch with limited funds.
• Easy scalability. You can add new products quickly.
• Less risk. Don’t pay for products until they sell.
• Automation potential. Integrate with suppliers like Alidropship, Wholesale2b.
• Flexible location. Manage the business from anywhere.

However, dropshipping also comes with some challenges:

• Low margins. After supplier & shipping costs, profits are slim.
• Inventory issues. Suppliers may be out of stock unexpectedly.
• Shipping delays. Customers must wait longer to receive orders.
• Stiff competition. Lots of people dropship identical items.
• Supplier errors. No quality control working with third parties.

Popular dropshipping niches include home decor, apparel, beauty products, pet supplies, and phone accessories. 

Top platforms like Shopify and Alidropship (WordPress) make it easy to set up a dropshipping store. 

Success comes down to finding a quality supplier, great products, and marketing effectively.

Amazon FBA

Amazon FBA (Fulfilment by Amazon) allows you to sell products directly on Amazon while leveraging their storage and distribution network. 

As an Amazon seller, you ship your inventory in bulk to Amazon’s warehouses.

 When an order comes in, Amazon picks, packs and ships it for you.

Key benefits of Amazon FBA include:

• Massive reach. Over 200 million customers on Amazon.
• Prime eligibility. Products can qualify for Prime’s free 2-day shipping.
• Fulfilment handled. Amazon picks, packs & ships your orders.
• Customer service. Amazon handles returns and customer service.
• Credibility. Gain trust selling under the Amazon brand.

However, Amazon FBA also has some downsides to consider:

• High competition. Lots of sellers offer similar products.
• Amazon fees. Various fees eat into your profits significantly.
• Account restrictions. Amazon can suspend your account without notice.
• Limited brand control. Amazon controls the buyer experience.
• Long-term risks. Amazon may ultimately copy your best products.

Top products to sell on Amazon FBA include private label items, books, toys, kitchenware, and electronics accessories. 

While lucrative, Amazon FBA requires greater upfront investment and risks compared to affiliate marketing and dropshipping. 

Patience is needed to gain traction.

Now we have covered the basics of each method, let’s jump to the comparison section where we can understand much more in details.

Comparison – Affiliate Marketing vs Dropshipping vs Amazon FBA

Factor	Affiliate marketing	Dropshipping	Amazon FBA
Startup costs	Low	Medium	High
Inventory	No	Yes	Yes
Fulfillment	No	Yes	Yes
Profit margins	Lower	Medium	Higher
Scalability	More difficult	Easier	Easier
Control	More control	Less control	Less control

Which is better affiliate marketing or dropshipping?

Both business models have pros and cons. Affiliate marketing offers higher earning potential long-term but requires significant traffic to profit. 

Dropshipping is easier to start yet has slim profit margins and stiff competition.

Is Amazon FBA more profitable than dropshipping?

Overall, dedicated Amazon FBA sellers generate higher revenues and profits compared to most dropshipping businesses. 

However, Amazon FBA requires greater upfront inventory investment and risks selling on Amazon’s platform.

What is the difference between Amazon FBA and affiliate marketing?

Amazon FBA is direct selling of your own products on Amazon. Affiliate marketing is earning commissions promoting other companies’ products online. 

FBA means buying inventory upfront while affiliate marketing has no inventory overhead.

What is more profitable than dropshipping?

Affiliate marketing and Amazon FBA both offer more profit potential than most dropshipping businesses. However, dropshipping is easier to start than either model. 

The tradeoff is lower profit margins due to supplier costs.

Is affiliate marketing a get rich quick scheme?

No, affiliate marketing requires significant effort over an extended period to build an audience and generate commissions. 

While top affiliates earn 6 or 7 figures, it takes 1-2 years of dedication for most people to turn a sizable, consistent profit.

Who pays more for affiliate marketing – Amazon or third party programs?

Amazon Associates tends to pay lower commissions on average compared to dedicated third-party affiliate programs. However, Amazon drives massive traffic volume, so remaining competitive is worthwhile. 

Combining Amazon with other programs maximises potential earnings.

Is it better to sell Amazon FBA or affiliate products?

Selling your own products via Amazon FBA is more profitable but requires greater startup investment and risks. 

Affiliate marketing earnings are commission-based but you don’t need to create or inventory products upfront. FBA rewards those willing to scale their inventory.

What pays most on Amazon affiliates – physical or digital products?

Physical products generally pay higher commissions from Amazon Associates. 

Digital products like ebooks often pay 15% or less, while popular physical products can pay upwards of 10% on qualifying purchases.

Does Amazon affiliate pay well for beginners?

Amazon affiliate earnings will be modest when starting out. Most beginners earn $100-$500 monthly. 

But with time and effort optimizing promotions and investing in referral traffic, 4-figure monthly commissions are attainable.

Can you become an Amazon FBA millionaire?

Yes, sellers who build large-scale brands selling their own products on Amazon FBA can generate over $1 million in annual revenue and profits. 

But it takes substantial capital, inventory, systems, and staff to reach those heights of success selling on Amazon.

How much can you make per month on Amazon FBA?

On average most Amazon FBA sellers generate between $1,000-$3,000 in monthly profits when getting started. 

With greater scale and optimization, monthly profits of $10,000+ are possible. But reaching higher profit levels takes significant inventory volumes and funding.

Is Amazon FBA still worth it in 2023?

Yes, Amazon FBA remains a lucrative model despite increased competition. With over 200 million customers on Amazon, the platform provides unparalleled reach. 

FBA simplifies the fulfilment process so sellers can scale. Just focus on finding high-demand niche products.

What are the 3 main types of affiliate marketing?

The 3 core affiliate marketing models are pay-per-sale, pay-per-lead, and cost-per-acquisition. 

Pay-per-sale pays a commission when shoppers buy based on your referral. 

Pay-per-lead pays when visitors opt-in via forms. 

Cost-per-acquisition involves negotiated payouts for conversions.

Does affiliate marketing pay daily?

Most affiliate programs pay out monthly, although top networks like Amazon and Commission Junction pay twice per month. 

Some offer weekly affiliate payments once you meet monthly minimum thresholds. Pay-per-lead/call programs often pay daily when activity thresholds are met.

Is affiliate marketing still profitable in 2023?

Yes, affiliate marketing remains highly profitable going into 2023, especially for niches like finance, software, ecommerce, and digital products. 

Key advantages like low overhead and recurring revenue continue driving growth for top affiliate marketers each year.

Is Amazon FBA good for beginners without experience?

Yes, Amazon FBA provides an excellent starting point for ecommerce beginners. Amazon’s platform and fulfilment resources make it easier to launch compared to independent ecommerce stores. 

Focus on finding a profitable niche and scaling up volume to maximize success.

Is selling on Amazon FBA free?

No, Amazon charges fees for selling, fulfilment, storage, advertising, and more. While fees vary by product category, plan for about 30% of sales going towards Amazon commissions, fulfilment costs, and other expenses required to sell on their marketplace.

Is Amazon FBA worth it for a beginner in 2023?

Yes, leveraging Fulfilment by Amazon remains a smart play for ecommerce beginners despite rising competition. Amazon’s platform and Prime reach are still unmatched. 

Focus on finding a niche and scaling up promising products using Amazon’s tools and fulfilment. Just be prepared for the costs and work involved.

Conclusion

In summary, affiliate marketing vs dropshipping vs Amazon FBA can all offer lucrative ecommerce opportunities. But each model has pros and cons to weigh given your skills, experience, and financial position. 

There is no one-size-fits-all best choice. Opportunity exists across all three models in 2023. Just focus on executing well for your chosen approach.

FAQs

1. What are the main risks with Amazon FBA?

The main risks with Amazon FBA include: account suspension, buy box competition from other sellers, Amazon copying your bestselling products, high fees eating into profits, and sudden changes to Amazon’s policies.

2. How much does it cost to start dropshipping?

Dropshipping can be started very cheaply, even with just a few hundred dollars. Main costs are web hosting, Shopify subscription, initial inventory purchases, and marketing spend. Startup costs can range from $300-$1000+ depending on the size and scope of your store.

3. What social media platforms work best for affiliate marketing?

YouTube, Instagram, Pinterest, and Facebook tend to work best for affiliate promotions. Each platform provides ways to integrate affiliate links and drive referral traffic. TikTok is also gaining traction for affiliates promoting products.

4. How long does it take to make money from Amazon FBA?

Most Amazon sellers don’t turn a profit for 6-12 months with FBA. It takes time to source products, create listings, ship inventory to Amazon, and accumulate reviews before sales pick up momentum. Patience and ample startup capital are required.

5. Can you do affiliate marketing without a website?

While having your own website makes things easier, you can do affiliate marketing without one. Options include directly placing affiliate links on social media, creating YouTube videos, building an email list to promote to, and joining affiliate programs that don’t require a website.