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How Does Amazon Associates Work? Business Model Explained

By Jamie Toyne

Amazon Associates is an effective, straightforward program that allows you to easily monetize a website or blog. A simple system that lets you earn money every time someone clicks on the Amazon affiliate link that you place on your site. If you are a site owner, entrepreneur or looking for your next side-hustle, you could stand to earn some cash from Amazon Associates. Who knows? You might even be able to build up a network of sites to create your own Amazon Associates empire.

Intrigued? You should be. Getting started with Amazon Associates isn’t difficult. But it comes with pros and cons. Read on for a run down of how the model works, the latest on commissions, and everything else you should consider before turning Associates.

What is Amazon Associates?

So what exactly is Amazon Associates and how does it work? Amazon Associates is the name of Amazon’s affiliate program. You might have already heard of affiliate marketing or affiliate links. This is a commission-based style of marketing where a third party places a link to a product on their website, and if someone clicks this link and buys the product, this third party earns a commission. And that is exactly what Amazon does.

This free program allows anyone with a blog or website, after being approved for the program, to link (or promote) Amazon products on their site. When someone clicks the link and ends up buying the product, Amazon pays the site owner a referral fee, a percentage of the product price. This is particularly common for content sites or influencer blogs, where people create product reviews or recommendations, including the links within this content.

New Commission Structure

So you’re still following, and so far so good. But there has been some recent bad news for affiliate site owners, as well as anyone on the market to buy, sell or start an Amazon Associates site. Amazon recently vastly cut their commission rates on April 21 2020 — some over 50%, although the cuts vary for different product categories. These reductions are as follows: Home, Home Improvement, Furniture, Lawn & Garden, Pet and Pantry products have seen a drop in commissions from 8% to 3%. Grocery product commissions have dropped from 5% to 1%. Health and personal care has dropped from 4.5% to just 1%.

The company did not comment on or confirm any specific reason for these cuts. It is not clear whether there is any relation to the Coronavirus crisis which has caused changes to the demand of different products and different ways of working. It seems the company has taken a decision to adapt to the market in the best way for them. But regardless of why, the cuts are certainly a blow for many site owners, influencers and content creators that rely on revenue streams from Amazon affiliate links.

The latest Amazon commission structure looks like this:

Source: affiliate-program.amazon.com

Is it still worth creating an Amazon Affiliate site?

So with these commission cuts, is it still worth using the Amazon Associates program? While the commission reductions are a blow, Amazon Associates can still be a good choice for many. Some niches will be less affected than others for example, depending on the types of products they promote. Sites with high levels of targeted traffic may still be able to make significant earnings, bridging the gap with more clicks. And sites that do not rely on Amazon Associates as their sole income stream can still enjoy the benefits of the program alongside other monetization methods.

Diversifying your site to work with a variety of affiliate programs can be a good idea to help you make up for the commission reduction. It will also help you future-proof your business, so you don’t have all your eggs in one basket should something similar happen again. Amazon Associates lists a wide range of products at a wide range of price points. If you are able to break into more highly-priced products, you may be able to increase your commissions this way. Amazon continues to be one of the most trusted and highly-converting affiliate programs and so it is still worth considering!

The steps to becoming an Amazon Associate

So still want to try it out? Let’s dig into how you can get started.

  1. Get a website – To join the Amazon Associates program you must have an active website, blog, YouTube channel or app. You can either start one from scratch, use an existing site or buy one.
  2. Create an account – You can do this on the Amazon Associates site by clicking ‘Join Now’. You can log in with your Amazon account details or create a new account.
  3. Build out your profile – This involves filling in details and giving information about your site. So make sure you have the following information to hand:
    Name, address, phone number
    The address of your website/ blog/ YouTube Channel/ App
    Your new preferred store ID
    The types of products your site will target
    The different ways you drive traffic to your site
    How you build links
    Monthly visitors to the site
    You can choose to enter your payment and tax details (after your identity verification)
  4. Identity verification – Here you will be asked to enter your phone number, press the ‘Call Me Now’ button and receive a call. You will be asked to enter a four digit code, and once done, your account should be approved. Approval lasts for 180 days in which time you should make at least one sale or your account will be closed.

How to create affiliate links on Amazon Associates

So you have created your account, success! Now you will be able to access the back office and start searching for products to promote and begin generating links for your site. This is a fairly simple process and there are three ways to do this.

  1. Quick Links: Search for Product by keyword- Once on the Amazon Associates home page, you will see an option to ‘Search for Products with Quick Links’. This is the most direct way to find products, where you can search for products by a specific keyword.
  2. Browse for Product – If you are not 100% sure on the products you want to promote, you might prefer browsing products. This search method is also accessed through the Amazon Associates home page, allowing you to view products by category such as Books, Baby Products, Home Improvement etc.
  3. Search on Amazon.com for the ASIN number – This is actually an even easier way to search for products. Just head to Amazon.com and search for products like you would as a shopper. Once you find one you’d like to promote, scroll down until you find its unique Amazon Standard Identification Number (ASIN Number), and copy and paste this into the Amazon Associates ‘Quick Links: Search for Product’ search bar.

So you have found a product you would like to promote. Now just simply click the button ‘Get Link’. You will be able to customize your link by choosing whether to add it with text, image, both or widget and adjusting how it will look. You can preview the link, and once you are happy, simply copy the link as a standard link, shortlink or HTML copy and add it to your website.

Can we see some Amazon Associate sites in action?

Ok, so we know what Amazon affiliate links are and how to create them. But how about seeing some in action? Let’s look at a few examples of sites that successfully use Amazon Associates to get a better idea of how they work and look. Also to see the different types of businesses that can use this model.

ThisIsWhyImBroke.com

that's why I'm broke

This site is super successful, targeting an enormous range of gadgets, oddities and gifts that they link through Amazon Associates. See the clear ‘Check it Out’ button under each product? This is the affiliate link that takes users to the Amazon web page. They also work with other affiliate programs, but Amazon is one of their biggest revenue streams.

ThisIsWhyImBroke.com lists products by price or category, along with a description and link. But they also create useful content and blog posts to generate more interest and traffic and target specific keywords. They then add Amazon Associate links within these posts which helps build up trust with the buyer and boost clicks and sales.

HomeGrounds.co

 

homeground

HomeGrounds.co is another successful Amazon Associates site. It is for coffee lovers and coffee enthusiasts and teaches people all about brewing the best coffee possible at home. One thing they do well is that they have really cornered their niche. But the secret to their success is that they publish extremely high-quality content that provides genuine value to their customers and solves their problems. The founder himself said they aim to publish better content than any competitor and content that aligns with search intent.

What are the benefits of Amazon Associates?

So, let’s have a look at the pros of having an Amazon affiliate site using Amazon Associates.

People trust Amazon

Amazon is so well established, and such an enormous authority site, people trust buying from them. Not only does that mean people will be happy buying through a link that takes them to a site they trust, it may also make them view your site as more trustworthy.

Great for beginners

It is super easy and straightforward to get started with Amazon Associates. Therefore if you are looking to get into online business, but don’t yet have the skills or experience to take on a high-risk or complex business model, this can be a good way to wet your toes. Pretty much all sites get approved for this and it doesn’t involve high levels of skill or involvement to get started. A harder part can be driving traffic to your site and improving your SEO and keyword research (we will talk more about this later).

Passive business model

If you like the idea of having some extra income passively trickling in, or are looking for a business model or side hustle that will not take up too much time and effort, this could be a good option. After you put in the work to join the program, find your products and links and put them on your site, you can essentially sit back and watch the income roll in. Obviously if you have a content site you may need to keep adding or updating content, but once a link is on there, there is no limit to how long or how much you can earn from it. This passive earning model is similar to the Google Adsense model, so if a passive income sounds up your street you may also want to check it out!

High conversion rates

So why pick Amazon over other affiliate programs, some of which offer higher commissions? While there are other affiliate programs that can be worth checking out, none convert website traffic into actual sales as often as Amazon.

You don’t have to sell the product you are listing

Another great thing about using the Amazon Associates model is that if someone clicks one of your affiliate links but ends up buying a different product, you still earn a commision. Your Amazon affiliate link uses a cookie to track the movements of anyone that clicks on your link for 24 hours. If they end up making a purchase from Amazon within those 24 hours, you will still earn a referral fee. And they could even end up buying something much more expensive, earning you even more commission than you hoped. Some other affiliate programs have an even longer cookie window, but this is still a great benefit.

Amazon does split testing on sales

Amazon uses something called split testing or A/B testing to optimise their websites to get more conversions and sales. This involves comprehensive analysis of buyer behaviors to create the most effective tactics. As an Amazon Associate, you will benefit from this too!

Physical products are easier to sell

Amazon mostly sells physical products and these are generally the easiest kind of product to market. Informational products can often need super specific, targeted marketing to make a sale. When you find people that are already looking for a specific physical product, it can be a lot easier to convert.

You may be able to upgrade into an FBA site

When you use Amazon Associates, you are able to track which of your listed products are selling best through your website. If you have a particular product that works really well with your niche, you may be able to turn your affiliate site into a Fulfillment by Amazon (FBA) model. Read more about this and how to do it further down.

And how about the negatives?

So there are a lot of positives, but what about the other side? Make sure to consider these downsides before deciding if an Amazon Associates business model is for you.

Lower commissions than other affiliate programs

Amazon typically offers lower commissions than many other affiliate programs. ClickBank for example, an affiliate market for digital information and software, offers up to 80% commission for certain products and stock products worth several hundred dollars. CJ Affiliate also lists many branded products with high commission rates at around 10%.

Commission cuts

As well as generally having lower commissions than many competitors, the recent further reductions to referral rates makes this an even bigger downside. As there is no way to predict when companies will make changes like this, it is always a good to monetise sites in a variety of ways. That might be through various affiliate programs or with various monetisation methods. This way if one income stream is affected, you will have other ones to fall back on.

You need traffic

To make a significant income through Amazon Associates you need to have a lot of traffic. AND that traffic needs to be highly targeted and ready to buy. This means you need the people that visit your site to be interested in the products you list and likely to actually click and buy them. How can you ensure that? You can do this by targeting and ranking for keywords like ‘best product X’ or ‘buy product X’ as these are the types of words people will search when they are looking to buy.

Keyword research

As we just discussed, keywords matter. And so to achieve the necessary traffic, you will need to become good at keyword research. It is important to understand how SEO works, which keywords to target, and how to rank for them.

Getting banned

One thing to note is that there is always a risk of having your Amazon Associates account banned. This can happen if you don’t follow their Terms of Service (ToS), such as forgetting to identify yourself as an associate. Make sure you fully understand these terms as if your account gets banned you may also forgo any commissions you have made that you have not yet been paid.

Let’s talk about buying and selling Amazon affiliate sites

Ok so we have gone over how the Amazon affiliate business model works, as well as the pros and cons. But what if you are thinking of buying an Amazon affiliate site? Or selling yours? What are some important things to consider?

Selling your Amazon Associates site

Selling an Amazon Associates site is usually fairly straightforward and in general they sell fast. They also often for their list price rather than being negotiated down which is great. With the recent commission cuts however, it may be trickier to shift Amazon affiliate-based sites. It is a better time for buyers to pick them up cheap.

One of the reasons that Amazon Associates businesses are simpler to sell is that they are straightforward to manage and provide a passive income.They are very newbie-friendly, so it is easier to find a suitable buyer. This type of site is usually quite easy to migrate to a new owner as you will just need to associate the new owner’s account to the affiliate links and you’re good to go.

If you are looking to sell, it is best if you can prove at least a year of strong earnings. If you have the data to show that your revenue has been consistent, buyers will be more confident that the site can overcome any Google algorithm changes. If you have made a loss in income due to the reductions in commissions it might be a good idea to diversify your income streams before selling. This way buyers can still feel confident that the purchase will be beneficial.

Buying an Amazon Associates site

If you are new to online business, an Amazon Associates site can be an easy, beginner-friendly place to start. This business model is quite passive and low maintenance. Although the recent reductions to the commissions across various product sectors may mean a reduction in earning potential, there may still be opportunities to be had with affiliate sites. In fact, if you are open to a challenge, it may even be a good time to buy one at a reduced cost, and then work to diversify the affiliate programs or revenue streams.

If you are thinking of buying an Amazon Associates site, it is important to consider the fact you will need very targeted traffic. If the main traffic source to your site will be organic traffic that you gain through Search Engine Optimisation (SEO), you will need to clue up about keywords. You will need to make sure you are targeting ‘buyer keywords’— these will attract buyers at the end of the buyer cycle, aka people who are ready to buy.

Finally, any Amazon affiliate site buyer should try and make sure they promote a range of products. If you can list a mix of lower-end and higher-end products you should be able to boost your income.

Who should buy an Amazon Associates site?

Wandering if you are a good fit to buy an Amazon Associates website? The best-suited buyers are likely to be the following:
People that are seeking to make a passive income

People that are looking for a website that is easy to manage and doesn’t involve specific skills or a lot of time
Beginners to the online business world

Things to consider when running or growing an Amazon Affiliate Business

SEO Explained

As mentioned above, one of the key things to consider when running or purchasing an Amazon affiliate business is SEO and keyword research. Once you decide on which keywords you will target, you will need to populate your site and content with these words, so that your site will rank for them on Google.

As we discussed, it is also extremely important to target and rank for ‘buyer keywords’. This is to attract targeted traffic of people at the end of the buying cycle. Essentially, buyer keywords are search terms people type in when they are ready to buy. Let’s see an example of a buyer keyword versus a non-buyer-keyword.

Let’s take the standard keyword ‘travel backpack’ for example. This could attract people looking to buy a travel backpack, sure, but it could also include people researching or just dreaming about their next holiday. Buyer keywords would instead be things like ‘Where to buy travel backpack’, Travel backpack price’, ‘Best travel backpack’ or even ‘Patagonia travel backpack vs Osprey travel backpack’. You can see how these terms are a lot more specific and relate more to the buying cycle.

If you plan on taking on the challenge of keywords, some good tools to start with conducting your research are:

  • Ahrefs
  • SEM Rush
  • Moz Keyword Explorer

Other traffic methods

Although it is important to work on your organic traffic, you may also consider diversifying your traffic sources to give your traffic a boost. If so, you might consider using paid traffic. If you choose to do this it is important you keep check of your income versus your outgoings, but it can be a smart way to get more people on your site. And therefore more potential link clickers.

There are various different paid traffic types you could use. Social Media Advertising, such as Facebook and Twitter ads can be an effective way to do this and they can even help you with your SEO. You could also consider Pay per Click (PPC) advertising like Google Adwords or banner ads.

Growing your Amazon affiliate business

If you are considering ways to grow your Amazon Associates business and increase revenue, then one of the top ways is by owning more sites. If you own more than one affiliate site, you may be able to target a variety of different niches. Even better, populate all your sites with expertly-optimised, high-quality content and develop each site into an authority site. The earning potential for an authority site is high, so owning several is certainly a way to scale your business and revenue.

Another way you might be able to grow your business, is to create an email list. This will help you get more repeat traffic and help convince people to revisit your website. This will hopefully turn into repeat Amazon sales. Once you have built out your list of people, make sure to send out super useful content that really brings them value, such as user guides. You can also make the most of holidays and special events to promote things like sales on the products you promote. Make sure however not to include any affiliate links in emails which is against Amazon’s affiliate rules. As these tactics take time and effort, they are best if you are hoping to grow your niche website into an authority site. If so, they are definitely worth it and can massively up your revenue.

Test out Amazon FBA potential

If you have considered getting involved with a Fulfilment by Amazon (FBA) business, an Amazon affiliate site may work as one possible route into this. The FBA business model essential works with you providing and selling a product, while Amazon stores and ships it for you. They charge a fee, but in return you also benefit from their excellent delivery times and customer service.

If you start selling the product you’d like to turn into your FBA business as an Amazon Associate product first, you can gather real data about the demand for the product. And if you manage to turn it into your star seller, then you have a great indicator that your FBA business will be a success. As well as a stream of ready-targeted traffic in the right niche.

What about other affiliate programs?

So we have delved into the Amazon Associates program and how it all works. But what about alternative affiliate programs? After Amazon has cut their commissions many people may be looking to migrate their affiliate links over to other affiliate markets, or expand their links and branch out for more variety. If you want to have a look at some alternatives, you might consider the following:

  • ClickBank – If you are looking to promote software products or digital information products ClickBank could be a good alternative. It is easy to use and commission rates are set directly by vendors and can be high.
  • Rakuten – Outside of the tech world, you might consider Rakuten offering its own commission baselines.
  • CJ Affiliate – This affiliate platform includes a wide range of well known products from major brands with a range of commission rates set by the vendors.

Final thoughts…

So there you have the ins and outs of the Amazon Associates program and the Amazon affiliate business model. Whether you are a newbie thinking of getting involved in the online business world, whether you have your sights set on an affiliate empire, or whether you are on your way to building your own FBA business, the Amazon Associates program could be just what you need.

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