Why You Shouldn’t Do FULFILLED BY AMAZON (FBA) as an affiliate marketer

fulfilled by Amazon Amazon FBA it’s one
of those things it’s like super popular right now but I’m not interested in FBA
and I know quite a few other people aren’t either in this video we talked
about why maybe you shouldn’t get into FBA if you’re an affiliate marketer I
talked with my friend Rob Adkinson who is a successful niche site entrepreneur
and I am as well and actually we know quite a few people who don’t have any
interest in selling their own physical products we go into the pros and cons in
this video so let’s get to it right now hey what’s up Doug Huntington here I’m
sitting with Rob how’s it going today I’m doing awesome
today we’re gonna talk about why you shouldn’t do FBA that’s fulfilled by
Amazon or drop shipping now all right here’s the deal it could be a decent
option for some people but Rob and I are gonna tell you why we haven’t gotten
into it before we go any further I’m gonna define FBA and drop shipping so
drop shipping this definition by the way is from Shopify one of the sort of
leading drop shipping and ecommerce platforms out there so drop shipping is
a retail fulfillment method where a store doesn’t keep the products it sells
in stock instead when a store sells a product it purchases the item from a
third party and the third party ships it directly to the customer and as a result
the merchant never sees or handles the product the biggest difference between
drop shipping in the standard retail model is that the selling merchant
doesn’t stock or own inventory instead the merchant purchases it from the third
party usually a wholesale or manufacturer and then it fulfills the
orders so they end up not having to invest so much capital into the product
now FBA is sort of like a particular flavor of drop shipping where you
actually you know you do buy the products but then you ship it to Amazon
to do the fulfillment fulfilled by Amazon FBA S will refer to it here and
that’s what you’ll you know see across the web that’s sort of the idea and in
general you know one of the pros of this sort of model FBA or drop shipping /
affiliate marketing is a monetary one so you end up with higher margins because
you know you’re getting actual margins from like reselling a product
is getting a commission like an affiliate would it’s an interesting
model it’s very popular right now dropshipping got a huge mention in the
4-hour workweek which we talk about all the time and then FBA has been covered
over and over again over the last say four years or so now Rob some people ask
you about like moving from like affiliate marketing and then selling
your own products usually through FBA so can you kind of like explain the couple
steps involved in that and just you know what it would look like from a business
model perspective yeah so let’s say you started an affiliate website so your
content site reviewing I’m just gonna make a ballpoint pen so you’ve got all
these ballpoint pens you’re getting traffic to your blog and the way you’re
monetizing right now is you’re sending people the places like Amazon for five
or six percent commission you never touch the product or anything but that’s
how you make your money so you’re getting all this traffic and people tell
you okay well now that’s where you would like go source it from like China or
something you have it shipped to the US you know stored in Amazon’s
inventory and then it would be like a branded pin with your name on it and
then people would come to your affiliate site and instead of just directly
selling other people’s product now you have something to promote that’s your
own and with that being more in control not just being affiliate in that chain
you would get a higher cut of the profits cool so and yeah like that is
the big question right so you can get a higher margin so why would people like
you and I who will primarily focus on affiliate marketing why don’t we start
sourcing our own products and get higher margins so it seems like a no-brainer we
have sites we have traffic on those sites we know what the people are
searching for and we know what’s selling so Rob you don’t do any FBA
at this point in time right I have not and I’ve seriously considered it so I’ve
had sites with quite a lot of traffic that had products that would be
seemingly perfect to do exactly what you say and at the end of the day I think it
comes down to like where you spend your time where you’re kind of an all-star
where you have leverage in your business and for me doubling down on creating
more sites or increasing my rankings to improve my affiliate sales and drive up
that that lever for me was like so much easier to push
to increase then to take time out not do that learn how to do you know F be a
source the probably I have to learn all this other stuff
it’s more capital-intensive there’s possibly some form of customer support
so it’s just learning all these new things versus doubling down on something
you already know how to scale and you basically took you know most of my
answers to I mean the fact is it’s a completely different skill set right so
I have friends that have gotten into FBA so a couple of the pitfalls that they
had so because so many people got involved in FBA because the barrier to
entry was on the low end right you have to have capital upfront but once you
have like a small amount of capital to start with say fifteen hundred dollars
something like that you can you know start listing products and what happened
was a lot of people got into it and the people ended up competing with like
bigger companies that could sort of undercut the prices right so then you’re
stuck with inventory you’re not selling much because your prices are too high
because you have a bigger competitor who literally can like charge less and still
make money and then price you out of business essentially so that that was
one big aspect the other big issue that I observed with some of my friends was
the supply chain so let’s say they figured it out they have a premium
product the price isn’t the main competitive aspect so the issue there is
like sourcing the product again usually from China not always but when you’re
sourcing from China is cheaper so you make higher margins the the problem is
managing the supply chain because if you you know say you get air shipping it’s
way more expensive than if you get the ship with a freight liner like going
across the ocean that takes a while so what would happen is these you know FBA
businesses would run out of stock and it would take them like a month or two to
replenish the stock because you’re just managing the supply chain and inventory
it’s work to do so Rob do you know any friends that had you know FBA businesses
where they were running into trouble like that yeah definitely can relate to
they’re just focused on the FBA portion they were trying to get traffic from
actually doing Amazon searches but yes they ran into the same thing they
started getting some sales and they needed inventory and they were
behind and all sorts of just new problems that I don’t think the
affiliate SEO model has and you get paid less like we get paid less as affiliates
but I like it better yeah me too and you know the other part
is like the passive portion of it so yes you know for FBA you could hire a
business manager to take care of the supply chain stuff but generally you
have to understand operating procedures yourself before you can hire someone and
train them to do it not always you know sometimes you could find a business
manager to do that sort of stuff an Operations Manager but it’s not
necessarily easy to do so you’d want to hire someone who is competent and in
that way you either have to train them well and/or pay a lot of money for them
with the affiliate model typically it takes a little while it takes a lot of
work to you know get a site ranking earning but once it’s there usually it’s
fairly like secure so it takes longer to get there but once you’re up there it’s
harder for other people to displace you as well so just in general like it
sounds like you and I are just not interested in the business model too
much so yeah I want to tie it back to our thousand day principle conversation
I’ll link up if you haven’t seen that discussion is super interesting but part
of the thousand days I think is like learning the the skills and the craft
and and learning the pitfalls and stuff and I think like if we were to switch
Rob if we were to look at you know drop shipping or FBA
to integrate into our affiliate model we would have to start over at you know day
zero and learn from scratch so like do you agree with that a hundred percent
yeah so you’re okay maybe we gain a couple hundred days because we know some
internet marketing and stuff like that but essentially you have to start from
zero and that was kind of what I was getting at at that first point is I just
rather just ramp up where I am with my SEO business so I kind of made like I
have some notes here about this model I made up so relates perfectly to the
thousand days if you’re better than like 95 percent of people say in affiliate
marketing you can probably expect to make
comfortable money right so at that point maybe you decide I want to go FBA but
you have to start again and then go up to 95% if you go from like 95% master of
SEO to like 99 then you’re gonna make great money if you go from 99
to ninety-nine point nine that’s where things get really really crazy and if
money is your driver and that kind of thing that’s great go for it you want to
do FBA interest you now we’re having a whole different discussion that was a
great point by the way really well said in the same thing happens with like
different skills right like if you can stack the affiliate SEO model with FBA
and you enjoy both like that’s a great set of skills to be ninety-five percent
proficient in like me project management and some consulting background and now I
have affiliate SEO really interesting combination very rare and like it brings
me new opportunities I never would have thought of but you know I probably
wouldn’t have you know have like ten years project management experience like
just to get the certification you have to have like multi thousand number of
hours to even like qualify for it so like to put it all together like I
literally had to start SEO at zero I knew nothing but I put in the thousand
days or whatever if you have the time you could be doing something interesting
but I think the way you mentioned it Rob just you have skills in this area and
you’re gonna refine those skills you’re interested in it you’re already good at
it and why not like double down on the areas where you can like really excel
right and maybe maybe I’m not saying this is the right thing but you find a
partner who is the 99.9% of FBA combine them with your affiliate that could
explode now partnerships are a whole different thing but you know
specialization brick coming together huge yes good point good point okay so I
think for me at this point I’m still not interested in FBA it still it sounds
like a very crowded area how about you Rob still there’s now just keep doing my
SEO thing it’s boring but it works yeah like you get creative when there’s a
boring stuff happening so alright cool we want to know what you think about FBA
let us know in the comments if you’ve combined like an affiliate model with
FBA and how it turned out additionally like if you’re just focusing on an FBA
interested to hear about that I think you know obviously it’s a viable
business model and people are doing great at it just curious like if you’re
just getting started like where are you at with your FBA
business and let us know love to hear about it thanks for I appreciate it
thanks for having me it’s so wide this is such a big angle it makes my head
look big or my body looks small I’m not sure but if it’s your first time on the
channel check out some of the other videos I talked primarily about Amazon
affiliate marketing and some project management throwing some productivity
too so if you like what you see please consider subscribing thanks you

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