Today’s post I get into the weeds of how to analyze an affiliate site you either own or are considering buying to convert to an Amazon FBA model.
Big Disclaimer – I have not fully verified this model… I have one successful win under my belt with this strategy and another business which is struggling a little with this conversion. So although I have successfully done this once and watched others do it there is risk(like all business)!
Basic Strategy – What is the heck am I talking about?
This strategy is the basic strategy I followed to build and sell an Amazon Affiliate Site and Amazon (Fulfilled By Amazon / Private Label Product) business in 8 months with a 530% return and made $334k including sales price and net earnings. See the full case study here – how to sell Amazon FBA business.
- Step 1 – Build or buy an affiliate site that is generating sales of a product you believe you can source and private label yoruself
- Step 2 – Start an Amazon FBA business leveraging your affiliate website to drive traffic to your sales page.
What if you own an affiliate site and are considering using it to build an FBA Business? Although a lot of the details in this post gets talked about as if you are looking to buy a website. If you own an affiliate site and are considering following this approach the same analysis below is valid to estimate the potential opportunity.
What I Will Share in This Post:
- How to analyze the potential of an affiliate site for an FBA business
- A – 10 Point Checklist Weighted Average Matrix to evaluate if the site could work
- B – How to get and analyze the data to estimate potential sales driven by affiliate site
- C – Assumptions to use to based on my experience to gauge the impact Amazon organic sales will have
- Run the numbers (what is the expected net profit for the FBA business?)
- Spreadsheet I use to do this analysis – Free Download (Completed for One fake Site)
- A clever/slight twist on the Affiliate to FBA conversion model
ONE – How to analyze the potential of an affiliate site for an FBA business
A – 10 Point Checklist and Weighted Average Matrix To Evaluate Multiple Opportunities
Whether you own the affiliate site or are looking to buy one here are 10 key questions including their weighting in order of importance(from my perspective) to help evaluate the potential opportunity.
- Product can be easily sourced
- Not a restricted product (weapon, ecig, liquor, uranium)
- Similar Private Label Product Selling on Amazon
- Website Focused on a specific product
- Price point of product $20min to $40+ ideal
- Target $3k/month minimum amazon associate income
- Product is small/light (not oversized & cheaper shipping)
- Traffic Growing
- Industry Growing (easy to check with Google Trends)
- Backlink Profile & Risk
B – How to get and analyze the data to estimate sales
In order to determine the size of an opportunity, there is some critical data that is needed.
The key question we are trying to answer with this step in the process is saying…
“How many sales of a similar product to the one we could source does this website drive per month?”
This is a key piece of the equation when working on the next step.
So here are the detailed step-step instructions.
- Get the data – Login to Amazon associates account, go to reports, click on download reports, select max relevant date range and all associate tags attached to one website, download report
- Slice the data up using some excel tricks – Open the spreadsheet in Excel, sort all the orders by the date, create a pivot table with (filter on for relevant categories, row label = names, values = sum of items shipped). This pivot table will now show you how much of every product the site has sold. The next step is to copy that pivot table into a new tab and paste it as text then filter on the quantity so you can see the number of each unit that has been shipped starting with the most.
- Group the data based on the type of product your could replace – Based on looking at this table make some assumptions on the number of a similar product
Simplified Example – Download the template at the bottom of this post
The result for this step is that we can say in our fake example that our website sells around 500 3D Printing Pens in the given time period (for the purposes of this example assume 1 month)
C – Assumptions to use to based on my experience
Back when I first launched my affiliate site to FBA case study I shared several assumptions I made well before I knew if they would be true. Some held and some didn’t, however based on a very small sample size here are the assumptions I am using to evaluate a sites potential…
TWO – Run the Numbers – What is The Potential Profit?
For this section we just punch the numbers we have collected into the summary tab on the spreadsheet and it provides a very rough approximation of what kind of volume and net profit the business is going to do.
YES – I know this is simplistic and there are many ways to get into more detail (which I do in the template) but when evaluating any potential opportunity this is great way to start!
So after this analysis a Printing Pen (no I didn’t check if any of these numbers were reasonable) would be able to generate an additional $4k/month net profit if the little affiliate site added an FBA arm to it.
THREE – Spreadsheet I use to do this analysis – Free Download (Completed for One Site)
To get the same template I used to do my analysis on this “fake” site for the post or many other potential acquisitions simply click on the link below…
FOUR – What About Buying Both an FBA Business and Complimentary Affiliate Website
Slight Twist – Eric from DigitalStrats made the interesting suggestion that flipping the model would deal with a few of the downsides of my suggested model… meaning buy an FBA business and then add on acquiring Amazon Affiliate sites in the space. This would result in a much faster return on the investment since you would see the increase in earnings immediately. There are 3 main downsides to this model I currently see…
- The time until you realize your return is higher… as soon as you point a related affiliate site at your FBA business you will see the benefit.
- If you can acquire both your probability of success for the overall investment goes up vs acquiring just one. This is mainly due to there being fewer unknowns that could derail the business.
- Total investment required would be more substantial
- The ability to find complimentary affiliate sites and FBA sites all willing to sell is tricky
- The return on your investment is lower than if you completely added the FBA side potentially
I hope me sharing this method and spreadsheet for quickly evaluating the potential is helpful to some of you. Although one of my recent migrations is not going as planned I still strongly believe in this model and am looking forward to continuing to
If you are doing anything cool in this space please let me know I always like connecting and learning.