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Building Online Revenue with Affiliate Programs

Sep 11, 2010
by Kevin Zimmerman

"Do you want to make more money?" queried a certain line of infomercials in the 1990s. "Sure, we all do!" The phrase captures a basic tenet of capitalism, after all. But it also applies to any business or individual looking to make a financial splash as an affiliate of another company. Many people hearing the word "affiliate," may think of their local NBC or Fox TV station, which are indeed affiliates of their parent networks, carrying some or all of the programming line-up of the network, but owned by a company other than the owner of the network itself.

On the Internet, affiliate marketing programs are typically centered around a business that rewards qualified affiliates for each visitor or customer brought about by the affiliate's marketing efforts. In other words, using one website to drive traffic to another. In exchange for the increased traffic/business, the owner/operator of the affiliate program rewards its affiliates with cash or gifts. That's where the, "Do you want to make more money," part of the equation comes into play.

One of the more popular such programs is Amazon.com's "Amazon Associates" initiative (https://affiliate-program.amazon.com). The program essentially boils down to advertising Amazon products, complete with embedded links, on one's own website. When visitors to the individual's website click through to Amazon and make a purchase, the individual can receive up to 15 percent of the final sale. Amazon reportedly derives about 40 percent of its sales from Amazon Associates and third-party sellers who sell products on Amazon. The company claims that it has over 900,000 members in its affiliate program worldwide.

In 2007 Amazon added "aStore" to its affiliate marketing efforts. AStore allows affiliates to embed a subset of Amazon products within their own site; again, actual sales are conducted on the Amazon.com site. Affiliates can earn referral fees on the products purchased by their users, usually in the four to 15 percent range of the product price. Some products are excluded from the offer, and a cap has been set on high-end electronics products.

Even the mighty Amazon, though, bows before another entity, as North America's largest affiliate network: Commission Junction (www.cj.com). The Santa Barbara, CA based company, owned by online advertising company ValueClick, announced on June 15 that for the fifth year in a row, it continues to maintain its position as the affiliate provider of choice among more online retailers than any other provider, as per the 2010 Internet Retailer Top 500 Guide. Of the retailers on the list who work with a third-party affiliate provider, 63 percent chose Commission Junction more than twice as often as they chose any other player in the affiliate space.

Commission Junction also commands the greatest number of the list's largest online retailers who have third-party affiliate programs, including 64 percent of the top 100. According to Internet Retailer, the 100 biggest merchants on their list generate 86 percent of all sales for the entire 500. The company currently has over 1,500 customers, including Dell, Overstock.com, Buy.com, Home Depot, Zappos, and Yahoo!, not to mention WholesaleCentral.com.

The web's leading directory of wholesalers, importers, distributors and manufacturers covering all merchandise categories, including apparel, jewelry, gifts, novelties, toys, sporting goods and more, WholesaleCentral.com offers its own CJ-powered affiliate program, whereby affiliates can earn $60 for each new approved company listing sent to WholesaleCentral.com. The company provides a variety of banners and text links to affiliates to help drive wholesalers, importers, distributors, and manufacturers of general merchandise to WholesaleCentral.com, and its affiliate program requires no minimum threshold and has no limit to affiliates' earnings. Additional information can be found at www.wholesalecentral.com.

Another popular affiliate marketing network is operated by Chicago based ShareASale (www.shareasale.com). The company maintains over 2,500 merchants in its network, all of whom sell a different type of product, and are willing to share a commission with businesses who successfully refer their customers to those merchants. ShareASale divides its merchants, includeing DropShip.com, DiscountMags.com, and FatWallet.com, into easily perusable "pay-per-sale," "pay-per-lead," and "pay-per-click" categories.

Also worth noting is New York based LinkShare (www.linkshare.com), which claims it has created the largest network of affiliate partners of any program provider (over ten million), and is the first affiliate network provider to achieve sustained profitability. Its client list includes iTunes, Macy's, Avon, and Office Depot. Is it possible that search behemoth, Google, is missing out on the affiliate party? It is not. In 2007 the company acquired Doubleclick Performics, and rebranded it the Google Affiliate Network. Though still something of a Johnny-come-lately to the affiliate space, as can be seen at its homepage (www.google.com/ads/affiliatenetwork), GAN is already viewed as a potent player in the affiliate space.

On July 20, Shopatron, a provider of eCommerce solutions to branded consumer goods manufacturers, introduced its Shopatron Affiliate Network, whose sites range from large platform affiliates such as the Google search engine, to small content affiliates who run websites dedicated to such subjects as camping, surfing or motherhood. These affiliates send highly targeted visitors to Shopatron online stores, looking for a product listed or mentioned on the affiliate site, resulting in incremental online sales. Through the Shopatron Affiliate Network, Shopatron clients receive free brand exposure on participating affiliate sites. Fees are paid only when that exposure turns into a completed sale.

As opposed to some ecommerce ventures, affiliate marketing does not necessarily need to be restricted to one provider. Even if a retailer already offers an affiliate program, they may consider adding another to increase potential sales growth. A second network can draw new affiliates, competitive recruiting benefits, and additional promotional opportunities and other features. Since some potential partners will only join affiliate programs overseen by Commission Junction or ShareASale, offering both those options will obviously increase your chances of netting those affiliates. In addition, networks can differ in the features they supply to affiliates. By broadening the scope of your affiliate programs, you can help them take advantage of multiple options like RSS and coupon feeds.

However, as is the case with any additional technology based venture, there may be some crucial technological issues to consider. Just as the two affiliate programs will offer different options to users, so too will they offer different options on the backend. This can result in more work for you, as you attempt to maintain clearly delineated lines of communication with the affiliates of each program. The usual pitfalls of ecommerce, including fraud and other like service violations, will be multiplied when adding a second affiliate program.

As with anything web related, there are always new players and new solutions from established players coming along. In late July, a new URL shortening service, Edeems, launched (www.edeems.com), encouraging users to find a link to an item on a website from one of Edeems' 3,500 affiliate partners, shorten it using their service, and share it. If someone clicks on the affiliate's link and makes a purchase, the affiliate receives a percentage of that sale, normally in the three to seven percent range.

Edeems is also looking to capture some of the ecologically friendly trend that drives so much business of late. It's partnered with Virginia's nonprofit National Wildlife Federation to allow affiliates to donate their commissions to its wildlife conservation efforts. Ninety percent of the donations will go to the charity, with the remaining ten percent being used to cover Edeems' operating costs.

Topic: Business Strategies

Related Articles: affiliate programs  online  marketing  revenue 

Article ID: 1365

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