Last updated - July 8, 2021
Done extremely well, eCommerce can be enormously lucrative, but the market is certainly challenging these days. The fundamentals have all been polished, the barrier to entry has been lowered to the point of insignificance, and the surfeit of online guides and courses has ensured that anyone with the slightest hint of entrepreneurial ambition knows their options.
Of course, if you already run an eCommerce business, you should be aware of this — of the struggle to stand out in a field of similar competitors. This advances the urge to use any and all sales and marketing tools at your disposal to get an edge, but you can’t do everything. Even the biggest global brands don’t adopt the “scattergun” approach: it simply isn’t effective.
What you must do, then, is cherry-pick the most useful tools to deploy. And when reviewing the tools on the table, you might spot affiliate marketing, and wonder about the value it brings. Is it something with enough worth to focus on, or should you forget about it entirely? That’s what we’re going to look at here, so let’s get to it:
What is affiliate marketing?
The sales industry has always achieved a great deal through commissions: to incentivize their salespeople to sell more products, merchants can offer them small percentages of the money made from those sales. Affiliate marketing adapts this method slightly. Instead of sellers paying commissions to employees, they pay them to any people who drive sales for them.
How is this tracked? Through custom links. An affiliate marketer is given custom links to the products they’re marketing, and they use them for their promotional efforts — any resulting visits and conversions can then be traced back to them, leading to their compensation. Commissions are generally lower than in traditional sales, but that makes sense, because affiliate marketing sales are mostly achieved passively.
Marketing your own products
If you wanted to use affiliate marketing, you’d most likely be offering people affiliate revenue to promote your products. It’s a very reliable tactic for two reasons: firstly, it makes little difference to a shopper whether they use an affiliate link or the original link (the costs are the same), and secondly, you only pay your affiliates when they produce sales.
There is an exception, admittedly. If you choose to work with a social media influencer, they might well charge you to post your links, regardless of whether they lead to any sales. But since you don’t need to negotiate deals with influencers (more on that later), it isn’t a big problem. You do need to pay close attention to which people get custom links, but that isn’t typically an issue.
Marketing third-party products
Even if you’re concentrating on selling your own products, you can still approach affiliate marketing from the opposite end by promoting third-party items. It all comes down to the extent of your blogging and content marketing in general. If you create content that gets a lot of readers, you can easily work in some links to products that don’t compete with your own.
For instance, if you only sold home furniture, you could include affiliate links to carpet cleaners. Such links are unlikely to prove particularly lucrative, but it’s all profit, so if you have a suitable platform and you think your readers won’t object to some other recommendations, there’s very little reason not to work it into your affiliate marketing strategy.
Look at affiliate programs from large brands, as they often have fairly generous terms, but keep in mind that they use different types of compensation. A sale through the eBay Partner Network pays between 50% and 70% of the eBay fee, requiring you to make a lot of sales to really profit, whereas the Shopify Affiliate Program (see above) pays around $2000 for just one enterprise-level referral.
Choosing a network
Instead of arranging affiliate deals manually, the typical experience involves using an affiliate marketing network to set everything up. The process is fairly simple: you find a network with terms that suit you, and send over a product feed. The network then creates custom URLs for the registered marketers and starts tracking resulting sales.
How do you choose the right network (or networks)? Look at things like typical success rates, charges, product specialties, and numbers of marketers — as well as ease of use, since the easier it is to operate the platform, the less time you’ll need to spend on your affiliate marketing. Here’s a list of viable networks to get you started. If you’re unsure, look to the brands already using the networking you’re considering: for instance, CJ boasts some big clients (see below).
Is it the right choice for you?
So, having been through various aspects of affiliate marketing, we can return to the titular question: should you include affiliate marketing in your eCommerce business? Well, as with many things, it depends on your circumstances.
You shouldn’t spend time on affiliate marketing if you don’t have a product that’s simple to market. If you offer something with niche appeal, it’ll need in-depth content marketing to build up interest in it. Instead, put that time towards better understanding your target audience (it’s a core part of eCommerce) and creating high-quality content to make you a thought leader in your field.
However, you should use affiliate marketing if you offer products that can easily be presented to broad audiences, or if you’re willing to invest in complex influencer marketing with notable figures within your niche (it’ll be much more expensive than using regular link-insert affiliate marketing, but it could be lucrative).
Wrapping up, then, there’s no easy answer — but given that affiliate marketing in its most popular form isn’t costly to attempt (with the price only going up with actual sales), you might as well attempt it to see if it’s something you want to embrace in the long-term.