Affiliate Programs : Golden Opportunity or Waste of Time?

Now that the idea of doing business over the internet has been firmly established, many potential internet businessmen are searching for the best way to do business. Usually the choice comes down to whether you want to set up your own business and online store, or sign up for an affiliate program.

First of all, let's define what we mean by an affiliate program. An affiliate program is basically an internet business set up by someone else. They could be selling physical goods, education, information or any other products that can be sold online. By signing up as their affiliate, you are helping them promote their business or store. In return, they will pay you a commission for each sale you bring them. The amount of commission varies between different affiliate programs. Examples of affiliate programs include Amazon.com and Wordtracker.

1) EARNINGS

So how does an affiliate program differ from starting your own online store? Let's start by looking at the potential earnings. (After all, the main reason everyone wants to start an internet business is for the money). When you sign up for an affiliate program, you will be paid a commission for each sale you refer to the online store. This commission can range from 5% to 15% for physical products, and possibly up to 50% or more for virtual products such as subscriptions and ebooks.

On the other hand, if you start your own store, your profit can be much higher. For virtual products, your profit can be 100% of your selling price. After all, once the newsletter or ebook is created, you do not need to spend any more effort. When someone buys your ebook, they just download it from your website. If you are selling a physical product, your profit depends on whether you are manufacturing the product yourself, or buying from a wholesaler or dropshipping company. Your profit in this case could easily be more than 40% or 50%.

So, if you only consider the potential earnings, starting your own business is more lucrative than joining an affiliate program.

2) LOGISTICS

However, money isn't everything (Or so they say). When you are starting your own internet business, there are a number of logistic issues you need to look at. Here are a few things you would need to take care of:

a) Create your website

b) Design your product (if you are selling new products)

c) Create your product (if you are selling new physical products, or any virtual products)

d) Set up an online store

e) Set up a merchant account or payment gateway

f) Set up a warehouse or storage space (if you are selling physical products)

g) Have procedures and staff ready to fulfill orders

h) Set up an affiliate program to get others to market the products for you

i) Monitor for fraud

j) Monitor stock levels

As they say, "No pain, no gain". Having your own store pays very well, but requires a substantial time investment from you.

On the other hand, if you sign up for an affiliate program, all you need to do is set up a website to promote the program. All the ads, banners, marketing text etc will be provided to you by the affiliate program. Your only responsibilities would be to get people to visit your website, and hopefully click on the affiliate links to buy the products that you are promoting.

3) CONVERSION

Whether you have your own business or are promoting an affiliate program, the bottom line is the conversion rate, or the percentage of visitors that actually buy something from you. A number of factors influence this conversion rate. Factors as quality of the product, quality of the website, customer support are all important. However, I personally believe that the most important factor is trust.

When a potential customer arrives at your website, he will need to trust your site enough for him to be willing to buy from you. After all, on the internet you are just a faceless salesman. He doesn't know who is actually running the site and whether he will actually get the goods that he orders.

Having said that, one of the key methods of garnering trust is by recommendation and referral. If a store is being referred to or recommended by another website, the potential customer will feel that the store is trustworthy. After all, if the store is not trustworthy, why would the other website recommend it?

This is where affiliate programs shine. When you refer a potential customer to the store for which you are an affiliate, the customer will feel more relieved, since the store is being recommended by your site, a 3rd party. The customer will be more likely to buy from the store, benefiting both the store, and you as well.

There are both pros and cons to joining an affiliate program. You might earn less with an affiliate program compared to starting your own store, but I believe the benefits of not having to be responsible for the logistics makes affiliate programs are very viable "passive" source of income.

Steven is the webmaster of http://www.onlinebiz-help.com - Your Guide To Internet Business. His website contains various resources on affiliate programs and internet marketing advice to help you succeed in your internet business.

http://store.xiiiv.com/rss
In The News:

Top stocks to watch out for on March 8  Business Insider India
Form 424B2 CITIGROUP INC  StreetInsider.com

How To Build Your Sales

You may have heard of joint venture marketing, It's used... Read More

Choosing the Best Affiliate Program - What You Absolutely Must Know

Choosing the best affiliate program means that you are aware... Read More

Affiliate Communication

Communication is Key!When building an affiliate network communicating with affiliates... Read More

Top 5 Tips For Frustrated Affiliate Program Marketers

Do you go through affiliate programs like most people go... Read More

Affiliate Marketing - Join in on the Success of the 2nd Wave

What do I mean by '2nd Wave'? Let me explain:Can... Read More

Whats LinkShare, And Do I Need To Use It?

Online affiliate marketing is one of the most effective, cheapest... Read More

Top Three Internet Marketing Two-Tier Affiliate Programs

If you run an Internet marketing web site and sell... Read More

How To Attract Affiliates

One of the biggest fears new Affiliate managers have is... Read More

8 Basic Rules for Choosing The Right Affiliate Program

Joining an Affiliate Program is a great way to start... Read More

How to Make Your Affiliate Sales Take Off in a Hurry

Affiliate programs are probably the easiest and simplest way to... Read More

11 Awesome Ways To Explode Your Affiliate Commission

1. Start your own affiliate program directory. Join a large... Read More

Why 95% of Affiliate Websites Lose Money - And To Avoid The Pitfalls

Affiliate marketing is an agreement between two websites in which... Read More

Three Critical Affiliate Marketing Tips For Higher Commissions!

Affiliate marketing is quickly becoming a very specialized form of... Read More

Pros and Cons of Third Party Online Affiliate Networks

Online affiliate marketing has taken the internet by storm and... Read More

Setting Up Your Own Affiliate Program (Part Two)

This article is the second of my two part series... Read More

5 Essential Tools of the Successful Affiliate Marketer

In the time I have been running my internet home... Read More

Affiliate Marketing Tips

If there really is a big secret at all, it... Read More

The Prosperous Affiliate Merry-Go-Round

In the affiliate world, just as in the rest of... Read More

Understanding Affiliate Programs

Years ago before the internet was born, starting your own... Read More

How To Become A Data-Feed Super Affiliate

I am not going to describe what a product feed... Read More

Earn Top Dollar With Your Affiliate Monthly Income Stream

Virtually all online marketers have attempted lots of schemes and... Read More

What are the Benefits of Affiliate Marketing?

Affiliate marketing is a cooperative effort between merchant and an... Read More

Affiliate Program Marketing: 10 Significant Sharp Ways To Increase Your Affiliate Commissions

Millions of people sign up for affiliate programs, but have... Read More

Best Affiliate Products, Where to Find them and Choose the Best ones

The BIG QUESTION on everyone's mind is...Can you make money... Read More

Why is Affiliate Marketing Popular with Home Based Business Entrepreneurs?

The great strides made in the development of the Internet... Read More

http://store.xiiiv.com/rss