The concept behind affiliate marketing is fairly simple - you use your website to advertise products from other sites that are related in some way to your business. When a visitor to your site clicks on one of those advertisements and goes to another site you earn money. If they buy something there, you earn even more.

Before committing to an affiliate program, you'll need to consider the following:

  1. Do you want to be associated with the product in terms of overall image, its fit with your company and the reputation of the company selling it? If you're advertising a product or service on your site and it will compromise your standing as a reliable, honest company, you'll want to think twice about including it on your site.
  2. How much might you garner from this particular association? Will it help generate income? How long has the company been in existence and how popular are its products?
  3. How is the affiliate program structured and run? Do you receive money if someone simply 'clicks' on their advertisement and is redirected to their site (pay per click)? How much do you receive if someone buys something? (50% is a good average). Are they able to track consumers who go to their site via your portal, then leave without buying anything and come back later to make a purchase? If they do that, and they should, do you earn money from that sale? Are you paid another fee if someone simply registers with the affiliate partner's site? Most serious affiliate programs offer these facilities, however it is always important you confirm the above questions are answered positively by the affiliate partner.

Some retailers and wholesalers believe that they'll get rich by simply pasting an affiliate partner's icon onto their site. Although it is true that you'll generate some income this way, you can create a lot more interest in your affiliate partners by taking some time to promote them. After all, the more interest there is in them from your customers, the more money you stand to earn.

Here are a few things that you can do to increase traffic to your affiliate partners, and increase your affiliate earnings without necessarily affecting your sales (in fact there are ways to optimise both):

  1. Request promotional material from them and incorporate it into their advertisement on your site.
  2. Be sure that you know and like their product and create a testimonial about it and offer information on the company.
  3. Create the 'link' between your business and your individual affiliates. If you sell shoes and someone is buying hiking boots suggest that they can find 'quality camping and outdoor equipment' at your affiliate partner's site. If someone else is buying a pair of shoes designed for eveningwear, then make the product connection for the customer by noting that they may want to 'dress up in something new and wonderful' that can be found at a particular site. In essence, you are creating a call to action for each of your affiliate partners.
  4. If you're selling products that are seasonal, then be sure to change your marketing strategy for your affiliates in the same manner that you'll adjust it for your site. Outdoor recreation in the summer involves different clothing and equipment than outdoor activity in the winter. That means a different sales pitch for you and your affiliates.
  5. If it makes economic sense, offer an incentive for someone to buy a product from one of your affiliate partners. As an example, offer your customers a 10% discount on your site when they spend 100 or more at an affiliate partner's site that offers 50% commissions. You'd receive 50 of that sale + 100 from the sale on your site, minus the 10 discount, increasing your profits by 40.

Much of what we have considered pertains to retailers, although the same practices and potential profits apply to wholesalers.

One of the primary selling points for a distributor relates to becoming a one-stop, reliable resource for all or much of what a retailer might need. This can really create large amounts of goodwill and revenue for your wholesale business. Your ability to connect retailers with other services and products that will lessen their workload while providing the goods that they desire can actually become a big selling point. If advertised properly, it can give you a major advantage over other distributors.

Affiliate programs have the potential to generate passive income from a few hundred pounds per month to thousands. Consider carefully what companies you would like to promote and then put some effort into informing your visitors about them. Think of your site as a resource and your affiliates as partners in your venture to serve your constituency.