[wa2111]

We are an emarketplace that charge 15% commission on products posted on our website. I have been reading people saying some companies pay 30% or more in commission to their affiliates. We won’t make a profit if we pay 30% to affiliates when we only make 15% on the sale ourselves. What would you guys advise?

A little info on our website, it’s a fashion marketplace where people post clothes and jewelry to sell.

Thank you.

[Convergence]

Do you process the purchases or does the merchant?

[wa2111]

We process the purchase. Our site is a bit like Etsy.

[Convergence]

An affiliate program may not be conducive for your current business model.

Out of your 15% you still have to pay:

• Credit Card transaction fees
• Cost of AM or OPM
• Monthly network fees
• Network transaction fees
• Affiliate commissions

You could run an indy/in-house program but that requires a little more dedication, expertise, and trust with affiliates than with a trusted network. Still have to pay someone to manage your program as well...

[Chuck Hamrick]

As Convergence said an affiliate program may not be a good fit. Affiliate programs are attractive because they are performance based. But like any other advertising channel they require expertise and resources. Try putting $3000 a month into a paid search campaign that you worked on once!

[Convergence]

Some additional thoughts:

• Do you have return customers?
• Do your customers return to you to shop for other merchant's products?
• Do your customers buy from a merchant on your site then all repeat orders go directly to the merchant?

Reason I ask is this: what is a new customer worth to you?

Affiliate marketing can be an inexpensive method for gaining exposure for your website. If return customers are shopping for different products over and over again then it could be feasible to pay affiliates as much, if not all, of your profits as you can. You are gaining a new customer from that affiliate traffic.

If customers are one time customers and/or go directly to the merchant after the fact, then again, an affiliate program may not be cost effective...

[Chuck Hamrick]

Convergence you have just illustrated how an affiliate program is a customer acquisition channel. That is something that is undervalued by many merchants. Another benefit is the organic ranking for affiliate merchant store pages. If rises the merchants brand higher up in the SERPs and gives them more branding. Its not something that you can put a dollar figure to or track in the affiliate program.