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  1. #1
    Newbie maae10's Avatar
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    February 23rd, 2006
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    48
    Building a retail site just for affiliate marketing
    A friend of mine is a big diamond wholesaler, he wants me to build a retail site from scratch that will be affiliate friendly. After number crunching and looking at the competition he can make his profit, give a 5% commision and beat the big boys on price.

    My question is...Should I hike the commision to 10% and mark up the sale price of the inventory accordingly, or should I leave it at 5% and the affiliates will push the site because the prices are lower then the competition.

    With loose high end diamonds it's hard for the avg. customer to even know why 2 diamonds that look identical are priced $1,000 differently. Should I focus more on price or on giving the 10% commision and rely on the heavy affiliate marketing to bring in the sales.

    What should I do...oh, what should I do?

  2. #2
    Internet Cowboy
    Join Date
    January 18th, 2005
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    4,662
    Have your friend front the additional 5% so you can increase affiliate commissions AND beat the others in price.

    Slimmer margins in the affiliate channel for an established merchant don't hurt any existing activity and will increase loyalty among affiliates AND customers because everyone wins.

    Before making either of the choices you layed out, talk to him about squeezing everything he can from his end to make sure the affiliate program is not the same as everyone elses program.

    Wanna see it thrive and catch fire real fast? Give your affiliates their cake and eat it too.


  3. #3
    Newbie maae10's Avatar
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    February 23rd, 2006
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    Margins are very slim in the high-end diamond business, if he goes into jewelry (which will be phase 2 if the sites takes off) he will be able to offer more, but on diamonds, the mark-up is really low.

  4. #4
    Full Member asr_guy's Avatar
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    June 12th, 2005
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    Do both and test which business gives best ROI. Then drop the other and encourage the affiliates to move over - you'll have the data to convince them.
    [URL=http://www.typoassassin.com/?utm_source=abestweb&utm_medium=forum&utm_content=p&utm_campaign=sig]Are these affiliates stealing from you?[/URL]

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