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  1. #1
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    What would you do? Expand as a merchant versus Affilliate Marketing?
    Hi,
    I am hoping that some of your brainiacs might be able to offer some me advice. I've been thinking about this for some time now, and I'm still stumped. Maybe what I need is a fresh perspective from knowledgeable affilliate marketers.

    I'll try to keep it brief, but my situation is basically this: I am Australian, relatively ok with web technolgies such as design, CMS, php, mysql, datefeeds etc. I had some problems joining US affiliate programs a few years back (like needing a US social security number, and troubles with receiving payment from Affilate programs in Aussie currency).

    I wouldn't say I gave up exactly, but I did side track my efforts into learning how to market on the web, attract traffic, and a maintain a loyal customer base, but as a merchant rather than an as affilliate marketer.

    From the outset, the appeal of affillate marketing was the fact that I felt that as a merchant, my income would be capped (eventually) by labour problems.

    And sure enough, 2 years later, thats exactly where I am. If I want to expand, I have to either stop sleeping or hire people. I've even had to turn away business because I just can't deal with the workload (theres two of us running the business full time at the moment).

    My business partner wants to hire people, but the other option I'm considering is putting our `expansion efforts' into Affilliate marketing instead, using our existing customer base and web traffic. Its a market we understand very well (youth, gamers & sub cultural interests) , and we already have a loyal following. We see traffic along the lines of 40,000 unique visitors per month, and 50-100 orders per day...all from this particular niche. Is that enough to get started do you think?

    What are your thoughts? Where I'm totally clueless is I don't really know what kind of hours you guys put into affilliate marketing before you see returns. If it were you, knowing what you know, what would you do.....expand as a merchant, or expand into affilliate marketing?

    I really appreciate you taking the time to consider my dilhemma!

  2. #2
    ABW Ambassador PatrickAllmond's Avatar
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    If I understand this correctly you want to start up some affiliate sites and then market them to your existing customer base. Is that correct?
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  3. #3
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    Hi Patrick,
    I would like to start there, yes..only because its somewhere tangible to start. Realistically I wouldn't restrict myself in the long term though... Does does make any sense?

    The other option would be to take the existing business to the next level by hiring employees, and throw our time into business development.

    I guess I already know I don't really want to do that. I don't like the business model. Maybe i'm looking for some encouragment to move into affilliate marketing?

  4. #4
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    This is not a question you can get a quality answer for without looking deep into your current business'
    • trends
    • profits
    • overhead
    • potential employee wages
    • employee benefits
    • how much you must invest to build on this business
    • market analysis
    • and more

    Is avoiding expansion going to hurt your business, or will it possibly keep demand high?
    Sometimes limited or exclusive is a more lucrative approach.

    Diversifying your income is generally good practice.

    Affiliate marketing is what you make of it. If you don't want to put in the time, your paychecks will show it. You definitely have a head start, if you can incorporate it into your site and list. Just a few select programs cleverly installed could make some extra money without a ton of effort. Just be ready to do a lot of testing. The basic principles of business still apply, no matter what you hear about easy money.

    Also, if you are going to put forth special effort for promoting these products other than on your site, you need to consider those costs, time and effort. With 40,000 unique visitors a month, I would say you have a good idea of what you're getting into there.

    As far as the US affiliate programs, they are expanding more internationally. I don't know much of the details, but at least some, I think, do have the Federal US tax forms that need to be filed. Check with the larger networks.
    They might even pay you in Aussie currency.

    If you happen to choose to hire someone, this may free up some time you could put towards affiliate marketing as well.

    Good luck, whatever you choose.


    Food for thought,
    JasonR

  5. #5
    ABW Ambassador PatrickAllmond's Avatar
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    Maybe i'm looking for some encouragment to move into affilliate marketing?
    There are two blog posts that have reminded me how much I want to get my affiliate marketing moving. One was about a guy that talk about he was an affiliate marketer and he lived in the Katrina area. In short the post said: His house and everything around him was destroyed. Yet all he had to do was move, find a new computer and internet connection, and he was back at it. He was even making money while he was offline.

    I read this post the other day about the most I can do at any hourly job. To me affiliate marketing allows you to break rules like this.

    http://www.johnchow.com/index.php/tr...s-for-dollars/
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  6. #6
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    Wow, Thankyou so much Jason! That was an incredibly helpful post in all respects...thanks for taking the time to respond. I hadn't considered some of those points.

    And I checked into the current TOS for some of the major affilliate programs, and you are right....it is possible to join as an Aussie without a US tax ID. I'm not too sure about whether the paymkent method is suitable ( US Checks) though. We find them very expensive to cash here in Australia....they're hardly worth anything. I obviously have to do some more research.

    Thanks for the inspiration jason....you really helped!

  7. #7
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    Quote Originally Posted by patrick24601
    There are two blog posts that have reminded me how much I want to get my affiliate marketing moving. One was about a guy that talk about he was an affiliate marketer and he lived in the Katrina area. In short the post said: His house and everything around him was destroyed. Yet all he had to do was move, find a new computer and internet connection, and he was back at it. He was even making money while he was offline.

    I read this post the other day about the most I can do at any hourly job. To me affiliate marketing allows you to break rules like this.

    http://www.johnchow.com/index.php/tr...s-for-dollars/
    Hi patrick24601,

    Thanks for the link...I read it and it was good. I agree with you; I am so grateful to be making a living which is not `working for the man'. I can hardly believe it when the sales just keep on raking in all day and all night, and I make more money in day than i did in week in my former job. I would cry if I had to go back to that way of life!!

  8. #8
    ABW Ambassador PatrickAllmond's Avatar
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    Not a problem. My web business is not doing well yet. But I am making progress.

    I have my own business so I don't work for the man as such. But I still have to be someplace at a certain time to get a certain thing done on somebody elses schedule. So that means my goals are to be like you:

    1. You don't have to be anyplace (except at the computer)
    2. You can be there any time.
    3. You get done what you want to
    4. You get it done by a schedule you have full control over.

    Those should be the 4 mantras of internet sales/affiliate marketing.
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  9. #9
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    Quote Originally Posted by patrick24601
    Not a problem. My web business is not doing well yet. But I am making progress.

    I have my own business so I don't work for the man as such. But I still have to be someplace at a certain time to get a certain thing done on somebody elses schedule. So that means my goals are to be like you:

    1. You don't have to be anyplace (except at the computer)
    2. You can be there any time.
    3. You get done what you want to
    4. You get it done by a schedule you have full control over.

    Those should be the 4 mantras of internet sales/affiliate marketing.
    LOL...yes I agree Patrick. Are we freedom junkies or what?

    I also wanted to add:

    5. You can take a month sailing trip around Spain and know its all going to be there when you get back...AND you get paid on your holiday.

    And I really wish you the best with the upcoming Christmas season, Patrick. I think this is good time to throw some effort into new things.....hopefully by this time next year we'll be worrying about taxes rather than trying to get a new business off the ground, lol.

  10. #10
    ABW Ambassador PatrickAllmond's Avatar
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    Kruder,

    I hear you man. I have visual studio and SQL server up right now on the computer next to me doing some OO development and trying to import a product feed. Daugter is fast asleep. Wife is out of town. And my eyelids are hanging on for dear life.

    Patrick
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  11. #11
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    Hi Kruder,

    Glad I could be of assistance.

    I also came across another thread that might interest you.
    I didn't have a chance to really read it though.

    http://www.warriorforum.com/forum/to...OPIC_ID=105341


    JasonR

  12. #12
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    Quote Originally Posted by patrick24601
    Kruder,

    I hear you man. I have visual studio and SQL server up right now on the computer next to me doing some OO development and trying to import a product feed. Daugter is fast asleep. Wife is out of town. And my eyelids are hanging on for dear life.

    Patrick
    LOL Patrick...at least if you get insomnia, you know that sorting out technical issues will do the trick. It does th same to me. Hey, but its worth the struggle, for the empowerment at the end of the learning curve. You are way ahead of me too...good on you!

  13. #13
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    Quote Originally Posted by JasonR
    Hi Kruder,

    Glad I could be of assistance.

    I also came across another thread that might interest you.
    I didn't have a chance to really read it though.

    http://www.warriorforum.com/forum/to...OPIC_ID=105341


    JasonR
    Thankyou once again Jason! I read through the first bit of the thread and it sounded pretty depressing...long delays for checks to be cleared, difficulties generally. I will read all the way through it and see if there anything positive in there. It was a great link....I appreciate hearing the thoughts of other Aussie affilliates.

    Thanks!

  14. #14
    ABW Ambassador Paul_Ward's Avatar
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    It seems like you've already made your mind up, but to throw a few more things into the ring:

    50-100 orders per day - 1500/3000 per month 3.75-7.5% conversion. Now you are not going to get that from AM - unless you are very lucky/specialized.

    I would also guess that the profit on your current orders is considerably more than you would get on an AM order. Most of those 40,000 people a month will not be spending more with you just because there is more to spend it on (affilaite links).

    I would be wary of mixing AM and being a merchant on the same site (or are you thinking of different sites?).
    Have you thought about hiring freelances to help develop particular projects? Instead of giving someone a job, you give them a contract for a specific task that will help to grow what you have at the moment without tying yourself into becoming an employer in the longer term. The if it works, repeat and expand.

  15. #15
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    They are very good points and worth contemplating, Paul...thankyou for taking the time to give my situation some thought. Its much appreciated!

    Yes, I only wish that some of the work was out-sourcable!!
    Unfortunately, the extra labour required is repetitive, factory type production work ...very menial and repetetive. In order to expand, we'd need to lease a commercial premises and deal with issues and expenses surrounding setting up a mini-factory...health and safety, supervision and training, extra costs, insurance, paper-work, etc etc. I'm sure you get the picture.

    Its just not very `web 2.0' as a busines model LOL. I hope I am making sense.

  16. #16
    ABW Ambassador Paul_Ward's Avatar
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    Hi Kruder, at risk of delivering an egg sucking lecture to grandma's everywhere...

    You can outsource almost anything these days - have you looked at contracting out order fulfillment? The $$ might not be so attractive to start, but as a look-see?

    If you do decide to go the affiliate route - you'll find plenty of help here - but also affilaites need to sleep too - apparently....

  17. #17
    Member Jigsaw2order's Avatar
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    Hi Kruder,

    You my friend have hit the classic growth problem of a start-up Merchant. Itís a nice problem to have but a hard decision. Unfortunately it will not be the last one you will face. I've been in the same position as you a couple of times and always decided to grow the business. One thing I have learned is that there are ALWAYS options out there - itís just finding and understanding them. An important factor for me has been to evaluate risk!. The risk associated with each option (or doing nothing) can help you decide what to do.

    You can also be sure that things will change. What you have today will more than likely not be the same tomorrow. If you don't change and reinvent your business on a regular basis, someone else will and take your business. You have achieved the first step of setting up a successful business, now the equally hard part is keeping it successful.

    Quote Originally Posted by Kruder
    Yes, I only wish that some of the work was out-sourcable!!
    Unfortunately, the extra labor required is repetitive, factory type production work ...very menial and repetitive. In order to expand, we'd need to lease a commercial premises and deal with issues and expenses surrounding setting up a mini-factory...health and safety, supervision and training, extra costs, insurance, paper-work, etc etc. I'm sure you get the picture.
    Sounds like you should be looking at outsourcing to somewhere like India, China or Thailand where the cost of production is lower. My suggestion would be to approach a number of companies who are doing a similar thing already and see what kind of deal they can come up with. Even if you decide not to proceed, at least you have checked it out. Having options is so important to being able to evaluate and take decisions.

    Good luck and take comfort in the fact that you are not the first to be faced with this decision.

    regards, Colin
    [URL=http://www.jigsaw2order.com]www.jigsaw2order.com[/URL]
    [URL=http://www.shareasale.com/shareasale.cfm?merchantID=10436][COLOR=Blue]Join our Affiliate Program[/COLOR][/URL]

  18. #18
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    Hi Colin! Nice posts Colin, and Paul...I can't tell you how much I appreciate your sound advice and experience.

    I feel reassured to hear that this is regarded as a typical growth problem that can be potentially solved. And many thanks to yourself and Paul for getting me thinking a bit more about outsourcing the labour. I can see the `pros'; I will have to put a bit more thought into the `cons' as they are tricky ones to solve, related to the way the business is set up and how it makes a profit.

    At this point, I'm pretty set on diversifying into affiliate marketing, whilst working through some of the expansion problems I'm facing with the existing business. It can't hurt to diversify, right?

    Thanks sooo much for helping me to focus on the specific issues...that really helped `un-jam' my thinking process.

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