How E-commerce Works

Affiliate Programs

A big part of today's e-commerce landscape is the affiliate program (also known as associate programs). This area was pioneered by Amazon. Amazon allows anyone to set up a specialty book store. When people buy books from the specialty store, the person who owns the specialty bookstore gets a commission (up to 10 percent of the book's list price) from Amazon. The affiliate program gives Amazon great exposure because it now has over 1,000,000 specialty bookstores all over the Web [ref]. Therefore this model is now copied by thousands of e-commerce sites. If you are setting up an e-commerce site you will want to consider an affiliate program as one way to get exposure. Link Share is a company that helps e-commerce sites set up affiliate programs.

Another twist on affiliate programs is the CPC Link (CPC=Cost Per Click), also known as affiliate links or click-thru links. You put a link on your site and the company pays you when someone clicks on the link. A typical payment ranges from 5 cents to 20 cents per click. Affiliate links represent the middle ground between banner ads and commission-based affiliate programs. With banner ads, the advertiser takes all the risk -- if no one clicks on the banner then the advertiser wastes money. Commission-based affiliate programs place all the risk on the Web site. If the Web site sends a bunch of people to the affiliate e-commerce site but no one buys anything, then it has no value for the Web site. In CPC links, both sides share risks and rewards equally. You may want to consider setting up this sort of affiliate program to gain exposure for your e-commerce site.