How Effective Is Affiliate Marketing For Your Ecommerce Business?

The Indian e-commerce industry has never been this fierce as it is now and the competition has reached another level. Most of them are trying to outwit each other by replicating the strategies (voluntarily or involuntarily, consciously or unintentionally) in order to lure consumers and bag more sales. We got a glimpse of this competition when last year, a very visible marketing trend was adopted by almost all Indian E-commerce websites. That was introducing Affiliate Programs.

So what is it about this marketing tool that is garnering so much attention? What makes it click? Or are you plain clueless as to what really an Affiliate program is at the first place? Let’s find out.

Affiliate Program 101

The concept isn’t new. But just like ‘online shopping’ or for that matter any concept; it does takes a decade for it to reach India. So affiliate marketing has been around for a while. Initially it was popular in the Internet Marketing & Multi-Level Marketing circuit, especially for those who were exploring online moneymaking business opportunities. Now it has reached our Indian E-commerce industry as well.

So what’s the concept?

Affiliate Marketing Program is an indirect tool of promoting a business using a third party. In layman’s term it can be explained as joining forces with people/brands to increase your business. It works like this: XYZ accepts ABC as an affiliate partner. ABC promotes or advertises XYZ’s product/service on its website to create business leads and increase sales. And in return XYZ pays ABC a commission on every sale generated.

Still confused? Think Amway or Tupperware. Do you remember visiting a neighbour’s house and getting product demonstrations of Amway or Tupperware? They were essentially global affiliates of the brand promoting products, selling it and getting more associates to sign up. It’s only now that both the brands are advertising or using digital mode as promotional tools.

Pretty much the same concept but house has been replaced by Internet/websites and personal selling/demonstration has been replaced by persuasive advertising content/banners.

Effectiveness of this marketing tool

• It offers measurable Return on Investment. Unlike other modes of promotions like newspaper print ad, television advertisement, BTL activities – effectiveness of which is difficult to measure, Affiliate Marketing is clear-cut. You pay an ‘x’ amount on every sale.  So you know where your money is going and the best part is that you need to pay only for results.

• The returns are twice as high compared to digital marketing campaigns. And very less investment is required to sell using this medium.

• From a long-term business perspective, the Cost of Customer Acquisition (CoCA) is quite low compared to other mediums of acquiring customers and generating leads.

• Diverts traffic to your website and generates a buzz. Isn’t that one of the primary goals of e-commerce organizations?

• Makes brand building process easy. Again, a long-term objective but a very important element with respect to increasing shelf life of a brand.

• Gives an insight about customer’s purchasing pattern. Based on the number of sales generated from each affiliate network helps you understand what nature of content/sites entices consumers.

Indian E-commerce sites that are using this tool

You browse through Flipkart, Jabong, Amazon, Infibeam, Snapdeal or Healthkart and you will find a tab about becoming an Affiliate.

As mentioned above, last year the big guns of online shopping portals realized the worth of this marketing concept and quickly tied up with sites that could help to increase their revenue.

Jabong Affiliate Program offers 10% commission per sale and provides support in terms of preparing advertising texts & banners. The eligibility criterion for tying up with Jabong is a site devoid of any porn/illegal content with at least 50,000 monthly visits.

As for Flipkart, they offer probably the best commission rates and it differs from category to category. For instance, the current commission rates for books are 10%, whereas for eBooks is 15%! They offer 12% for bags, shoes, clothes and jewellery; on the other hand a meagre 0.5% for hard disks and pen drives. Amazon’s rates fall between 3-15%, Infibeams’s 1-10%, and Snapdeal’s between 2.5-20%.

The payouts are usually in the form of Electronic Funds Transfer, coupons, gift-vouchers or cheques, depending on company policy of each E-commerce site.

Affiliates & Networks for Ecommerce Businesses to choose from

An affiliate partner can be a seasoned blogger that has a huge following or a website that offers E-commerce supplementary services such as couponing, price comparing, and cash-back sites. There are Affiliate Networks as well that connects ecommerce owners with those interested in partnering. The success of this marketing tool has encouraged several angel investors to invest money in the above-mentioned ventures. The options are explained briefly below:

• Bloggers: Popular bloggers such as Amit Agarwal who maintains Digital Inspiration is part of many affiliate programs. Agarwal writes on Internet & Technology and earns a handsome commission via his 200,000+ followers blog.

• Independent Affiliates: Sites like MySmartPrice, etailing india, Cashkaro, PricePanda, IndiaBookStore are coupons and price comparing sites and attract huge traffic. For the very same reason ecommerce businesses collaborate with them directly and generate revenues. This is a two way street because both are inter-dependent.

• Affiliate Networks: Those who don’t want to handle their own network (such as Jabong, Myntra, Firstcry), outsource it to companies like OMG India, Trootrac, Ibibo ads network, Payoom. Each network company has expertise in specific categories and campaign models. Their responsibility is to manage Affiliate Programs of concerned ecommerce site by finding website publishers interested in partnering.

As a parting note, Affiliate Marketing is an excellent tool in today’s market scenario when used correctly. It’s like having an army of salespersons operating from different pockets of the country with a common goal – Generate Sales Leads. As it benefits all the parties involved, it is a win-win situation. All you need to identify is what kind of affiliate model your ecommerce venture needs and how extensive should be the network. The rest will fall in to place.