In this post I’m going to describe the advantages of being an affiliate marketer. First, before ever being a product or service owner online there are some considerations to have. Right now there’s a lot of training going around that is especially focused around the E-COM business model. This is where you set up your own products, distribute it to customers and then you reap the rewards… or at least that’s the common idea. I’m seeing a lot of e-commerce stuff on Facebook right now in terms of ads targeting people who want to make money online. The idea here is that you create your own product to sell instead of selling other’s as an affiliate.
There are a lot of disadvantages to creating your own products before becoming an affiliate first. I’m going to describe my experience as an affiliate marketer and why I’ve continued to be an affiliate-marketer versus being the actual product or service owner. In 2002 I started affiliate marketing and over the years I’ve found campaigns and offers that were working extremely well. I thought it would be a great idea to set up similar offers myself since I knew they were working. I was promoting software, diet products, even skin care products too. I thought to myself “hey, how hard can it be to set up a distribution line and all the processing and everything that’s needed so that I can just sell this myself” and so I gave it a shot!
Let me give you a quick example of one product owner venture I embarked on just so you have an idea of what I had to go through. I was promoting diet products as an affiliate then decided I wanted to be the actual product owner of the product, not “just an affiliate” so I started the process. I needed to look into getting a payment processor, these are called merchant accounts and they’re what allow you to work with companies like Visa and Master Card in order to collect money from customers. The problem with going into business this way, where you are selling products you own directly to customers is you have so many fees to pay each and every month. You’re going to be responsible for these fees no matter if you make sales or not so that can get tricky when you’re just starting out.
Sometimes there are limits placed on you by your payment processor where they’ll say “okay, you can only process up to $20,000 this month… this is typically a bottleneck placed on new businesses which haven’t proven themselves yet. That’s a problem if you need to scale up quicker than they will allow, you’ll be locked into just that amount of money for the month and that’s it. Next thing you’ll need is some kind of tracking software that helps you process orders and keep track of payments for your own records. CRM’s do exist and a popular example of another software would be something like Shopify. The problem with using something like Shopify is the limits you’ll run into. What that means is you’re probably going to get stuck with having to choose a bigger, more robust option which can cost you literally thousands of dollars per month just to use, if you make sales or not.
I then need a way for my customers to reach me if they don’t get their products and services in time. Or maybe they want to dispute something or they want a refund. Who knows, they might just have questions about my product and I need a way for them to contact my company, that means I need a support line or some way for people to contact my company. The way this is usually done is through phone, that means you’re going to need a call center and if you’re going to be scaling your business properly you’re gonna need many people answering the phones, maybe even five or ten people.
At first you could probably start with just a single customer service rep but you’re still gonna have to eventually scale your your support while you’re scaling your business. The more business you get the more support you’re gonna need so there’s another thing that needs to be considered as you build out your products. The next thing you need to consider is the fact that I become the the center of attention if anything happens in my business, especially when it comes to shipping products or consumables to people. If somebody were to get sick, or if somebody was to get injured by my products, or if there’s a legal dispute, or there’s some false advertising or anything going on around the product that I own, I am the one responsible.
Not only that, my company is responsible which means you need to have the legal aspects of your business set up so that there are protections in place for yourself and your family along with your money. There are risks involved with being the owner of anything that is sold or offered to the public in exchange for money, a certain level of safety has to be ensured and if something happens you could be putting your assets and yourself at risk if you’re not legally protected and that costs money too. As an affiliate you don’t really have those risks, here are a couple of examples that you need to consider as you build your own products.
You need to ship stuff to people if you’re selling actual physical products, that means you need a fulfillment plan. There’s fulfillment centers out there where you can ship stuff from and to different countries and they can all be shipped into one warehouse, then out to your customers. This should be expected to eventually happen every single day and that again is more fees, also depending on what you’re selling, for example if you’re selling a $20 product and you start adding up all your little fees along the way it starts to get very pricey. Once you factor in all your back-end fees, cost for traffic to your offers, maybe you have a payroll to maintain and anything else that’s a proper business expense, it all adds up and that cuts into profits. What I began to learn as I built out these products is that your front end profit will almost always go to near zero.
Basically, if all your stuff is set up properly on the front-end then expect to take a loss or make almost no profit at all and also expect to makeup for that lack of profit in the back-end. A lot of times as an affiliate you’ll see offers that pay marketers more than the cost of the initial purchase, this is because the product owner knows the lifetime value of each new customers and they factor that in. This lets them be competitive in the affiliate marketing space to attract more affiliate marketers like us to sell their stuff. Let’s talk about the back-end of a business real quick. I still take advantage of building a back-end system for my own affiliate business because I know that as soon as a product or service is done then my entire affiliate campaign could be gone with it.
The way I build my affiliate campaigns is by actually building my own assets online. I build nice properties of high authority such as websites and I also collect emails which I then use for follow-ups as an affiliate. Doing this lets me increase my own visitor value to not only offset traffic costs but to actually turn a profit from selling other people’s products. I can either send people to a squeeze page and collect their email where I’ll then send them affiliate products and make my front-end commissions. I’ll be able to keep sending them other emails and information in order to build Authority in a niche even higher. This is the way I’ve done it and I believe this is why affiliate marketing is definitely the way to go, especially if you’re new to online business and you want to consider building out a product of your own. My advice would be to start as an affiliate and promote a similar product to see if you can actually sell it for the price that you want, then build your campaign around that and decide if it would make sense to build out into your very own product or service.
Once you are making money from selling something as an affiliate you can work on taking the knowledge of that product to turn into your own business where you are the owner and not only an affiliate. There are a lot of services and training material out there being pushed to newbies who think that all it takes is to set up some quick and simple webpage, throw some products up on that page which might be outsourced from China or some place you can get things for cheap and then a bit of traffic and Bam! Well, sorry to say it but things really don’t work that way, there are going to be bumps in the road and you’re gong to deal with the headaches yourself.
Being an affiliate lets you work with many different products across many different platforms, it offers absolute freedom from so many pitfalls and hardships that being a product owner comes with. In the future we’re going to be covering more on the topic of affiliate marketing, hacking your dayjob and finally breaking free from the grind of making other people rich. It’s time to do things right, we’re going to show you how… stick around.
Until next time!
Latest posts by Joey from Day Job Hacks & Powerhouse Affiliate (see all)
- How to Move Shopify to a Subdomain – Shopify Subdomain Setup - September 21, 2019
- 4 Easy Ways To Survive in CPA Affiliate Marketing - September 13, 2019
- DJH Podcast #8 – Working From Home Pro’s & Con’s, Project Management, The Importance of SEO - September 13, 2019