Merits and Demerits of Affiliate Marketing

Affiliate marketing requires the affiliate to present someone else’s product to another person and earn paid a commission when that person buys the product. Affiliate marketing has its merits and demerits both for the product owner and the affiliate. Product has its broadest meaning in this context. It includes services.

Merits for the Owner of the Product

Extension of Distribution
Affiliate marketing enables the product owner reach a much larger market than he would have been able to sell to all by him/herself. This is because many people canvass the product in different places, striving to sell as much as they can since their commission is based on their sale.

Good ROI
The return on investment would be high because the product owner does not invest much in selling and distribution. Imagine the cost if the product owner were to integrate forwards selling their product to all consumers/users. The cost would be so high that the business would fail.

Freed Resources
The product creator does not spend time selling the product. The resources thus freed could be used for enjoyment or creating other products. If the new products are successful, then they can grow their business.

Merits for the Affiliate

Start-up Ease
It is nearly hassle-free to begin affiliate marketing because there is no product creation involved. All you need do is select a suitable product and sign up for the affiliate programme. Your equipment are your computer, an internet connection and your grey matter.

Several Income Streams
An affiliate marketer who is really ambitious can sign up for more than one product thereby open up more than one source of of income. In no time this could lead to financial freedom.

Quit Regular Employment
Being your own boss as well as being able to work from the comfort of your home are some of the aspirations of employees. Affiliate marketing helps you get these benefits.

Demerits to the Owner of the Product

Distibution Problems
If the product is a physical product, the task of delivering it to customers would be huge and complicated. However, this aspect of the business could be outsourced. There are fulfilment houses that can deal this aspect of the operations.

Selling Cost
They may not have much direct selling expenses but the amount paid out as commission to affiliates and the cost of engaging merchant houses could be substantial. The bottom-line takes a hit from these costs.

Demerits to the Affiliate

Selling Cost
It takes money to make money, the saying goes. So even though start-up cost is low, the affiliate  must invest in advertising, list building and other promotional methods in order to make it big.

Learning Curve
It is not enough to just sign up and go to sleep. The affiliate must learn how sell on the internet.The need to learn internet marketing methods is not dispensed with. The idea of plug-and-play given in sales copies is often not correct.

Do you think affiliate marketing is beneficial or not beneficial?