Key Concepts and Benefits of Affiliate Marketing in E-commerce

Ever bought a workout outfit from Gymshark? If you saw a discount code on Instagram, chances are it came from an Athlete — aka, a Gymshark affiliate. 

It turns out that those influencers can make up to $100,00 a year through 4%- 10% commissions, but of course, the e-commerce brand Gymshark makes even more. 

If you’re an e-commerce brand, affiliate marketing could be the marketing strategy that takes you from a short time to viral — in brand exposure and revenue. 

Keep reading as we explore affiliate marketing basics, why it’s vital for e-commerce brands, and examples of brands that are killing sales with affiliate marketing. 

What is Affiliate Marketing in E-commerce?

Affiliate marketing is a marketing strategy where brands pay commissions to affiliates (partners) who successfully bring them new leads, customers, and sales. 

In an e-commerce model, affiliate marketers use their platforms to create content around and eventually sell individual e-commerce products for a brand. 

The most prominent e-commerce affiliate marketing program is Amazon Associates. In fact, the online giant has 47% of the affiliate market as a whole, with 47% of market share. 

Think about it this way: every customer likes to see social proof before they buy a product. That’s partially why you always peruse Amazon product reviews and ratings before hitting “add to cart.” 

However, affiliate marketing content brings a regular review to life with visuals and commentary about a brand’s product. For example, it’s always more enticing to sell a pair of jeans with a model wearing them than just a written description, right?

So, what goes into the affiliate marketing process? Keep reading to find out. 

Key Concepts of Affiliate Marketing

You don’t just post an Instagram story and call it a day in the affiliate marketing world. On the contrary, this marketing strategy has a ton of moving parts to operate successfully. Here’s a quick look at the key concepts: 

Affiliate programs

An affiliate program is an agreement offered by a brand to potential affiliates. It outlines the criteria a brand has for potential affiliates or partners and the terms of the working relationship. Those terms might include commission rates for sales, types of sales considered valid, and how long affiliates have to convert a lead to get a commission. 

Ever bought a product off Etsy? The creator marketplace offers an affiliate program that’s open to all affiliate types except cashback and coupon websites. 

But it’s not just e-commerce brands and websites that offer affiliate programs. They’re prominent in the SaaS world, too. For example, SEO software Semrush has an affiliate program that offers potential affiliates $200 for every sale they make. 

Commission structures

We mentioned a flat-fee commission with Semrush’s affiliate program. But that’s not the only commission structure available to you. With e-commerce businesses, product-specific commissions are a popular choice. This toggles the commission percentage or flat fee for each product. For example, you might increase the commission rate for more expensive items to entice affiliates to sell more. 

You might also choose lifetime commissions, which reward affiliates for every purchase a particular customer makes in their lifetime (not just one purchase). Percentage-based structures, between 4% to 10%, seem to be the most common. 

Cookie duration

When you click on an affiliate link or product, you might make a purchase immediately or wait for a few weeks to make sure it’s the best purchase for you. 

Cookie duration measures the time between a website visitor seeing affiliate content and then purchasing the product. Of course, your customers might not decide right then and there if they want to buy. That’s why cookie durations usually last between 20 and 90 days, to ensure affiliates are still awarded a commission for a later purchase. 

Tracking and attribution

Affiliate marketing programs might have hundreds or even thousands of affiliates (like Amazon). The right affiliate management software is essential for tracking and attribution. 

By tracking, we mean tech to track each conversion or sale that your affiliates bring. Attribution is the accurate identification of the affiliate who brings each sale or conversion, and their total revenue or sales value. 

Types of affiliate partners

Not all affiliates are the same! Types of affiliates include: 

• Coupon websites: These websites offer coupons to various websites, including your e-commerce site!
• Cashback websites: These websites reward customers with extra cash for purchasing at stores linked on their web pages. The cash comes from part of the commission they make off each brand’s website. 
• Website online publishers: These might be popular, high-traffic websites in a specific niche. For example, Business Insider might publish an article about affordable Christmas gifts in December and feature an e-commerce store’s new headphones. 
• Influencers: Often social media personalities, influencers have cult followings who regularly watch their stories, live streams, and videos. 

Remember to research your target audience (including their website behavior) to find the most relevant affiliate partner types. 

The Affiliate Marketing Process

We covered a few elements of affiliate marketing, but how does it all flow together? Here are the steps from inception to sales.

• Create your affiliate program: You decide which products or product categories you’d like to promote.
• Recruit affiliates: You might offer a set number of criteria to approve affiliates to your program and accept them automatically. Or, you might prefer more autonomy in choosing your affiliates. Check out an affiliate network like Admitad for a marketplace to browse affiliates by industry, channel, following, and more. Or…
• Invite customers to your affiliate program: Some affiliate platforms (like ours) offer an automated customer referral program to invite your customers to promote your products. This is a great recruitment tactic because your customers have already used and loved your products — who better to advocate for your brand?

• Decide on commission structure and amount: SaaS brands might use recurring commissions, while e-commerce businesses might prefer lifetime commissions to reward affiliates for super shoppers. Some affiliate platforms also give you the opportunity to reward affiliates further with performance-automated increases. 
• Track performance and view reports: Which affiliates, channels, assets, and campaigns bring you the most sales? Assess performance regularly and look out for straggling low-performers, too. You can also compare product sales over certain time periods and campaigns with certain types of affiliate software. 

• So, what do you get out of an e-commerce affiliate program? 

Benefits for E-commerce Businesses

Here are our top benefits for affiliate marketing in e-commerce businesses: 

Cost-effective marketing

Did you know e-commerce brands spend as much as $5,000 per month on pay-per-click (PPC) advertising? These are the sponsored posts you see on Google search pages or ads within your social media feed. 

However, affiliate marketing is a fraction of the price and requires no upfront investment. Why? Because you don’t have to pay your affiliates until you actually see a sale. 

Increased reach and brand awareness

Imagine you’re a brand new e-commerce brand on the map. Nobody heard of you — but if you partner with an influencer on Instagram with 300,000 followers? All of a sudden, 50,000 people just saw your product modeled in seconds on an Instagram story. Hello, brand awareness!

Performance-based model

Affiliate marketing is easy to improve and strategize because you can always find a new affiliate to post your promotional content. 

Scalability

Affiliate programs are easy to scale because you can recruit as many affiliates as you want to your program. When you add more qualified partners to your network, your clicks, leads, and revenue will skyrocket. 

Just remember to use an affiliate tracking system that has the capacity for this growth! For example, Tapfiliate offers scalable pricing tiers that help you track more clicks and conversions as you grow your program. But even our most basic plan still offers unlimited affiliates and affiliate programs. 

Access to niche markets

Online businesses have the potential to reach abundant new audiences since geography and ethnicity no longer have barriers on the internet. However, you can’t realize that potential without the right partners. 

Say you want to tap into the South African shoe market. You might use a South African blog or influencer to showcase your shoes on your channels, thus opening up a new international market. 

Of course, niche markets aren’t only geographical. Influencers come from all types of interests and communities. If you sell accessories or apparel, you could have a niche influencer in the deaf community model it to her followers. Just type in #whateveryouwant on Instagram to find a ton of potential niche markets to tap into.

Challenges and How to Overcome Them

Your affiliate marketing strategy won’t be perfect right off the bat. You’ll encounter a few challenges, like: 

Finding the right partners

Affiliates can influence your brand reputation. You wouldn’t want to trust an affiliate marketer just to have a customer complain about sneaky or pushy tactics. Similarly, you should make sure affiliates have relevant followings and reviews from other happy brands. 

Maintaining quality control

E-commerce websites have to take extra care to provide a solid product every time. Of course, manufacturing hundreds or thousands of products can always lead to the odd dud. Just have a supply chain process in place to capture any potential poor products, and be prompt when responding to any poor reviewers or testimonials. 

Dealing with competition

If an e-commerce affiliate has a large following among your target audience, chances are your competition will want them, too. Stay ahead of the competition with an attractive commission per sale amount and engage affiliates with branded social media assets and regular communication. 

Best Practices for Success

Enough about challenges — let’s spin this a bit more positively. Keep reading for our best tips for new affiliate marketing success: 

• Building authentic relationships: Affiliate relationships can make or break your campaigns. For example, an affiliate who has just been onboarded might feel overwhelmed by all the options.
• Creating valuable content: Your potential customers don’t want to see the same Reel style or color scheme as your competitors. Create and share content with your affiliates that both speak to your brand and your affiliates’ friends and energy. 
• Leveraging data and analytics: Strategy is huge in e-commerce affiliate marketing. You can’t improve without the right data to back you up. That’s why you should always have a pulse on your bank account. 

Case Studies

Curious to see e-commerce affiliate marketing in action? Let’s look at one solid example from Tapfiliate’s client roster. 

• MD Hearing Aid: This online retailer for hearing ads charges significantly less than almost all of those little glasses shops in the big cities. Conversion rates went up by 40% with their affiliate program’s laser-sharp insights from Tapfiliate. 

• Hyperzod: Hyperzod serves over 200 different firms with easy-to-use delivery solutions. After partnering with Tapfiliate, they saw a dramatic increase of 300% for new affiliates. 

Conclusion

Affiliate marketing isn’t just a strategic option for e-commerce businesses — it’s a necessity. E-commerce transactions continue to grow yearly, reaching over $8 billion in sales in 2024. Meaning? More customers want the convenience of online shopping. Your job? Tap into all those new customers online with the right affiliate partnerships. 

Affiliates help bridge the gap between consumer and brand, often humanizing a company and making their products look more reputable and appealing to potential customers. 

Of course, you’ll need to keep tabs on performance somehow. That’s where Tapfiliate’s affiliate tracking solution can help with its direct integrations, flexible commissions, branded assets, and scalable tier rates.