Affiliate Marketing

What do you choose: affiliate or reseller system?

Every once in a while I get a vendor asking: "What's the difference between affiliates and resellers"? I couldn't find a reliable internet resource to support my usual answer about it, so I thought why not make an article of my own and see how well it goes in Google. So here we are.

Actually the biggest issue doesn't come from choosing between resellers and affiliates, but mostly from vendors that are questioning the channel conflict that might happen between their resellers/distributors and the affiliates.

The questions are especially important in the software industry where some of the sales techniques are shared by both resellers and affiliates.

The fact is that we don't actually have a conflict because there are some fundamental differences between them.

Not in a particular order:

1. Affiliates only do online sales and marketing. Resellers have a physical office, they answer phone calls from customers and they take care of invoicing & billing locally and maybe do some technical support as well. Sure, some buyers might get the product online from an affiliate and not from the reseller, but still, the reseller has a different target and this is offline local market. Actually, if you think about it, a buyer that wants to purchase online, he can anyway skip the reseller by buying directly from your site.


2. Resellers are better for custom solutions/big volume purchases or complex packages that also include services. I can't really see or imagine an affiliate doing corporate, academic or governmental sales, or the way they could provide related add-on services in local markets. Affiliates don't train sales/technical people and therefore they might not be able to compete with the resellers who have in-depth knowledge about your products.


3. Affiliates mean pre-selling, resellers do selling. Affiliates warm the site visitor and make him confident and willing to make the purchase on the vendor site. So basically, the vendor sells directly to the customer and makes a direct invoice to the purchaser. Resellers should do the sale on their own, they purchase bulk products from the vendor, then sell by retail to customers; the invoice they issue to customers on their account.


4. It might be easier to get hundreds of affiliates through affiliate networks, but resellers are established companies. Resellers are a much more reliable and easy to control force as they work by the same economic principles as you (the vendor) do. Affiliates might come and go.


5. Affiliates are more innovative and open-minded willing to try the latest marketing techniques. Acting as a one man show or as small companies, affiliates are less bureaucratic. Also, affiliate marketing is extremely competitive - they need to be up to date and more willing to take risks to keep up their revenues flowing.


6. It's more costly to have resellers because of the overhead: you need to have contracts, make agreements, or do marketing co-ops.

Let me make a table now:

	Affiliates	Resellers
Targeted market
Channel	Online - affiliate towards vendor's site The end-user buys directly from the vendor.	Offline & online - physical location. Resellers buy bulk and sell further to the end-users.
Reach	Unlimited Affiliates reach customers according to the their site exposure.	Focused Geographically Resellers serve customers in a specific area
Sale Location	Vendor site	Reseller/customer location
Sale Type	Standard products Affiliates sell products that are available online.	Complex packages Reseller sell customized packages, including add-on services
Overhead
Costs and Efforts	Light Costs and efforts are usually outsourced to affiliate networks	Heavy The reseller system needs agreements, contract, invoicing and billing.
Business Model Implementation	Easy In the affiliates case, most tools, know-how and technologies are offered by Affiliate Networks.	Complex Resellers develop both in-house tools and processes to sustain the reseller channel.
Strengths
Marketing Methods	Innovative The main idea is to stay ahead of the competition.	Reliable Resellers rely more on proven techniques, under the vendor control.
Acquiring	Easy to get Affiliates have no contracts to sign, no obligation.	Long term partnerships The relationship between producer and reseller is contract based, there are targets to reach and sustainable developments.
Value Provided	Online add on value Affiliates do the pre-selling and provide additional value to a product on their site while the merchants do the selling.	Active presence on the local markets This could be recognized from marketing actions, PR, sales/technical support.
Number	Big number In order to achieve better results, a greater number of affiliates is necessary.	Selected partners Vendors must resort to multiple selection methods to get only the best resellers.

What would I do if I were you? I would try to run both affiliates and resellers/distributors and find the ways to eliminate any potential channel conflict by:

• Imposing market limitations (i.e. limit online sales in certain countries)
• Setting up different commission/discounts levels
• Offering different packagings
• Providing specific and different know-how for affiliates and for resellers

Happy selling!

Resources:

• Affiliate marketing
• What is a reseller

If you liked this article, please subscribe to our
Articles & Interviews RSS Feed .

You can also bookmark and share this article:

Your Name *:
Email *: (will not be published)
Website:	Ex: http://www.google.com .
Your comment *:	Plain text only.
Validation Code *:	Type in the number above.
Please note: Comment moderation is enabled and may delay your comment. There is no need to resubmit your comment.

Link to this article from your site or blog. Just copy and paste from this box:
<a href="http://www.avangate.com/articles/reseller-affiliate-96.htm">Difference between affiliates and resellers</a>