What is E-commerce in Affiliate Marketing?

Welcome, community! Today we will talk about one of the white niches that has a high demand among many affiliate marketers – the E-commerce vertical. Many people confuse it with ordinary goods, but this is a mistake. These niches are quite different, which we will explain in detail in our review today.

But before that, we advise you to familiarize yourself with other articles on our website that can help you learn even more about what affiliate marketing is and how it works. Recently we published a comprehensive dictionary for affiliate marketers, where not only beginners but also experienced professionals will find new terms for themselves.

What is Affiliate Marketing?

Affiliate Marketing is the process where a specialist is engaged in buying traffic from one resource, primarily an advertising platform, and redirects it to an affiliate product, receiving a reward for it.

The profit from Affiliate Marketing is the difference between the costs of buying visitors and the profit from their interaction with the advertiser. For example, if you spent $500 on buying traffic, redirected it to the advertiser’s site where they purchased goods worth $10,000, and your reward from the sales is 20%, then the net profit would be $1500 ($2000 reward – $500 expenses).

This example is purely for a visual representation of how it works. In practice, it’s a bit more complicated, but the essence remains the same: we receive profit from the sale of traffic.

What is the E-commerce Vertical in Affiliate Marketing?

In general, E-commerce (from Eng. Electronic Commerce) should include any financial, and therefore commercial operations that occur through electronic networks. This includes any sales in online stores, whether it’s about physical goods or digital ones. It also includes selling tickets, creating websites on a commercial basis, or money transfers.

In Affiliate Marketing, the E-commerce vertical is represented in the form of offers from online stores like AliExpress, Amazon, or even Comfy. Ukrainian online stores are also actively cooperating with affiliate networks and affiliate marketers themselves to generate even more profit.

The popularity of the niche has contributed to the fact that there are now numerous tools for convenient work. Specifically, the Woocommerce WordPress plugin, which allows any seller to start working in the niche, regardless of what they are selling.

The advantages of working with e-commerce offers through affiliate programs are:

• No need to negotiate directly with the advertiser. Moreover, such difficulties prevent newcomers from the possibility of collaborating with large trading networks. Affiliate programs and CPA networks reduce the entry threshold;
• Support for the affiliate marketer: protecting his interests, better cooperation terms for partners who have proven themselves from the best side, the possibility of getting help from the support service, which will advise the best ways to create an effective advertising campaign;
• A wide selection of offers: the ability to interact with different trading platforms using one workspace. This is not only convenient but also allows conducting experiments to find the most profitable connections;
• Stable payouts, protection against shave. The affiliate program is interested in keeping not only the advertiser but also the affiliate marketer satisfied. So in case of disputes between them, you can expect the conflict to be resolved in your favor if you complied with the offer terms during the process.

The disadvantages of collaborating with E-commerce offers through affiliate programs are:

• Lower payouts. A portion of the commission will be taken by the platform itself, as it also provides you with services and tools that simplify the working process;
• Finding a reliable network can sometimes be extremely difficult. And this affects the security of your work and budget.

E-commerce also offers interaction with the advertiser directly, without the involvement of additional platforms: aggregators of affiliate programs, CPA networks. In this case, the affiliate marketer can gain additional advantages, as well as certain difficulties, because his work will be less protected.

Advantages of this model can be considered:

• Higher payouts, as there is no need to pay additional commissions to an intermediary;
• The possibility to receive even more advertising creatives directly from the advertiser, and even negotiate more favorable cooperation terms.

Disadvantages of working with an advertiser in the E-commerce vertical should include:

• Negotiating directly with a large trading network is extremely difficult, impossible for newcomers without a portfolio;
• Lack of any support;
• You will work exclusively with one offer, so it must be of high quality. In some cases, there will also be a limited GEO if the store sells products only in one country.

However, it is difficult to specifically outline the advantages and disadvantages of working with an advertiser directly, as the offer can vary greatly. So, if you can find a cool and loyal advertiser for yourself, such an experience can be even better than through any CPA network.

Market Statistics for E-commerce in Ukraine

Like everywhere in the world, Ukrainians have gradually shifted from going to stores to preferring online shopping. The highest demand for E-commerce occurred during the COVID period, 2020-2021, which is quite logical. Then the profit from electronic commerce was $2,493.53 million and $3,147.20 million respectively. This information is shared by the statistics aggregator Statista.com.

We observe a natural decline in 2022 when Russia started a full-scale invasion of our country. But! The following year the dynamics significantly improved, and the E -commerce market reached the same level we observed in 2019. And according to forecasts, the profit from electronic commerce will also significantly increase in the coming years.

However, this all depends on the situation on the battlefield. Despite the titanic work that our defenders are doing, the horde’s invasion still continues. Therefore, we remind you that when you make another online purchase, do not be lazy to donate at least a small amount to support our army. Because only together we will win!

Payouts in the E-commerce Vertical

In the electronic commerce niche, two payment models dominate: CPA and Revenue Share (RevShare).

CPA is a payment for the traffic performing a targeted action. What exactly – is decided by the advertiser and is specified in the offer. In the context of E-commerce, this action could be placing an order, paying for a product, buying a subscription, making a payment, making a deposit, or even just registering. Depending on how difficult the targeted action is, the amount of the reward will vary. Typically, working on a CPA model, the affiliate marketer will receive a one-time reward for a lead if the offer does not include payment for rebills (repeat orders).

Advantages of CPA:

• You receive the reward immediately for the result;
• Transparent and understandable cooperation terms;
• Quick return on your investments in buying traffic;
• The advertiser receives higher quality traffic.

Disadvantages can include:

• No reward for further activity of your traffic if the offer does not include payment for rebills;
• Lower payouts if the targeted action is relatively simple (e.g., site registration).

Revenue Share is a payment model that involves distributing profits between the affiliate marketer and the advertiser (and the CPA network if interaction is through one). The percentage of sales varies depending on the specific product. This payment model implies that you will receive a reward as a percentage of the sales check for every purchase your referral makes. This model is suitable for those who are playing for the long haul, as Revenue Share takes a while to ramp up but can later provide a stable and high income.

Advantages of Revenue Share:

• Prospects, you can earn significantly more than by any other model, but only in the long term;
• Potential to create a source of passive income.

Disadvantages:

• Much depends on the seller’s effectiveness: how well they work with the audience, whether they motivate purchases through low prices, promotions, sales;
• This payment model in E-commerce is mostly offered to verified partners;
• Slow start: you need to invest money in advertising campaigns for many months to start seeing significant profits.

However, it’s important to understand that any payment model can demonstrate extremely high profits. It all depends on the approach you choose and how you implement your strategy.

General Recommendations for Working with the E-commerce Vertical

Working with E-commerce is relatively straightforward. Since it is a white vertical, it can even be recommended for beginners who are just starting their professional journey. The main factors to consider are:

1. High competition. Many affiliate marketers have long mastered this niche, complicating the promotion of offers. This is particularly due to high advertising costs and the need to be creative to stand out among competitors;
2. Most people make online purchases via mobile devices, so you should optimize your campaigns for mobile. This applies to both the formats of creatives and the layout of landing pages and the very internet platforms where traffic is directed;
3. It’s always worth testing combinations. First and foremost, to best assess the target audience of any given product.

Overall, working with E-commerce is very pleasant. You don’t need to circumvent the usage policies of advertising platforms to get your campaigns approved. Everything is transparent, so all efforts will be spent on making your advertising campaigns as effective and targeted as possible.

Conclusion

E-commerce is an extremely large vertical that is actively developing. According to forecasts by major analytical publications, including Nasdaq, by 2040 the percentage of online purchases will reach 95% of all sales. Therefore, we can state that now is the best time to dive into this vertical.

Keep up with updates in our Telegram community, where we always post the latest news and professional reviews on various phenomena in affiliate marketing.

With respect, Your Geek!