Difference Between Affiliate Marketing and E-commerce

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With the availability of many online marketing channels including Instagram, Facebook, LinkedIn, it is no doubt that online businesses are thriving, with businesses that are not in the online space losing on prospective leads. While the online space may seem like such a simple concept, it can be complex. Also, online platforms and marketing methods that suit one business’ needs may not suit another. Among common online marketing methods entails affiliate marketing and having an E-commerce platform. Online businesses looking to join the online space may be faced with the decision on whether to adopt an affiliate marketing strategy or an e-commerce model.

What is an Affiliate marketing?

This is a performance-based marketing strategy whereby businesses promote their products and services through affiliate sites. When someone purchases through the link, the affiliate marketers earn a commission. It entails four players namely; the brand, the network, the affiliate and the customer.

Affiliate market co-depends on other online marketing methods such as search engine optimization, e-mail marketing, pay per click and content marketing. They may also attract consumers to other sites by publishing products and services reviews.

Affiliates may be owners of multiple e-mail lists or websites hence a wider market reach. In the recent day and age, common types of affiliates include influencers, bloggers, email lists and large media websites. They then promote products or services through text ads, banner ads or links to the clientele. These redirect visitors who click on the links to the e-commerce site. If a purchase is made, the affiliates earn a commission.

Advantages of affiliate marketing include;

Businesses only pay for a prospect that has converted to a sale
It is an easy and low maintenance business brands
It is a low investment venture
It can bring a large volume of traffic to a brand
It enables businesses to reach a wide scope of clients

However, it has disadvantages

It can ruin a brand’s reputation when affiliates use fraudulent activities to increase sales

What is E-commerce?

Also known as electronic commerce, this is a business platform that allows brands to buy and sell products and services over the internet. E-commerce can be business to business, business to consumer, consumer to consumer and consumer to business. While it is mostly used regarding the sale of physical products, it can also describe any other commercial transaction facilitated through the internet.

The ease of conducting e-business has led to millions of businesses that would be non-existent without E-commerce platforms. It also helps that it can be conducted via smartphones, computers and smartphones provided an internet connection is available.

E-commerce entails a wide variety of transactional relationships between sellers and buyers. Some of these include;

Retail- This is the sale of products directly to a consumer and does not involve any intermediaries.
Wholesale- This is the sale of products to a retailer in bulk, usually to resell to consumers.
Dropshipping- This entails selling products to consumers by directly shipping from the manufacturer to the consumer
Digital products- These are downloadable services and products such as courses, media or templates.

Advantages of E-commerce include;

Provides business persons and consumers with convenience
It has increased the variety of services and products provided by businesses

However, E-commerce may have disadvantages including:

The lack of instant gratification as most items take time before they are shipped
Consumers may fail to see and interact with products before purchase
It has limited customer service
Cases of online security breaches may discourage E-commerce

Similarities between Affiliate marketing and E-commerce

Both are carried out via online platforms
Both can increase the leads and prospects of a brand

Differences between Affiliate marketing and E-commerce

Definition

Affiliate marketing refers to a performance-based marketing strategy whereby businesses promote their products and services through affiliate sites. On the other hand, E-commerce refers to a business platform that allows brands to buy and sell products and services over the internet.

Start-up costs

While affiliate marketing does not require much upfront investment, E-commerce involves more upfront costs such as maintaining a website and running an online store.

Risk of ruining the brand’s reputation

While affiliate marketing may ruin a brand’s reputation when affiliates use fraudulent activities to increase sales, the reputation of a brand on E-commerce cannot be ruined through other parties unless the brand chooses to work with them.

Payment methods

While affiliate marketers are paid a commission of the sales made, brands using E-commerce platforms receive the full amount after a sale is made.

Affiliate marketing vs. E-commerce: Comparison Table

Summary of Affiliate marketing vs. E-commerce

While it may be difficult for business owners to decide between affiliate marketing and E-commerce platforms, factors such as time and money available, target audience and the skill required to run either should be considered. Nevertheless, the two are great marketing avenues and can help businesses generate more leads and sales.

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