Reseller Affiliate Programs

Reseller and affiliate programs are two separate things, but people often confuse them. Learn how to properly differentiate reseller and affiliate programs in this article, plus some pros and cons of each.

What Is a Reseller Program?

A reseller offers for sale a good or service that the reseller owns. The reseller owns it because the reseller purchased it from the original source. The merchandise could be a service, like web hosting, or a product, like computers. Some people differentiate at least several different types of resellers, all of which may be referred to as channel partners:

• a distributor is a firm that delivers the products of a number of different companies to a number of retailers

• a dealer is a firm that purchases items and offers them to the public

• a value-added reseller (VAR) does something to increase the value of the product it purchases and resells, such as adding software, particularly in a way that personalizes the solution for a client. One type of VAR is customized original equipment sold under the resellers brand. They are referred to as OEMs (Original Equipment Manufacturer), even though the reseller is not the manufacturer.

What Is an Affiliate Program?

An affiliate program offers for sale good or services that the affiliate does not own. The affiliate earns revenue, often on a commission basis, for the direction of potential customers to the website of the manufacturer or merchant who is selling the goods or services. Often the affiliate is paid on a commission basis of some kind, but the type and amount of commission can vary quite a bit. Merchants may invite affiliates directly or recruit them through an affiliate network that functions as a clearinghouse for a variety of affiliate programs. An agreement is made, and by the terms of that agreement, the affiliate is periodically compensated by the merchant for the agreed upon conversions.

Comparing Reseller and Affiliate Programs

Reseller and affiliate programs have very different relationships to the merchants they are linked with. Resellers have a much larger economic investment in the process—the purchase of the goods, while the affiliates have, perhaps created a webpage or website, created content, and set up some related advertising. The reseller has a great deal of control—not only of the items purchased, but of the price, promotions, etc. The affiliate—for better or worse—is free from these decisions/concerns, depending on how you look at it. The reseller is responsible for collecting payment, delivery, customer service, and technical support, none of which the affiliate has to be concerned about, because all those items are the responsibility of the merchant. While resellers may suffer from not enough sales, affiliates may suffer from not getting paid their fair amount of commissions.

Reseller and affiliate programs have in common the desire to find the best system to advertise the product or service in order to elicit sales/conversions. This can take the form of trying out different web content, different pay-per-click ad programs, different ad placements, visitor incentives or promotions, etc.

Reseller and affiliate programs also share a need to find the products that will work well together and result in sales/conversions. This may involve research into available products and careful tracking of not only which items sell, but which items sell together, for example.

Both affiliate programs and reseller programs may require an application, and the merchant may review your website and other data to make sure there is a good fit. Since in some way, both resellers and affiliates represent the merchant, the merchant may wish to exercise some discretion about who is allowed to assume this relationship, even though it's not an employer/employee relationship. Merchants seek affiliates and resellers who reflect favorably on the merchants and the merchants' goods and services.