A Quick Rundown Of How It Works
Throughout my time as a blogger/vlogger, I’ve noticed somewhat of a backlash against affiliate marketing from consumers and I feel like it needs to be explained. As a consumer, affiliate marketing has no negative impact as the money your favorite blogger/vlogger receives does not cost you any extra coin. With that being said, I would like to explain the entire process in how the things you love to buy go from individual ingredients or parts to something you can pick up off the shelf or order online.
The manufacturer is the beginning of the process. The manufacturer general receives ingredients or parts from other manufacturers, puts them together, packages the items and packs them for shipping. Manufacturers generally profit from increased efficiency and safety practices as well as sourcing the cheapest ingredients or parts. The manufacturer normally sells the finished goods to a distributor after a small mark-up. Some larger retailers buy direct from some manufacturers.
A distributor is a middle man between manufacturers and retailers. Distributors often handle transportation as well as housing of the goods until the retail outlet can accommodate them. Distributors often operate locally or regionally. This allows them to keep up with trends and tailor their selection to accommodate retailers and consumers. The distributor adds a small markup to their cost for profit.
Brands and Retailers
The retailer is the entity in which you purchase. Amazon, Walmart, Target and Best Buy are some of the largest. Many brands such as Old Navy, H & M, Cotton On, and Express design and sell on their own. Many others such as Polo, Nautica, and Nike have their own brick and mortar locations and sell to other retailers. Retailers normally make the highest markup. Retail markups go from in the negative to plus 1000s of a percent over what they pay.
Affiliate Marketing and Influencers
Affiliate Marketers, influencers and other online marketers generally have deals with retailers and brands. Since the retailers and brands take the highest mark-up they normally do the most advertising. Affiliate marketers and influencers are just a modern way of advertising from the standpoint of the business. As a consumer, you should feel the same way. Sometimes marketers and influencers reach out to who they want to work with and sometimes the brands reach out. Either way, the other party has to accept. The terms are generally set by the larger entity which is normally the brand. If you would like more information about how it works, check out: Rakuten Advertising CJ Affiliates Impact