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My aim with this article is to give a brief explanation of how affiliate links work.
In general affiliate links work by giving a small commission to people who drive traffic towards a site, and it is paid for by seller fees that exist on that site.
When someone visits a site the source of that click will be recorded and a portion of the seller fees will be attributed to that source for a given time period, which can be days, months or perhaps even a year.
In summary:
- John reads an article on ABC website and clicks on an Amazon affiliate link, for example for a specific product.
- John is redirected to Amazon and his affiliate link click is recorded.
- John is tagged and any purchase he makes within the next 24 hours will grant ABC website a commission.
Something to note is that affiliate link tags are usually overwritten if the same user visits the same site from another source, usually only the last source will get paid.
Examples
One such website that facilitates affiliate links is eBay, seller fees there range from 10% to 15%. With these seller fees the platform can be maintained, but of course they are also a big factor in the profit they make.
When you want to create affiliate links you will have to use the eBay Partner Network program, this will allow you to create affiliate links with a duration of 24 hours and a commission of 1.5-4% depending on the category in which the item gets sold. For trading cards this commission is 3% for example.
A commission of 1.5-4% is not massive but eBay doesn’t actually need the traffic from these affiliate links either, they are big enough to exist on their own. The 24 hour window also ensures that eBay only rarely needs to pay a commission when comparing those affiliate sales to the total of their sales.
Sometimes you will find online stores offering a commission of 10% with a tracking duration of for example 30 days, in that case it can be assumed that they prioritize acquiring new, hopefully recurring, customers over making a big profit on that specific sale. Of course this still depends on the margin on their sale, in the case of trading cards this margin may actually be quite low. And in this case the traffic can reach new customers who otherwise never would have visited this store.
Final words
Hopefully this article helped in giving you a better understanding in how affiliate links work. If you are interested in more of these articles then please consider subscribing to the newsletter on my Home page.
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