Affiliate Marketing and Direct Selling have been very effective over the years helping brands grow quickly using an independent, 1099 sales force.
Before deciding which way to go, it’s important to get familiar with them and their differences.
Affiliate marketing happens when an individual enrolls in a referral program, usually for free, and earns a commission for referring their followers to a brand or site.
The affiliates generally don’t have the ability to build a team and don’t receive a commission when a new affiliate signs up because of their efforts.
You also won’t see minimum personal volume features, quota requirements or overhead.
The affiliate payouts are considered wholesale commissions and are a percentages of sales (see my previous article link here).
Direct selling is when you sell your product or services direct/straight to the consumer.
The consumer doesn’t have to come to your physical store. You can deliver the product via a distributor or a sales rep.
Direct selling companies are hybrids of Traditional MLM’s and modern day affiliate programs.
Most direct selling companies refer to their field as distributors, not affiliates.
Distributors have a wholesale commission just like their affiliate counterparts, but they also get paid additional commissions for building teams.
Their focus isn’t 100% on driving traffic and selling products. They are encouraged to not only sell the products but also to teach their team members in their “downline” how to sell and build a team.
Here, the independent distributor is thought of as a salesperson, not just a referrer or influencer.
Here are some of the key differences between direct selling companies and Affiliate marketing programs:
Start Up Costs
Most affiliate programs are free to join, which makes it very appealing to many.
However, there are hidden costs associated with being a blogger or influencer that many people overlook. Its free to get in, but you have to invest on your own to be successful.
In Direct sales companies, distributors will usually be required to purchase a “starter kit,” often ranging from as low as $29 and up to $499.
The kits are designed to help jump start your business with tools, print materials and product inventory or samples. In some cases you may need to purchase additional inventory to support “cash n carry” models.
initially, you really have to invest time and effort in finding the right product mix, building your market list and developing your promo tools but in the long run, positive results may far exceed your expectation.
Most bloggers and influencers are already working their website and their Social Media pages already as micro entrepreneurs. They have a niche and a voice and are doing the work anyway.
For those influencers, adding some affiliate links is quick and easy. For those aspiring influencers, they must first invest the time to build their following first and worry about monetization later.
In Direct selling, your time commitment can also vary but general averages 3-10 hours per week for the part-time distributor, and as much as 20-40 hours per week or even more for the full time distributor.
In affiliate network marketing, you usually find yourself on an island.
Companies don’t provide much in the way of tech tools and training. You also can’t rely much on your fellow affiliates for help and support as they are busy working their own business. They are not encouraged or compensated to help others in the system.
Direct selling on the other hand, strongly encourages a sense of community in their sales field.
We see this in the Facebook groups where distributors gather to support each other with mentoring, information, and digital assets to help their “team.” Companies host annual conferences, regional meetings and incentive trips to bring the distributors together and connect with the brand.
Your warm market
A lot of bloggers and influencers like affiliate programs because they can use their network to sell beyond their friends and family.
They don’t have to host parties in their homes and instead can use SEO, Google Ads and Social Media to generate new interest on their affiliate offers all the time.
Affiliate Marketing is simple because you share your opinion with your audience via email, social media, blogging, and you might get a small kickback when a purchase is made.
The key to affiliate marketing is having an online presence. Getting an increase in traffic means more potential for someone to click on the links and purchase the products.
In Direct selling, you are strongly encouraged to share your new business with your warm market, also known as friends, family, co-workers and neighbors.
There is a good reason for this.
Experienced sellers know that your warm market is inclined to support you and your new business by being a customer. This early success has proven to give the new distributor confidence that they can be successful as an ambassador to the brand.
So, if you are starting a new E-commerce brand which one is better, Direct Selling or Affiliate Marketing? The answer is it depends on your products and the type of culture you want to cultivate with your brand.