Affiliate Commission: Advantages and Disadvantages!

The so-called regulated trade offers different models : franchise, trademark license, franchise, cooperative, affiliate commission ; All of these forms have in common that they are networked and based on a commercial contract between two legally and financially independent companies.
If you feel like Create a business Depending on the famous brandThe affiliate commission It may suit you. Focus on the sound managementfor him origins so is Negatives.

affiliation principle

fall on it charge formula : The supplier company authorizes the merchant to sell its products for a commission, i.e. a bonus as a percentage of the sales volume. This percentage varies between 30-40% of sales with the knowledge that if the subsidiary owns or rents the point of sale, its profitability will be different.

this is partnership he is commercial contract Which connects two companies within a network: School Manager On one side (the supplier of the product(s)) and Guardian or ally Who sells products in his store. The ally has no stock He did not buy and He is no longer a manager of its shares. It’s the supplier who makes predictions, restock, and recover unsold items at the end of the season. If a partner has an interest in selling under a well-known brand name, he will not be obligated to have exclusive rights to it and may have different brands in his store and thus contract with several companies affiliate commission with different suppliers.

Personal goods brands are dominant in this form of commerceespecially men’s, women’s and children’s ready-to-wear, jewelry, shoes, fashion jewelry, etc.

Advantages of the Affiliate-Affiliate Formula

Affiliation means benefiting from a well-known brandFrom proven tradeFrom help and sometimes exclusivity (At the request and consent of both parties). The subsidiary also benefits from network knowledge For various marketing operations and promotions during the season or during the sale period.

The main difference lies in the fact that the affiliate marketer does not choose his products and does not manage his stock. There is an entry fee as in a franchise and the manager chooses his affiliate company according to his contribution and the profitability of the point of sale. As an affiliate, you should primarily focus on choosing the building, financing the structure and operating your store. To open a commission affiliation, it is therefore necessary to make at least €50,000 of personal contribution for a total investment of approximately €150,000.

Opening under this formula immediately benefits fromBad reputation brand and attracts acquired clients. not being Not the owner of the stockhe doesn’t have to fund it, allowing lighter cash flow. This is a deposit selling system where the partner is an independent who resells the products without choosing them, but if he does not sell them, the brand will take over. So the lower the risk and the more it sells, the higher its profit. Depends on inventory management and central logistics.

Read: Franchise Advantages for Franchisees and Franchisors

Disadvantages of commission formula

The franchisor owns the goods he sells, in affiliate commission The subsidiary company is a distributor of goods and did There is no influence on the selection and size of products.

Having only the commercial part can be frustrating for some entrepreneurs who want to control all aspects of their business, but this can be a deliberate choice of a business profile rather than a managerial one. In addition, the financial investment is less important as it only pertains to buildings and entrance fees. For a trader who already has premises, this may be interesting provided that it is not associated with a full or partial exclusive clause. Some products can be complementary, such as jewelry and women’s ready-to-wear, providing added value and increasing the average basket.

side of the headthere are inherent risks to the formula: Bear the burden of unsold goods And the Manage dozens of points of sale with different issues. Only networks that master supply chain management and logistics can be developed under this business model.
human sidea Affiliate He must understand that it is Responsible for the proper management of his point of sale. Also, the hiring should be for the benefit of the entrepreneurs who take the risks of operating their business.

Read: Different types of network contracts

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