One of the significant threats to Danish online stores is the global expansion of Amazon. Recent rumors suggest that it won’t be long before Scandinavia is on their radar. Amazon’s latest financial report revealed a staggering revenue of $136 billion.
This amount surpasses the entire Danish national debt and is equivalent to the combined revenue of Denmark’s eight largest companies:
– A.P. Moller
– Maersk
– Novo Nordisk
– ISS
– Arla Foods
– Orsted (DONG Energy)
– Carlsberg
– Vestas Wind Systems
– Danish Crown
It’s a figure that’s challenging for the average person to comprehend.
So, how should owners and employees of small Danish online shops sleep at night when a giant like Amazon is on the horizon?
The challenge cannot be addressed with a single solution…
In this post, however, I will provide insights into how you can establish a more secure foundation and ensure that it’s your competitors who lose the battle with the giant, not yourself.
16% of All Online Orders are Processed Through This Channel.
BusinessInsider.com published an extensive study (1) revealing that 16% of all online sales are generated through Affiliate Marketing. If you’re unsure about what Affiliate Marketing is, you can learn more here.
The study’s figures also indicate that this percentage is on par with the sales generated through email marketing (PPC accounts for 20%, and organic traffic accounts for 21%).
According to a 2016 report (2) from Forrester® Consulting, 81% of all brands utilize affiliate marketing programs.
With over 20,000 active webshops in Denmark and 2-3,000 leveraging affiliate marketing as a sales channel, we are still well below that threshold.
Hence, my guess is that if you’re reading this, there’s a +85% probability that you haven’t yet explored affiliate marketing. If you want to find out if affiliate marketing is right for you, you can get the answer by taking the test here: https://www.eraffiliateformig.dk/
Why is Affiliate Marketing Essential?
“I could also phrase it differently… Why is email marketing important? The study shows that these two elements generate an equal amount of revenue.
And the answer, of course, is precisely that: It generates revenue and earnings.
One aspect that makes affiliate marketing a shield against giants like Amazon is that you can be ‘present’ everywhere.
- With effective affiliates, you can dominate all the search results on Google for your primary keywords.
- With reliable affiliates, your products can be mentioned on all existing social media platforms.
- With strong affiliates, you can leverage not only your own email list but also the extensive email lists they have built.
In short, you extend your reach across a much larger portion of the internet, customers’ social profiles, and their email inboxes.”
How Much Can you Gain from Affiliate Marketing?
“Rakuten Marketing® conducted an extensive study (3) among various webshops and concluded that, on average, 20% of the total revenue comes from affiliates.
This means that if you’re not utilizing affiliates today, you’re potentially missing out on an additional 25% in revenue…
In the UK, the study reveals that for every £1 webshops invested in affiliate marketing, it resulted in an increased revenue of £15 – equivalent to 1500%.
For most, that appears to be a sensible return. However, it’s not necessarily “easy.”
Similar to Adwords or Facebook ads, one needs to know what they’re doing.
Building a solid foundation takes time. So instead of waiting for Amazon to arrive, now would be a good time to get started.”
3 Crucial Elements for Top-performing Affiliates
Perhaps it’s not something you think about every day, but sites like PriceRunner, Hotels.com, Momondo, and EDBPriser are actually significant affiliate platforms.
They earn money when a customer clicks on a link, goes to the webshop, and makes a purchase.
So, what are the three key elements for the major players in the affiliate market?
#1 You need to offer an attractive commission.
Affiliates rely on the commission paid when customers generate revenue in your business. When choosing between two stores selling the same products, an affiliate often opts for the webshop where they can earn the most money.
#2 You should have a good (and preferably extensive) product range.
This doesn’t mean that a webshop with a few products or in a niche market can’t still do well. However, major players often prefer to source as much as possible from one place.
And that leads us to the third thing.
#3 You must have complete control over your product feed.
Platforms like PriceRunner and others retrieve all products, prices, stock status, etc., through product feeds.
If you don’t have a feed or if it’s not correctly formatted or comprehensive, they may not be interested in importing your products at all. For foolproof management of your product feeds for affiliates, I recommend checking out this option: https://avecdo.com/channels/partner-ads/
It’s user-friendly and ensures accuracy and completeness in your feed.
Can Affiliate Marketing Keep Amazon at Bay?
The answer is, simply put: No. Amazon is coming, and we all have to come to terms with that.
However, it’s crucial that we don’t just give up but explore all the opportunities available to us.
One of those opportunities is affiliate marketing. Ironically, Amazon built much of its success on affiliate marketing. Today, they have significantly reduced commissions, leading affiliates to search for other webshops and products where they can earn better returns by providing assistance.
Mikael Rieck
Affiliate Marketing Expert
Mikael is the Co-founder of Marketers.dk and has been working in online marketing since 2003. Today, he teaches webshops and affiliates how to optimize collaboration and maximize returns. Mikael speaks at various Danish conferences and instructs at IBC in Kolding.
(1) Source: http://www.businessinsider.com/the-affiliate-marketing-report-how-mainstream-publishers-are-turning-performance-based-marketing-into-a-fine-art-2015-11?r=US&IR=T&IR=T
(2) Source: https://www.practicalecommerce.com/wp-content/uploads/2016/03/Networks_Help_Drive_Affiliate_Marketing_Into_The_Mainstream.pdf
(3) Source: https://web.archive.org/web/20170303031344/http://marketing.rakuten.com/independent-survey-commissioned-by-rakuten-affiliate-network-2016
