I consider Amazon.com to be the Internet pioneer for establishing affiliate programs. Their strategy to permit others to sell their products for a commission on affiliate websites has single-handedly help them become an Internet powerhouse and has resulted in Amazon.com becoming a household name.

As an online business owner, you, too, should be offering your own affiliate program. Affiliate marketing is so much less expensive than to take out a banner ad or text ad on other websites or in email newsletters, and the results tend to be better. Imagine that you have a staff of people working for you, and they have agreed to work free of charge until they successfully make a sale. At that point, they are paid when their sales reach a predetermined volume (as outlined in your affiliate agreement) at a certain interval. You’ve instantly created a fast and almost free sales force with very little money.

Even though you may not have the monetary resources available to Amazon.com, you can create this sales phenomenon as well for your professional service business.

Here are the steps you need to consider to create your own affiliate program:

1. Find affiliate tracking software. Trying to manually track all of the sales of your affiliates is simply too labor-intensive. Instead, you need to find a software program that will help you manage your affiliate program. I recommend the one bundled with my shopping cart, GetMoreClientsCart.com, which assigns each affiliate a unique affiliate ID that they can use in their websites to make referrals back to your website, where the actual sale occurs. Each affiliate is also assigned a unique log-in and password so that they can log into their affiliate account at any time and check on their sales volume. Best of all, once you’ve set up your affiliate program, the setup for each affiliate is completely automated.

2. Determine your level of tiers. Typically an affiliate program is limited to no more than 2 tiers. After two, it begins to take on the persona of a pyramid scheme. The first tier is comprised of the affiliates who are directly signed up for your affiliate program, and the second tier are affiliates of your affiliates. For simplicity, I tend to use the 1-tier affiliate structure.

3. Determine your commission structure and rules. Many online business owners spend countless hours wringing their hands over how much to pay in commissions. If you offer too little, no one is interested in promoting your products and services because the payoff isn’t large enough to motivate them. If you offer too much, you feel like you’re giving money away. I’ve discovered that first-tier commission amounts typically range from 25%-75%, with most in the 35-50% range. Second-tier commissions seem to range between 10%-30%, with most landing in the 20% range. You’ll also need to determine if you’ll pay commissions on products that people buy for themselves through their affiliate link. Many people join an affiliate program solely for that reason. However, if that’s the only reason they’ve joined your affiliate program, they probably won’t be making additional sales for you.

4. Create your payout schedule. Next you’ll need to determine at what intervals you’ll pay your affiliates. I’ve seen some programs pay commissions weekly, but monthly payouts is the most common. Let your affiliates know on what day you determine the month’s commission, what their minimum earnings must be to get paid (i.e. at least $50 in earnings, for example), and on what day you send payments.

5. Determine your payment form. For many affiliate programs to which I belong, I receive a check in the mail for my payments. However, more companies are transitioning to PayPal’s Mass Pay feature to pay affiliate commissions. PayPal’s Mass Pay feature eliminates most of the paperwork involved in check writing, and with the upload of a few files, you can pay your affiliate quickly via their PayPal email addresses. In order to use this service, you have to have a PayPal Premier or Business Account and you need to ask for your affiliate’s PayPal email address.

6. Provide marketing assistance. For the greatest success in your affiliate program, you need to provide your affiliates with marketing materials to help them promote yours products and services. Have a graphic designer create a variety of website banners and buttons they can use, and you can compose classified ads that they can place in ezines and sales letters they can use on their site or as an email marketing tool. You’ll need to create some reminders about ethical email marketing strategies so that you don’t become associated with anyone who is labeled as a spammer. Lastly, give your affiliates access to a group of articles that they can use on their site to promote your programs and services, with directions on how to insert their affiliate link in the resource box.

7. Educate your affiliates. After joining an affiliate program, I often receive a phone call from a company’s affiliate manager welcoming me to the affiliate program and encouraging me to contact him/her with questions. Or, I get an invitation to special affiliate teleclasses/webinars to give me strategies on how to be a good affiliate. You can offer the same amenities to your affiliates by working with an Online Business Manager/Virtual Assistant to run this program for you. At a minimum, you can create an affiliate handbook that your affiliates receive upon signing up for you program, which will walk them through the steps of your affiliate program.

8. Market your affiliate program. Once your affiliate program has been set-up, you’ll need to promote it. Have your OBM/VA seek out strategic alliance opportunities. Search for websites that permit you to promote your affiliate program. Send out notice of your affiliate program to your list, on your blog, and on discussion lists where this is type of promotion is permitted.

Creating your own affiliate program is a great way for you to grow your business in a short period of time. You never know–you may be on your way to creating your own Amazon.com!

Amazon was founded in 1994, spurred by what Bezos refers to as his regret minimization framework, his effort to fend off late in life regret for not staking a claim in the Internet gold rush.1 It is common lore that Bezos wrote its business plan while he and his wife drove a 1988 Chevrolet Blazer from Fort Worth, Texas to Bellevue, Washington,although this story is largely apocryphal according to early employees of the company.original research?

The company began operating as an online bookstore under the name Cadabra.com (as in abracadabra), a name that Bezos quickly abandoned due to its sounding like “cadaver”. While the largest brick-and-mortar bookstores and mail-order catalogs for books might offer 200,000 titles, an online bookstore could offer many times more. Bezos renamed his company “Amazon” after the world’s most voluminous river.

The company was incorporated in 1994, in the state of Washington, began service in July 1995, and was reincorporated in 1996 in Delaware. The first book ever sold by Amazon.com was Douglas Hofstadter’s Fluid Concepts & Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought.Amazon.com had its initial public offering on May 15, 1997, trading on the NASDAQ stock exchange under the symbol amazon at an IPO price of US$18.00 per share (equivalent to US$1.50 after three stock splits during the late 1990s).

Amazon’s initial business plan was unusual: the company did not expect to turn a profit for four to five years. In retrospect, the strategy was effective. Amazon grew at a steady pace in the late 1990s while many other Internet companies grew at a blindingly fast pace.

Amazon’s “slow” growth caused a number of its stockholders to complain, saying that the company was not reaching profitability fast enough. When the Dot-com bubble burst and many e-companies went out of business, Amazon persevered and finally turned its first profit in the fourth quarter of 2002: a meager US$5 million, just 1¢ per share, on revenues of over US$1 billion, but it was important symbolically.

The firm has since remained profitable: net income was US$35.3 million in 2003, US$588.5 million in 2004, US$359 million in 2005, and US$190 million in 2006 (including a US$662 million charge on R&D in 2006). Nevertheless, the firm’s cumulative profits remain negative. As of September 2007, the accumulated deficit stood at US$1.58 billion.

Revenue continued to grow thanks to product diversification and international presence: US$3.9 billion in 2002, US$5.3 billion in 2003, US$6.9 billion in 2004, US$8.5 billion in 2005, and US$10.7 billion in 2006. On November 21, 2005, Amazon entered the S&P 500 index, replacing AT&T after it merged with SBC Communications.

Time Magazine named Bezos its 1999 Person of the Year in recognition of the company’s success in popularizing online shopping

Merchant partnerships

The Web sites of Borders (borders.com, borders.co.uk), Waldenbooks (waldenbooks.com), Virgin Megastores (virginmega.com), CDNOW (cdnow.com), and HMV (hmv.com) are powered and hosted by Amazon. Until June 30, 2006, typing ToysRUs.com into a browser would similarly bring up Amazon.com’s Toys & Games tab; however, this relationship was terminated as the result of a lawsuit.4.

Amazon.com powers and operates retail web sites for Target, the NBA, Sears Canada, Sears UK, Benefit Cosmetics, Bebe Stores, Timex Corporation, Marks & Spencer, Mothercare, Lacoste and Bombay Company now defunct. For a growing number of enterprise clients, currently including the UK merchants Marks & Spencer and Mothercare, Amazon provides a unified multichannel platform from where a customer can interchangeably interact with the retail website, standalone in-store terminals, and phone-based customer service agents.

It also powers AOL’s Shop@AOL service via Web Services technology.

The company’s global headquarters is located on Seattle, Washington’s Beacon Hill. It has offices throughout other parts of greater Seattle including Union Station and The Columbia Center.

2.The Product lines:

Amazon has steadily branched into retail sales of music CDs, videotapes and DVDs, software, consumer electronics, kitchen items, tools, lawn and garden items, toys & games, baby products, apparel, sporting goods, gourmet food, jewelry, watches, health and personal-care items, beauty products, musical instruments, industrial & scientific supplies, groceries, and more.

The company launched Amazon.com Auctions, its own Web auctions service, in March 1999. However it failed to chip away at industry pioneer eBay’s juggernaut growth. Amazon Auctions was followed by the launch of a fixed-price marketplace business called zShops in September 1999, and a failed Sotheby’s/Amazon partnership called sothebys.amazon.com in November. Although zShops failed to live up to its expectations, it laid the groundwork for the hugely successful Amazon Marketplace service launched in 2001 that let customers sell used books, CDs, DVDs, and other products alongside new items. Amazon Marketplace’s main rival today is eBay’s Half.com service.

Beginning August 2005 5, Amazon began selling products under its own private label, “Pinzon”; the initial trademark applications suggested the company intended to focus on textiles, kitchen utensils, and other household goods.In March 2007, the company applied to expand the trademark to cover a larger and more diverse list of goods, and to register a new design consisting of the “word PINZON in stylized letters with a notched letter O whose space appears at the “one o’clock” position.” 6. The list of products registered for coverage by the trademark grew to include items such as paints, carpets, wallpaper, hair accessories, clothing, footwear, headgear, cleaning products, and jewelry.

On May 16, 2007 Amazon announced its intention to launch its own online music store.The store launched in public beta September 25, 2007, selling downloads exclusively in MP3 format without digital rights management.

In August 2007, Amazon announced Amazon Fresh, a grocery service offering perishable and nonperishable foods. Customers can pick up orders or have them delivered to their homes. Delivery is initially restricted to residents of Mercer Island, Washington, a wealthy suburb of Seattle.

3.Website:

A popular feature of Amazon is the ability for users to submit reviews to the web page of each product. As part of their review, users must rate the product on a rating scale from one to five stars. Such rating scales provide a basic idea of the popularity and dependability of a product.

The review feature is an important and highly influential function for customers and one of the main reasons for amazon.com’s success at selling books. As with book reviews anywhere, the buyer must beware that all reviewers have bias. Under normal circumstances, reviews give the reader at least a modest basis for evaluating a given book.

Because it is an open forum, the reader can benefit from a variety of perspectives. However, the anonymity of web reviewers increases the chances of abuse in the form of self-praise, praise from friends, or malicious criticism. This situation was confirmed in 2004 when the origin of reviews was accidentally made public on an amazon site, and some authors openly confirmed their glowing reviews of their own books.

Amazon provides an optional badging option for reviewers, e.g., to indicate the “real name” of the reviewer (based on a credit card) or to indicate that the reviewer is one of the “top” (most popular) reviewers. Some books have well over one thousand reviews (e.g. Ayn Rand’s Atlas Shrugged), but many books, especially new ones, have none.

The U.S. site generally has the most reviews, but other country sites offer the perspectives of other reviewers. A review posted on one site is not necessarily visible on another site.

Search Inside the Book is a feature which allows customers to search for keywords in the full text of many books in the catalog.The feature started with 120,000 titles (or 33 million pages of text) on October 23, 2003. There are currently about 250,000 books in the program. Amazon has cooperated with around 130 publishers to allow users to perform these searches.

To avoid copyright violations, Amazon.com does not return the computer-readable text of the book but rather a picture of the matching page, disables printing, and puts limits on the number of pages in a book a single user can access. Amazon is planning to launch Search Inside the Book internationally. Additionally, customers can purchase access to the entire book online via the Amazon Upgrade program, although the selection of books eligible for this service is currently limited.

According to information in Amazon.com discussion forums, Amazon derives about 40% of its sales from affiliates, whom they call “Associates.” An Associate is an independent seller or business that receives a commission for referring customers to the Amazon.com site.

Associates do this by placing links on their websites to the Amazon homepage or to specific products. If a referral results in a sale, the Associate receives a commission from Amazon. Worldwide, Amazon has “over 900,000 members” in its affiliate programs. Associates can access the Amazon catalog directly on their websites by using the Amazon Web Services (AWS) XML service.

Amazon was one of the first online businesses to set up an affiliate marketing program.AStore is a new affiliate product that allows Associates to embedded a subset of Amazon products within, or linked to from, another website.

According to the Internet audience measurement website Compete.com, Amazon attracts approximately 50 million U.S. consumers to its website on a monthly basis.

4.Noteworthy events:

In 2002, Amazon became the exclusive retailer for the much-hyped Segway Human Transporter. Bezos was an early supporter of the Segway before its details were made public.

On June 21, 2003, Amazon coordinated what was at the time one of the largest sales and distribution events in e-commerce history with the sale of over 1.3 million copies of Harry Potter and the Order of the Phoenix, since beaten by Harry Potter and the Deathly Hallows with a sale of over 2 million copies preordered in 2007.

On July 16, 2005, Amazon celebrated its 10th anniversary by telecasting a worldwide live concert hosted by Bill Maher and artists such as Bob Dylan and Norah Jones.

5.Donations:

In 2001, Amazon was one of the first online stores to begin accepting donations to the Red Cross on behalf of 9/11 victims. For several days the company dedicated its entire home page for this cause.citation needed

In 2004, Amazon launched its Presidential Candidates feature, whereby customers could donate from US$5 to US$200 to the campaigns of U.S. presidential hopefuls, resurrecting the Amazon Honor System for the purpose. The Honor System was originally launched in 2001 as a way for Amazon customers to “tip” their “favorite Web sites and to buy digital content on the Web,” Amazon collecting 2.9% of the payment plus a flat fee of US$0.30. It has never been shut down, but had fallen into relative disuse.

At the end of 2004, with the catastrophic earthquake and tsunami in the Indian Ocean, Amazon set up an online donation channel to the American Red Cross using the Honor System, waiving its processing fee. As of January 3, 2005, over 162,000 individuals had donated over US$13.1 million in this way.

The same week, Amazon created similar channels for the British, Canadian, French, German, and Japanese Red Cross organizations via its international sites. Over 7,000 Britons donated more than US$350,000; 900 Canadians over US$56,000; 660 French over US$23,000; 2,900 Germans over US$145,000; and 1,900 Japanese over US$66,000.

Amazon reactivated its Red Cross donation channel when Hurricane Katrina struck at the end of August 2005. As of September 8, over 98,000 payments had been made totaling over US$10.7 million.

6.Patent use:

The company has been controversial for its alleged use of patents as a competitive hindrance. The “1-click patent”is perhaps the best-known example of this. Amazon’s use of the one-click patent against competitor Barnes and Noble’s website led the Free Software Foundation to announce a boycott on Amazon in December 1999.The boycott was discontinued in September 2002.

On May 12, 2006, the USPTO ordered a reexamination of the “One-Click” patent, based on a request filed by Peter Calveley. Calveley cited as prior art an earlier ecommerce patent and the Digicash electronic cash system.

On February 22, 2000, the company was granted a patent covering an Internet-based customer referral system, or what is commonly called an “affiliate program”. Reaction was swift and negative. Industry leaders Tim O’Reilly and Charlie Jackson spoke out strongly against this patent and O’Reilly published an open letter to Bezos protesting the 1-click patent and the affiliate-program patent, and petitioning him to “avoid any attempts to limit the further development of internet commerce”.

O’Reilly collected 10,000 signatures with this petition. Bezos responded with his own open letter. The protest ended with O’Reilly and Bezos visiting Washington D.C. to lobby for patent reform.

On February 25, 2003, the company was granted a patent titled “Method and system for conducting a discussion relating to an item on Internet discussion boards”.

7.Chris Benoit DVD:

In late June 2007, shortly after the death of professional wrestler Chris Benoit, Amazon displayed a special note on search results pages for the term “WWE” “Tragic news from the WWE. Wrestler Chris Benoit and his wife and son have been found dead in their Georgia home, and police are investigating the situation as a possible murder-suicide.”

The caption was then followed by a photo and a link to purchase the Hard Knocks: The Chris Benoit Story DVD. Amazon.com later removed the offending message after widespread complaints in the professional wrestling community

8.The Humane Society of the United States v. Amazon.com,Inc:

Amazon continues to carry two cockfighting magazines and two dog fighting videos although the Humane Society of the United States (HSUS) contends that the sale of these materials is a violation of U.S. Federal law. The Humane Society of the United States has filed a lawsuit against Amazon. The HSUS is actively advising supporters to write Amazon requesting the removal of the offensive materials.

This writing campaign gained momentum in August of 2007 after the much publicized dog fighting case involving NFL quarterback Michael Vick.Some supporters are also calling for a boycott of Amazon until the animal fighting materials are removed from sale.

They are also the pioneers of what is now the fastest growing marketing model on the Internet right now – affiliate marketing.

Geniuses they are, taking the concept of the commissioned salesman and applying it on to the Internet! And what’s best, these salesmen do not have to deliver a sales pitch to every potential customer. What a great win-win, eh?

There is a way to make it rich with Amazon’s affiliate program. Don’t promote books as an affiliate. Rather, promote high-end products like software (Microsoft Vista, Photoshop Elements etc) or even television sets and digital cameras.

How do we promote these items? Simple. Through Google Adwords.

Go to Adwords.com to see what it is all about. It only takes $5 to start.

You will get about 4% for every item you sell. Now this might not seem like a lot, but when you are talking about a double lenses digital camera selling for $3000, then you will begin seeing the big picture. And if you think nobody will buy a $3000 digital camera, think again. There are ferraris and yatchts being traded on eBay right as we speak. There are people with truckloads of money to burn out there. These people have bottomless pockets.

Now what you do is simply direct your Adwords ad direct to your Amazon affiliate link. Your cookie will set on the user’s computer and if he buys, you will be credited with the sale.

Most people who have experience with affiliate programs know about the Amazon Associates program – a person who has a website set up such that the site’s primary purpose is to make money from a variety of affiliate programs is glad to add Amazon’s free program to the perhaps multitude of affiliate programs listed on his or her site.

If you don’t have a website dedicated to affiliate programs but instead have (or are considering starting) a website that exist primarily to sell products, you probably haven’t considered joining the Amazon Associates program. Instead, your focus is solely on selling products. That’s understandable – but you’re missing out on the potential for easy, extra income.

No matter what you choose to sell online, there are undoubtedly many books about that line of products. If you’re selling pet products, customers may be interested in pet books. If you’re selling crafts, customers may be interested in buying craft books. If someone is interested enough to spend money at your website for the product, they may very well also be interested enough to spend money on a book or two. Such customers can of course visit Amazon.com at any later time, but why not encourage them to consider buying some books right now, while they’re in the mood to spend money at your website?

There are a few different ways you can incorporate an Amazon Affiliates program into your website:

Skilled website developers who want to add book-selling to a website should use Amazon’s own Amazon Web Services API. This is a set of programming code that a developer can use with existing HTML to develop a web page that displays book covers, titles, and other book information. Developers interested in this API should check out the ‘Amazon Web Services’ link at Amazon.com.

People with more modest website development skills should consider making use of Amazon’s free aStore product. With aStore you can, without programming skills, embed a book-selling online store into your product-selling website. You can search the Amazon.com website for ‘aStore’ to find more details about the aStore product.

Finally, people who are considering setting up a small online business using an ‘all-in-one’ website builder should investigate the various website builders that web hosts offer to find one that includes a pre-built ‘Book Buying’ page. Such a website builder allows you to easily include a page that lists any number of Amazon.com books. By ‘easily’ I mean the website builder should allow you to simply enter a topic and the number of books to display, and the website builder does all the work. A good website builder will even give you the option of making the page interactive for your customers by including a text box in which a visitor types a subject of interest and the web page returns Amazon.com-supplied information about any number of books on that subject.

Amazon’s Associates program won’t provide enough of an income to be your primary source of earning money from a website. But if you already have a website that sells products, or are about to start such a website, it may well be worth a few minutes of your time to add a book selling page and use it to supplement the money you make from selling your primary products.