A Huge Merchant Mistake with Affiliate Marketing. Do not do this!

I Just saw a huge merchant mistake with some cologne I ordered through Amazon.  I’m thankful this Thanksgiving that none of my clients would make a mistake like this.  So, I ordered the cologne online and when the package came it had a coupon site plastered all over it along side the Merchant’s own branding.  I went to the coupon site right after I saw this and sure enough it was an Affiliate site, and they were using the Merchant’s Affiliate link.  Here is why this is stupid.

1.  You are sending your current customers to someone who is going to charge you to send them back to you with numerous fees.

These fees include:

  • Affiliate commissions
  • Network fees (depending on their deal)
  • Your Affiliate Manager’s salary or outsourced manager’s fees
  • The actual amount of a discount the person got from the coupon code
  • The lifetime loss of value in margin per customer because you gave your current customer a place to always find discount instead of shopping without the discount.

These are your current customers so you are losing tons of margin by sending them to an Affiliate site, not to mention you lose more margin on the actual coupon or discount as well.

2.  If you work with coupon sites, like this merchant does, and your other coupon Affiliate partners end up finding out, guess what, they are going to pull you from their sites and not want to work with you.  You are taking their loyal visitors and exposing them to their competitors sites.  You may also anger content sites since you are showing their readers and followers where to go for discounts which can cause the content sites cookie to be overwritten.

3.  You loose the value of a customer’s profitability potentially for life.  If you would have closed the sale with customers like me who think your prices are already discounted enough, you have now given me somewhere to go before I shop with you.  So instead of having a 40% margin off the sale (I’m making the 40% up) because I enjoy your service and products, you now have to pay Affiliate commissions, coupon discounts, network fees, etc… which lowers my value to you and reduces your profit margin. If the commission is 10%, my coupon is 15% and your network fee is a 20% override, you are now much less profitable and I may go to that coupon site for life so you are losing a decent amount of money by making this mistake.

Anyways, I saw this package come in from this well known merchant and was shocked.  I am not going to name the Merchant or Affiliate, mainly because I don’t want a lawsuit, but I may send this post over to their Marketing team to find out what is going on and why they would do this.  It’ll be interesting to hear their reasons behind doing this.  If they respond I’ll update this post.  Happy Thanksgiving everyone!

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4 thoughts on “A Huge Merchant Mistake with Affiliate Marketing. Do not do this!”

  1. One other thing to mention is that if they spend money to breakeven with a new customer via Banner ads, PPC, CSEs, Amazon, etc… they now lose margin again on these new customers and it could take two to three purchases before they become profitable again for their new customer when they would have been profitable on the next purchase.

  2. Wow. When you add all of that up it certainly does make for a tremendous cost, but you never know – perhaps they’ve struck a deal with the coupon site, or maybe its a deal between Amazon and the coupon site.. Great deal for the affiliate though!

    1. Well, I don’t think it was shipped by Amazon and it had absolutely no Amazon branding on the package. They could have easily set up their own coupon site for their own coupons and not had to pay the additional fees.

  3. Socialize znd Promote on meengle.net

    Hi, I read your new stuff regularly. Your humoristic style is awesome, keep doing what you’re doing!

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