Of growing importance to companies involved in e-commerce is the use of affiliate programs.

Building a successful affiliate program can be of tremendous help to a company.

If you were running an e-commerce company, how would you tackle the idea of an affiliate program? Would you do it for sure or maybe not. Would you want to do it in-house or hire a 3rd party?

Affiliate programs can be helpful but definitely aren't a must. Especially if you have a low margin. Now if your markup is very high it's easy to throw a decent chunk of change ($5 - $20 or more) at an affiliate as a strong incentive for them to send business your way. Having people motivated to send business your way using their own resources is a plus but don't do it at the expense of a tight margin.

I can't argue with that. There are definitely variables involved. The more profit you make on each unit sold the more you can put back into gowing the company.

Affiliate programs have their place in Ecommerce. What you have to consider is whether you can afford to devide your profits... If you are selling a product and makeing only 10% profit over cost, are you going to give away 5% of it. You are going to realize that Lots of Affiliates use questionable methods to get your banner or text link out to the public in general and that probably 75% of the unique customers they send you are not going to be the least bit interested in buying anything. Remembering this how does your web host handle bandwith usage, are you going to be charged more for your website if your traffic picks up. There are a lot of things to consider before jumping in to having affiliates.

I'm not saying affiliate programs aren't good. I use them constantly, but as an affiliate not a merchant... I have affiliate banners all over my websites and usually have at least one in any chat I engage in. My results with them are good... I usually make 2.2 times more off of my affiliate sites than I make off of sales each month. A lot of this is residual income... (someone joined something last January and I still recieve a % of their monthly fees ) I do investigate any company I affiliate with and would not offer a banner for a site I wouldn't do business with.

In the end it's your choice. If you decide you can use the traffic, and can afford to split your profits, an affiliat program is the way to go... If you are like me and work on a shoestring budget .... I wouldn't do it... after all it is just another marketing tool and like others it isn't necessary if you have something else that works.

Am I seeing another venerable and respectable term being hijacked? I've been an e-commerce developer since there was a web, and have never needed an "e-commerce" application to carry ads or have affiliates, etc.

An e-commerce application is any web-enabled application that is integrated with the normal business operations of a company. An e-commerce application need not even have a user interface or be tied to a "web site".

So my answer to the question is that Affiliate Programs are largely irrelevant to the vast majority of successful e-commerce applications.