Is it better to sign up for an affiliate program or opt to become a reseller? Maybe becoming a channel partner sounds perfect to you. Whatever you decide, you will still be involved with a type of partnership. Because of the similarities that all three terms share, people get confused about what makes each type of partnership different compared to the others.
The article below looks to discuss the major differences between the three terms. To get started, let us look at the definition of each term.
What is Affiliate
According to Investopedia, “affiliate is used primarily to describe a business relationship between wherein one company owns less than a majority stake in the other company’s stock. Affiliations can also describe a type of relationship in which at least two different companies are subsidiaries of the same larger parent company.
The term affiliate is also used in the retail sector. In this case, one company becomes affiliated with another in order to sell its products or services, earning a commission for doing so.”
What is Channel Partner
This is what Wikipedia has to say: “A channel partner is a company that partners with a manufacturer or producer to market and sell the manufacturer’s products, services, or technologies. This is usually done through a co-branding relationship. Channel partners may be distributors, vendors, retailers, consultants, systems integrators (SI), technology deployment consultancies, and value-added resellers (VARs) and other such organizations.”
What is Reseller / Distributor
Here is Wikipedia’s definition: “A reseller is a company or individual (merchant) that purchases goods or services with the intention of selling them rather than consuming or using them. This is usually done for profit (but could be resold at a loss). One example can be found in the industry of telecommunications, where companies buy excess amounts of transmission capacity or call time from other carriers and resell it to smaller carriers.”
The fact is, be it channel partnerships, affiliate marketing, or reselling the services or products of a mother company, the central idea of everything is that they all generate income for themselves and the mother company.
Affiliates vs Distributors vs Channel Partners
Affiliates are mostly based on the internet where affiliate marketers can promote products and services provided by a parent company. You can describe the role of affiliates as the management of pre-sales tasks. This involves driving prospects and visitors to the parent company’s products page.
Whereas distributors/resellers can indulge in conversations with the end-users, answer phone calls, resolve queries, and even offer sales support.
One of the biggest benefits of being a reseller is that you can add an extra measure of profit margin before selling products and services to the end-users. In simpler words, resellers enjoy the privilege of deciding the costs of products and services. In most cases, resellers are careful to not disclose the identity of the parent company. Here is why: with the identity of the parent company out in the open, end users can by-pass the reseller and directly purchase products from the parent company.
The story is different for affiliate marketers. The parent company usually pays fixed commissions in this case. When a product is purchased through an affiliate marketer’s link, the affiliate receives a fixed commission.
If you opt to become a channel partner, you are part of a company that signs up for channel partner programs in a bid to expand its product offerings by giving prospects a one-stop solution. Such a company isn’t looking to invest in the overheads, as there are no real reasons for that. Earnings are gotten through commissions that are paid for the number of customers that are referred to the mother company.
Advantages of being a reseller / distributor
The fact is, there’s no limit to the extent that resellers or distributors can sell products and services. If we look into an example of Web Hosting Reseller Programs, a distributor that is reselling WHUK can use different name servers, making it look like a sovereign hosting provider and not a reseller of the original program.
On the other hand, affiliates or channel partners earn commissions based on already defined structures that are born of mutual agreements.
Advantages of being an Affiliate
There are advantages that affiliates have over channel partners and resellers. For example, if you are an affiliate, you won’t have to invest in the overhead costs. All you are required to do is to use your marketing expertise to promote the services and products of the parent company. You are not expected to take part in customer acquisitions, corporate meetings, technical support, and so on. You can handle tasks on your own without the need of bringing in a team to assist with attracting affiliate sign-ups.
Resellers and channel partners are sometimes required to interact with prospects, offer discounts, provide post-sales support, trials, etc.
Advantages of being a Channel Partner
As the term suggests, a channel partner is a representative of the host company at a specific geographic location. Signing contracts, handling legal obligations, offering consultations, or even paying visits to customers when necessary can be part of a channel partner’s job. Channel partners are usually more involved in the day-to-day running of the parent company. This means that, as a channel partner, if you’d love the parent company to take a different approach, you are in a position to share your ideas and make things happen.
Which type of partnership is the best for you?
Unfortunately, there is no direct or simple answer to your question. Choosing the partnership strategy that is right for you can be a dynamic and often tricky process. However, there are a few rules of thumb that you can follow when making your final decision.
If your goal is to scale quickly, an affiliate program might work best for you. Affiliate partners have preexisting customer bases and audiences. Usually, a little nudge is all that is needed to convert your prospects into buyers.
If you’re looking to get your sales processes optimized for volume, try a reseller program. Once you have put robust procedures that can facilitate direct sales in place, a channel-partnership program can help boost the return on your sales investment, and you won’t have to scale your sales team.
As you can see, it is best to make your final decisions based on your goals. That way, you won’t have to waste valuable time trying out strategies that will yield undesired results.
Further read on:-
- The complete guide to partnership sales in 2021
- Top free affiliate tracking software for online business
- How to Recruit Great Affiliates for Retail
