A large majority of online purchases are actually for physical, tangible goods that have to be shipped to the consumer, so it is surprising that a lot of affiliate marketers will avoid promoting these types of products.
One of the main reasons they avoid promoting physical goods is because sales on these products typically offers a much lower commission percentage compared with sales on digital products.
Physical Goods vs.
Digital Products First, it is important to consider the metrics of the industries behind these two distinct types of products that affiliates can promote.
Producers of digital products have very low costs associated with the creation of their products.
In general, their only major costs may be wages or possibly marketing expenses.
Digital products are often made by individuals who get to keep all the income that results from a sale.
The world of tangible goods is quite different.
A manufacturer actually makes the product, often in a factory of some type.
Immediately, these manufacturers have costs for their facilities and wages, along with a basic cost to actually make each product.
In nearly all situations, the manufacturer is not actually selling their product directly to the consumer.
This alone is a major difference from digital products, since the producer is typically is the vendor as well.
Each different goods market can vary, especially considering some goods are only made in specific countries.
As a result, there are often even more costs added to the price of a product for importing and distribution.
Once the product lands in the possession of the retailer that actually sells it to consumers, it can easily multiply in price numerous times compared with what the manufacturer selling price.
Affiliate Commission Rates After these two different markets are understood, it is easier to understand how they can offer vastly different commission rates.
A producer and seller of a digital product may offer 50% or even 70% commission to an affiliate for selling their product, but they have extremely low costs to get that product on the market.
Even more so, it doesn't cost them anything to produce a particular quantity.
Digital goods are just made one time and then reproduced without any expenses at all.
On the opposite end of the spectrum, physical goods already have a lot of costs built into their price.
The reality of the situation is that retailers of these tangible items do not actually place a huge markup on their prices.
Their actual profits from the sale of a single item may only be 15% - 20% compared with nearly 100% profit from digital product sales.
As a result, physical goods do not have a lot of extra money in their costs to share with affiliates.
Even though an affiliate may only be earning 4% - 10% of the total sale amount, that may actually be 50% of the profits that a retailer is making from the sale.
The Real Affiliate Benefits From Promoting Physical Goods There are two major reasons why it is more beneficial for affiliates to promote physical goods over digital products.
Those reasons are the cost of physical goods and their demand.
Most digital products do not have prices above $100, and the ones that do will typically not have frequent sales.
With physical goods, the story is quite different.
The prices of tangible items have much more variety ranging from very cheap to downright expensive.
The cheap products can be very easy to sell, even though the actual earnings from those sales may be low.
However, expensive products can offer extremely high-paying commissions, even with the low percentage rates.
The good news for affiliates is that people actually want to buy physical goods online.
Prices for these products are often lower than those found in retail stores because the online retailers have lower expenses.
This means that people actually go to the internet to find good deals on things they want to buy.
All an affiliate marketer has to do is get in the position to direct these consumers to an online retailer that offers a competitive price.
One of the main reasons they avoid promoting physical goods is because sales on these products typically offers a much lower commission percentage compared with sales on digital products.
Physical Goods vs.
Digital Products First, it is important to consider the metrics of the industries behind these two distinct types of products that affiliates can promote.
Producers of digital products have very low costs associated with the creation of their products.
In general, their only major costs may be wages or possibly marketing expenses.
Digital products are often made by individuals who get to keep all the income that results from a sale.
The world of tangible goods is quite different.
A manufacturer actually makes the product, often in a factory of some type.
Immediately, these manufacturers have costs for their facilities and wages, along with a basic cost to actually make each product.
In nearly all situations, the manufacturer is not actually selling their product directly to the consumer.
This alone is a major difference from digital products, since the producer is typically is the vendor as well.
Each different goods market can vary, especially considering some goods are only made in specific countries.
As a result, there are often even more costs added to the price of a product for importing and distribution.
Once the product lands in the possession of the retailer that actually sells it to consumers, it can easily multiply in price numerous times compared with what the manufacturer selling price.
Affiliate Commission Rates After these two different markets are understood, it is easier to understand how they can offer vastly different commission rates.
A producer and seller of a digital product may offer 50% or even 70% commission to an affiliate for selling their product, but they have extremely low costs to get that product on the market.
Even more so, it doesn't cost them anything to produce a particular quantity.
Digital goods are just made one time and then reproduced without any expenses at all.
On the opposite end of the spectrum, physical goods already have a lot of costs built into their price.
The reality of the situation is that retailers of these tangible items do not actually place a huge markup on their prices.
Their actual profits from the sale of a single item may only be 15% - 20% compared with nearly 100% profit from digital product sales.
As a result, physical goods do not have a lot of extra money in their costs to share with affiliates.
Even though an affiliate may only be earning 4% - 10% of the total sale amount, that may actually be 50% of the profits that a retailer is making from the sale.
The Real Affiliate Benefits From Promoting Physical Goods There are two major reasons why it is more beneficial for affiliates to promote physical goods over digital products.
Those reasons are the cost of physical goods and their demand.
Most digital products do not have prices above $100, and the ones that do will typically not have frequent sales.
With physical goods, the story is quite different.
The prices of tangible items have much more variety ranging from very cheap to downright expensive.
The cheap products can be very easy to sell, even though the actual earnings from those sales may be low.
However, expensive products can offer extremely high-paying commissions, even with the low percentage rates.
The good news for affiliates is that people actually want to buy physical goods online.
Prices for these products are often lower than those found in retail stores because the online retailers have lower expenses.
This means that people actually go to the internet to find good deals on things they want to buy.
All an affiliate marketer has to do is get in the position to direct these consumers to an online retailer that offers a competitive price.
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