What is affiliate marketing?

Affiliate marketing is a way for a store to pay other people for the sales they bring in. An affiliate, a person or business that promotes the store, shares a link or discount code with their audience. When a customer buys through it, the store pays the affiliate a commission: a share of the sale, or a fixed amount agreed in advance. If no sale happens, the store pays nothing.

What you will learn

• The three roles in affiliate marketing: merchant, affiliate, and customer
• Why commission is paid only on attributed sales
• How an in-house affiliate program works on a Shopify store

The three roles in affiliate marketing

Every affiliate sale involves three parties:

• Merchant: the store that sells the product. The merchant sets the program rules, such as who can join and how much commission each sale earns.
• Affiliate: the person or business that recommends the merchant's products. Affiliates can be customers, content creators, or business partners, and they earn commission on the sales they refer.
• Customer: the shopper who hears about the product from an affiliate and buys it. The customer usually pays the same price as any other shopper, or less if the affiliate shared a discount code.

A simple example

Say a store offers affiliates a 10% commission. An affiliate reviews the store's backpack and shares their referral link, a web address that identifies the affiliate. A customer follows the link and buys the $50 backpack. The store makes the sale, the customer gets the backpack, and the affiliate earns $5.

Why commission is paid only on attributed sales

Attribution is the rule that decides which affiliate gets credit for a sale. An attributed sale is an order the store can connect to a specific affiliate, and only attributed sales earn commission.

Affiliates usually make that connection in one of two ways:

• Referral links: the link carries a tracking code, a short piece of text in the web address that tells the store which affiliate sent the customer.
• Discount codes: a code unique to the affiliate that the customer enters at checkout.

An order the store cannot connect to an affiliate earns no commission, even if the customer first heard about the product from one. This is why affiliate marketing is low risk for you as a merchant: you pay for sales, not for posts or clicks. It is also why you should tell affiliates and their audiences to use the link or code as intended.

How an in-house affiliate program works on a Shopify store

An in-house affiliate program is one you run from your own store, rather than through an affiliate network, a third-party company that connects many stores with affiliates. On a Shopify store, an app such as Simple Affiliate runs the program inside the store itself, so affiliate access, referral tracking, and commissions all live in one place.

With Simple Affiliate, the program works like this:

1. You install the app from the Shopify App Store, set a commission rule, and choose how affiliates refer customers: referral links, discount codes, or both, depending on your plan.
2. Affiliates sign up and sign in with your store's regular Shopify customer accounts, so they use the same credentials they use as customers.
3. Affiliates share referral links carrying a tracking code such as sacode, or their unique discount codes.
4. When Shopify records an order that matches one of those methods, Simple Affiliate connects the order to the affiliate, calculates the commission from your rules, and shows it in the affiliate's dashboard, the page where affiliates see their referral activity.
5. The commission is then paid out automatically through Autopay, or held for your approval and a manual payout, depending on your setup and plan.

The affiliate receives the full commission on every attributed order. To see what running the program costs you, visit the Simple Affiliate pricing page.

To see how links, discount codes, groups, and the affiliate dashboard fit together in the app, read How to use Simple Affiliate in the help center.