Am I in danger of being labeled an affiliate.

Can a closer relationship with your supplier make you an affiliate.

[lgn1]

Google claims that the following conditions must be true to be considered an affiliate.

A) You are in a business relationship with a merchant to promote the merchant's product or service.

B) The affiliate earns a small commission from the merchant for each referral that results in a sale.

C) The merchant handles payment and fulfillment.

Well A) is true for practically anybody (if you consider promote and sell as the same thing), and we now meet item C), and I am worried about Item B) except we are getting a 45% commision on the sale, which I would not consider small.

To give some background:

We started out 12 years ago with a particular supplier that had a wide range of products. Six years ago, we setup a drop shipping arrangement. Last year we integrated with their customized website on the suppliers server, so we could have real time stock updates, and integrated payment and shipping services. It also reduced our web development costs to near zero for the site.

Sounds alot like affiliate, except we are getting near retail commission cheque each month, and we handle customer service.

Another thing that makes me nervous, is that the way the website is setup, even though we have a separate domain, it maps back to a single IP address, shared with maybe a dozen other companies that sells this suppliers products.

The site is highly customizable, so each site does look different, except it maps back to the same IP address.

Currently the other companies selling the suppliers product are just retail stores, who wanted an online pressence for their local market, and we control the majority of the online market for this niche product line.

How would Google handle this situation,if the affiliate issue ever came up?

[Leosghost]

For what it is worth, I have been in various businesses for many years ..
You are an affiliate.

your % has nothing to do with it ..

You do not purchase stock ..you send customers to a merchant for money.
And they drop ship for you ..you have zero upfront financial "risk" other than building an aff site.

Google could do the same..( probably not initially with the same degree of expertise that you have amassed ..but eventually they could advise the manufacturer ..or sell them ad space direct ..and handle the transaction etc )..and it looks more and more like they will be doing this or be in direct competition with "classical model affiliates" in many verticals and on many services and products.

just retail stores,

have the goods waiting to be sent out ..they have stock ..they have made an investment .

Any of us who get commissions to send customers onwards to merchants , who then "fulfill" are affiliates ..as distinct from agents..who have stock ..the fact that you handle customer service says to me that you are nearly all the way to being an agent ..IIWY ..I'd take the last step ..invest real money in the merchandise ..and become an agent..

More complex ..sure ..more work ..sure ..But proof against an aff purge being ramped up.

[lgn1]

And they drop ship for you ..you have zero upfront financial "risk" other than building an aff site.

I have salaries to pay, legal, accounting, phone, lease, etc. I would hardly call this as zero upfront financial risk.

I see afflilates as coffee table operations playing the adwords arbitrage game to make a little extra income.

We went from the traditional model, to the pseudo-affiliate model out of efficiency.

Why ship the product to us, so we can turn around and ship it to the customer, likewise for returns and exchanges. Shorten the supply chain and the customer gets the products faster, and its better for the environment.

Likewise, by integrating with the manufactuers website we can take advantage of real time stock updates and quick elimination of discontinued items; and integrated shipping management and logistics. By doing this we have created a better experience for the customer. They get their order faster, cheaper and with less chance of errors.

I don't think its fair to list the two different modesl as being affiliate. With our model, it is more of a partnership.

[Leosghost]

Agree with almost all your points re efficiency etc..but my betting is that G wouldn't ..because it would suit them not to..

I see afflilates as coffee table operations playing the adwords arbitrage game to make a little extra income.

The big ones ( affs ) here will no doubt "bite" at that ..they too have what you list below

I have salaries to pay, legal, accounting, phone, lease, etc. I would hardly call this as zero upfront financial risk.

So do affiliates ..merely a difference of scale.

But affiliates don't have physical merchandise..

So ..invest in some actual merchandise..( I emphasise the "some" deliberately..just enough and an address ( you can always be closed to physical "visitors" 24 hours a day ) "suite xyz,101 Main st etc

I don't think its fair to list the two different modesl as being affiliate. With our model, it is more of a partnership.

Its what they think that will count ( and your current model looks like an aff "duck" )..so with a little adjustment ,when they start looking for ducks ..you will not walk like a duck, look like a duck ..nor will you quack like a duck..

btw ..I'm sure if the IRS looked at you as you are currently set up ..they'd say you were an affiliate..to not seem like one to G ..you need to think how would the IRS or whatever your local tax system would take you for.

[lgn1]

I guess I am at some future risk here, but since this is just one egg in a larger basket, I'm not to worried; since my other niche markets don't fall under the same scenario.

It is my understanding that Google is mostly going after the spammers, get rich quick schemes anyways.

I'm just doing some disaster and businesss continuity planning. If Google did ever challenge me, I would let my legal rep. mediate on the issue with Google anyways.

[incrediBILL]

Here's another thing to consider, who owns the customer?

If your drop shipper owns the customer, you are an affiliate.

If you own the customer, and the drop-shipper has no rights to contact them directly other than for the purposes of order fulfillment only, then you are not an affiliate.

Additionally, where are taxes computed, from your location or your drop-shippers location? Another test of being a retailer vs affiliate.

FYI, large percentage of payout per sale is a meaningless measure as I've had many aff programs of 40%+ payouts, it's not uncommon for certain types of goods and services.

[mslina2002]

Some very good points incrediBILL. Especially concerning the tax issue. That is very true.

Another question is customer service. You say you handle customer service, but is it simply handling the phone calls, questions, or also the damaged products and returns. If the customer needs to return an item do they ship it back to the drop shipper or back to you.

[smallcompany]

You did not mention the main thing:

Does ordering process start and finish on your website? In other words, the domain you have in display URL, does it change at any point during the buying process?

[netmeg]

The title of this thread threw me for a bit - the "danger" of being labeled an affiliate?

Contrary to a lot of negative press out there, Google doesn't have it in for affiliates. They just don't have a business model for promoting thin or dodgy affiliates. Affiliates that provide a good user experience are fine.

[GlobalMax]

@netmeg:

The title of this thread threw me for a bit - the "danger" of being labeled an affiliate?

Contrary to a lot of negative press out there, Google doesn't have it in for affiliates. They just don't have a business model for promoting thin or dodgy affiliates. Affiliates that provide a good user experience are fine.

I had the same reaction as netmeg. When Leosghost mentions

... an aff purge being ramped up.

I wonder what I'm missing. Why the sudden worry about merely being recognized as an affiliate? Did I miss a memo that expanded the Panda scope beyond thin content to include all affiliate sites?

Elaboration on the nature of the affiliate label concern would be most appreciated.

[Leosghost]

Merely referring to the thin aff purge, it appeared to stop ..but given the extra ways they are folding in data via panda , I expect it to start again as they didn't get all the thin affs..and they are always looking for verticals to add to their own product lines, ..it got some false positives last time ..safest way to avoid being a member of that band ( pun intended ) IMO is if you aren't affing "services" or tickets or intangibles ( downloadable software and the like ), then try to look like an agent ( they hold some actual stock ) as opposed to an aff.

[incrediBILL]

This isn't a Panda thing.

The OP appears to be worried that being labeled an affiliate would flag his business model as arbitrage and get his AdWords account canceled.

Nothing more complicated than that.

[GlobalMax]

Ah, got it. Thanks, iBill!

[Leosghost]

This isn't a Panda thing.

Didn't mean it was ..but when they have just changed the way they decide what kind of site you are .. next time they try to pick out thin affs ( and they will IMO again )..he may get dinged as being too close to the manufacturers own site integrated to the point of being indistinguishable ie "no extra offered"..they have changed the way they look at everyone, having passed the "is it an aff test" once, may not mean one would pass again now.

Especially if one is an aff for tangible drop shipped goods ..IMO one is vulnerable to being viewed as not needed in serps or as a Google customer for adwords.

I have stuff for sale on some places ( my own sites) that is made to my own design and that I purchase direct from the producer ..who has no site ..nor any interest in having one ..

I sell direct to the end customer ..to me, anyone ( and there have been many , I get regular enquiries from affs ) that doesn't want to buy actual stock from me, but wants me to drop ship ( I won't, and turn all such approaches down ..nor am I interested in selling wholesale ) is definitely an affiliate...whereas an agent has stock to hand.

IME customers prefer to buy "tangible " stuff , direct ( saves them money..they know that commission is always built into the price they pay if they go via an aff, and they don't really like to order from one place and see the stuff arrive from another )..and what customers think ..now counts more than it did .

Arbitrage ? ..I always understood "arbitrage" to mean PPC ( adwords or other ad buys ) leading to PPC ( ads on landing site or aff links ) and site existing only to act as click through to get click revenue.

[incrediBILL]

Arbitrage ? ..I always understood "arbitrage" to mean PPC ( adwords or other ad buys ) leading to PPC ( ads on landing site or aff links ) and site existing only to act as click through to get click revenue.

That's a bit narrow definition IMO as arbitrage is technically just a risk-free profit transaction at zero cost. Obviously when you start using AdWords it isn't zero cost, but if the cost is low enough it's relatively risk free, which makes affiliates fit the definition.

[adwords.google.com...]

Arbitrage

What's the policy?

Google AdWords prohibits websites that are designed for the sole or primary purpose of showing ads.

Examples of prohibited websites:

* Interstitials on pages that lead to pages of ads or sponsored offers
* Websites whose sole or primary purpose is for users to click on ads that redirect to other sites

Examples of acceptable websites:

* Websites that have more content than ads

Affiliates ads are still ads, they redirect to other sites, it's pretty clear, the OP has a valid reason to be nervous IMO.

[aruns]

How would you define good user experience?

[piatkow]

When did G ban affiliates? I am not a regular Adwords user but a few years ago I received a GBP100 voucher from my ISP. I decided to have a little play and set up an Amazon astore and used Adwords to publicise it. I got far less than £100 back of course but G seemed perfectly happy with the arrangement.

[eWhisper]

Affiliates aren't banned from AdWords.

Bad user experiences can get someone banned. It doesn't matter if its a publisher, affiliate, advertiser, or something else.

[shri]

Switch modes and take the order yourself. Send your supplier payments every 30 days and send them the orders via EDI / XML.

Will involve some extra steps but it will give you a lot more control over the user experience and will allow you to broker orders more effectively. (At the end of the day, this is what Amazon and pretty much everyone else is doing... taking orders and send them to their wholesalers / distributors who are doing the fulfillment.)

[techstyled]

and will allow you to broker orders more effectively

I would say "will allow you to broker orders"<period>

At the moment, it doesn't seem like you are situated to be able to. Doing as shri suggests would allow you to control your business and direct it where you will. Maybe your dropshipper decides to go out of business, or decides they don't like you, or you decide you don't like them, or you decide you like someone better, or...

My "day job" is for a 35 year old B&M that has been doing web for the last 10 years. Until 5 years ago, we warehoused everything we sold. The majority of new items to inventory over the last 5 years has been dropship items (even though we still have over 300,000 sqft of warehouse space stack to the roof. We'd never dream of integrating with one provider as intimately as you have (if we can help it that is, we do have one we have) because we want/need to be able to direct that business wherever/whenever.

Though I would understand an "if it ain't broke don't fix it" attitude, in this situation it would solve several likely things that can cause it to break, no?

[robdwoods]

I think I'm safe in saying, if you take the payment on your site, and do the customer service, you'll likely be seen as an e-commerce site regardless of who fulfills the order. If you send users to another domain and the payment happens there, you're an affiliate. Commission rates have nothing to do with it nor do annual sales.

I see afflilates as coffee table operations playing the adwords arbitrage game to make a little extra income.

That's simply an erroneous perception of what an affiliate is. I manage sites that have staff, with related expenses, and generate 7 figure revenues, but they are still very traditional affiliate sites and likely seen as such by the engines.

[coachm]

More craziness. So, let's say I'm a publisher. Our books are distributed through amazon because it's a very trusted site, and so many people have accounts to purchase from it. Our books (just saying, hypthetical, like) go to amazon where they are sold.

We, not wanting to do retail, again hypertheticlike, advertise using adwords and send buyers to amazon.com, where they can purchase from them rather than from CoachMeBozo, Inc, (my company). We receive a commission from the sale, plus we receive the wholesale price of the books.

Followin? No way no how an algo is going to know or understand any of this. Not that I care since at $5.00 a click, it's not doable on, let's say a book selling for ten bucks.

[netmeg]

You shouldn't have to be paying $5.00 a click for that for one thing.