Here's What Happens When You Buy from a Gift Guide
A basic, non-judgmental, hopefully informative affiliates explainer.
If you read this newsletter, you’ve probably clicked a link to a product recently. I know at least some of you have because I can access that information. 898 people clicked the link to the RealReal in the last letter, and 842 looked at Uniqlo socks the week prior. Four people bought them and/or something else from the website. When they did, I made a total of $25.64 in affiliate revenue, which is 13 percent of the profits.
What the heck are affiliates? In short, affiliate marketing is a business arrangement in which a person/entity is incentivized to share something because they get a commission for every sale or signup they generate. The individual profits may seem small, but they can add up. Publications like the NYTimes, for example, likely rake in at least a million dollars in affiliate revenue every year. Maybe you’ve seen the FTC-required disclaimer at the top of any Wirecutter shopping article, casually letting you know that the website “may earn a commission” from your clicks. This newsletter has one. So do most shopping and fashion-related newsletters if you read the fine print. (Minus
, which does not use affiliates and explains why here, and the same for , Opulent Tips, and others.)The odds are that you interact with affiliate links multiple times a day, especially now that it’s sale and gift guide season. Based on recent conversations with friends and family, though, I don’t think the average shopper understands what they are, how they work, or the pros and cons of their existence. And they should! It’s important to know where your dollars go when you click a link and buy something.
I’m not trying to be all “radically transparent” here, nor do I want to join any sort of “discourse.” I just think Shop Rat readers might care. I’m also relatively new to this whole game myself, and learning the ins and outs is like seeing The Matrix.
Below is a basic, non-judgmental, hopefully informative affiliates explainer.
Some background information:
Affiliate marketing, as we know it, has been around for years. In 1996, Amazon launched its associate program to boost book sales. It wasn’t the first, but it’s now the most extensive network, with one million associate partners worldwide.
Media companies make lots of money from affiliate marketing. It helps keep the lights on, which is why they’re hellbent on selling you mattresses, Dyson vacuums, desk chairs, and Black Friday and Amazon Prime Day deals.
So do individual content creators who share affiliate links in newsletters and on social media (and who probably saw how much money they could be making themselves when they coded links for media companies). There are plenty of articles out there about influencers making six figures a year from affiliate marketing, and I know they exist, but according to this survey, most make less than $10k. (Not nothing!)
How affiliates work:
I’ll give you an example: Let’s say I want to link to an Alex Mill sweater. I’ll go to alexmill.com, copy the link, and paste it into the affiliate platform I use most often, which is called ShopMy.
ShopMy then spits out this link, which is coded so that if you click it and buy ANYTHING while you’re browsing the Alex Mill website, I will earn a 10 percent commission from that sale.
Affiliate platforms like ShopMy are the middle-man between brands and “creators” like myself. They negotiate commission rates, which can differ depending on which platform you use and how successful you are on it. For example, I get a 10 percent commission when I use ShopMy to link to Alex Mill, but I’d get 11.3 percent if I used one called SMTM and up to 15 percent if I used one called Collective Voice, formerly known as ShopStyle.
Affiliate platforms make money by taking a portion of commissions. ShopMy operates on an 82:18 revenue share model, meaning if I made $100 from commissions in a month, I’d keep $82, and they’d keep $18.
Creators can work directly with brands and retailers, but platforms like ShopMy, SMTM, ShareASale, Collective Voice, etc., theoretically help streamline what can be an overwhelming and time-consuming process. There are just so many; it’s hard to know which one to use.
Not all brands and retailers offer affiliate programs. Most small businesses don’t. Last year, the most clicked-on link in my gift guide was for Everyday Oil, but I made zero dollars from it because the brand doesn’t have any affiliate partners, as far as I know. Some small brands and stores feel pressure to participate because they think it’s the only way to get coverage, which is a shame. Many cannot afford to lose a portion of a sale and shouldn’t have to in exchange for an endorsement.
I can still make money even if you don’t buy something I mentioned. For example, during last year's SSENSE sale, 1,177 people clicked on my link to a gold Chopova Lowena necklace. 18 people made a purchase, but I’m going to assume that there weren’t 18 necklaces left on the site. It’s possible there were, but it’s more likely that someone clicked the link and then bought something else from SSENSE, and I still got a 17-percent kickback on ShopMy. Yes, 17-percent! Of your total purchase! (*Not including anything you return.) This brings me to my next point…
How this affects you:
Affiliate commission rates can influence the decisions writers make. This is why it’s considered a conflict of interest to use them, and unlike hashtag #ads, affiliate disclosures are less regulated and less obvious to consumers.
I don’t think it’s a coincidence that brands and retailers you see often offer high commission rates. For example, the swimwear brand Tropic of C offers up to 21 percent. Jolie and Parachute offer up to 20. J.Crew up to 17. Khaite, Savette, and &Daughter up to 15. The list goes on. (And this is just what I can see on my end.)
Brands and retailers also offer special promotions periodically to incentivize creators even further. For example, I just got a notification that if I share three SSENSE links over the next 17 days and generate at least ten clicks each, I could earn a $350 bonus on ShopMy.
In this way, affiliate marketing can influence shopping trends. Net-a-Porter, which sells High Sport pants, offers a 13 percent commission on ShopMy. SMTM offers a little more than that. On a $860 pair of pants, that really adds up. You do the math!
Small businesses often lose out on a sale. When a retailer like Net-a-Porter offers a 13 percent commission on a brand like High Sport, but High Sport offers zero on its website, which one do you think a creator is more likely to link to? If you feel strongly about supporting a small brand or store, shop directly from its website.
How I feel about affiliates:
When someone stands to profit off a recommendation, it’s arguably no longer 100 percent pure. There are no two ways about it; it just is what it is.
That said, I think it’s possible to genuinely like something and also want to make a little money off sharing it with someone else. That’s the job, and it takes a lot of work to assemble a good gift guide or a helpful Black Friday sale sheet. Some creators will paywall a post with links to account for the time and effort they put into culling them, but they could make more money by making it available to the public.
I also don’t necessarily believe that people who abstain from using affiliates are completely free of bias, either. They’re linking to products made by their friends and to entities they may stand to benefit from socially and/or professionally. Are any recommendations truly pure?? I write a shopping newsletter; therefore, I am unethical, yada yada. And don’t even get me started on the “ethics” of these giant media corporations.
Ultimately, I think it comes down to: Do you trust the person or outlet writing about the thing? I trust that readers can smell bullshit.
How I use affiliates:
Affiliate revenue makes up a small fraction of my income from Shop Rat. That’s just because I don’t link to products that often; I try to make this newsletter more reported because that’s what I know how to do. Still, as a freelancer, it doesn’t make sense for me financially to leave that money on the table right now. The small amount I make from affiliate revenue allows me to focus on writing fewer and better stories. Also, I paywall this newsletter less frequently as a result.
I’m still feeling my way through it, though. All I can say is that I try to be conscious every time I drop a link by asking myself: Is this something I wholeheartedly like and/or would recommend, even if I weren’t making any money from it? I also try to make it obvious if I haven’t tried a product myself or was given it for free so that you have all the information. But, to be clear, I’m no saint.
When I see that people buy something I’ve written about, I get acute anxiety. Will they like it?? I hope so. That’s out of my control. But I feel a little less like a spineless shill when they do. Recently, someone showed me a photo of a Shaggy Dog sweater they bought for their boyfriend after reading about it in last year’s gift guide—one of many products I link to that generates zero affiliate revenue—and the feeling was [cue Mastercard ad] priceless.
So! With that, the next post will be my 2024 gift guide. Some of the links might generate affiliate revenue; some won’t. Now you know and can shop accordingly.
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I didn’t know a lot of this! Also as a consumer of words and goods sometimes I know I’m buying an affiliate link and I like the writer (you) so I’ll buy it from the link. And sometimes I think the writer is a rich bitch so I’ll remove the affiliate link and buy on my own. I am not pure either 😇
This was helpful! What really gets me is when I get the same iteration of a newsletter using the same affiliates or company over and over. It has me wanting to read and support smaller style writers and happy to pay for those who don’t (BBSP). I also use zero affiliates in my own newsletter (not on substack) as I feel it will interfere with my overall motive and writing approach.