E-Commerce Affiliate Programs: Building Brand, Losing Money

SAN FRANCISCO -- As the saying goes, it's who you know that counts.

But often it's who you don't know that counts even more. That is at least true for a handful of e-commerce companies that have programs designed to gain access to new customers. Amazon.com (AMZN Quote), barnesandnoble.com, Egghead.com (EGGS Quote) and CBS SportsLine -- to name a few -- allow businesses, organizations and Web enthusiasts to recommend products from their sites with a direct link to a place to buy them. These programs have the same purpose: to drive traffic and business to the companies' sites in exchange for a commission.

Because many of the products that these Internet commerce companies sell have low margins, these programs don't always make money for them. Add the commission fee and the sale can even become a loss.

"We may not make money on all sales," says Shawn Haynes, Amazon.com's director of business development. Often, Amazon doesn't make money, Haynes says, "but we can attract new users. And if it helps establish [those referrals] as Amazon customers, then it's a very cost-effective vehicle." ...