If affiliate marketing is based on a single thought, it could be this:

Lots of successful businesses didn’t succeed by relying solely on direct sales to customers. They outsourced at least some of the sales process to other parties. This enabled a wider product distribution in a cost-effective manner. Hence, we have affiliate marketers, and we have resellers.

Reseller programs, like affiliate programs, promote products made by somebody else. Both programs provide a great service to the product manufacturer by getting the word out about a product to an ever-growing target audience.

This leads some to think that the two are synonymous. But don’t be fooled. Resellers and affiliate marketers act on vastly different scales.

Marketing a merchant’s product is an affiliate marketer’s only job. An affiliate attracts the buying customer to his/her site, but then shepherds that customer to the merchant’s website. From there, the merchant handles everything related to completing the transaction. Resellers do more than that – they try to persuade that customer to purchase directly through them.

Resellers work with merchants under a business-to-business wholesaler relationship. Under this relationship, a reseller purchases the product from the merchant at a greatly reduced price. The reseller then sells the product to customers, usually at a discount from the retail price.

The reseller receives all the profit from the product sales. And the reseller handles all the transaction and customer service details, including credit card charges, product support, and product returns.

Many businesses use resellers – including, for instance, computer software manufacturers. (I oughta know; in a previous life, I worked for a software reseller.) And make no mistake – in terms of potential, reselling can be more lucrative than affiliate marketing.

But reselling is also riskier. Once a reseller buys the product from the merchant, that reseller is under pressure to sell it, or risk eating the cost. And once the product is sold, it could be returned by the customer. Or the customer could initiate a chargeback (a refund of the purchase price through the credit card provider), for which the reseller takes the hit. Affiliate marketers usually face none of these kinds of risks.

So, are you a reseller? Or are you an affiliate marketer? Whichever you are depends on what your goals are and what you’re willing to accept in terms of risk and reward. Given where you’re reading this post, I think I know your answer.