Why are hundreds and thousands of entrepreneurs setting up online businesses? There are several reasons for this phenomenal trend. Foremost among the reasons is that the Internet opens up an easier access to a wider market. In fact, the whole world becomes the market of the online business. An online business physically located in one city, for example in New York, can sell its products to clients that live across the globe. Of course, there will arrangements regarding shipment, but such things become SOP or standard operating procedures.

Today, a major part of online businesses is the setting up of affiliate marketing programs. The existence of such programs has attracted no only entrepreneurs and businessmen, but ordinary people who are looking into having their own online business. Affiliate marketing has become the entry point of many new businessmen.

Essentially, affiliate marketing is a business relationship between the affiliate and the merchant, who is the owner of an online company which is selling the product.. Upon entering the affiliate marketing program, the merchant is actually reducing the cost of advertising his products. He need not advertise because the affiliates are going to do this part of the business.

On the other hand, the affiliates will be willing and eager to promote and advertise the products of the merchants, without the hassle of taking orders or the demand of delivering the products on time, or the pressure of keeping the customers happy. The affiliates have already specialized in one small aspect of the business, and yet can still become part of another online business.

The merchant need not worry about wages for the affiliates because he is not obligated to pay salaries. What he should pay for are the commissions of the affiliate that will be computed depending on the agreed compensation package.

One package is called pay-per-click in which the affiliate is paid when a visitors clicks on the banner of the merchant. Another package is pay-per-lead in which the visitor has subscribed and has provided names of potential clients. And the third package is the pay-per-sale, in which the visitor purchases a product.

The affiliate is not limited by a certain amount of income. There will be no minimum nor maximum sales for the affiliate. The absence of minimum income removes the pressure on the affiliate, especially the new ones. And the absence of maximum limit paves the way to huge income opportunities.

Therefore, the situation created in affiliate marketing is a situation which is beneficial to both the merchant and the affiliate.