Selling books online for referral commissions is a useful way to supplement the income form any site, but watch out for the big shark.

Amazon is the world's largest bookstore and a pioneer of many features and techniques which have contributed to the development of e-commerce. Well, they're not just a bookstore anymore they sell just about every consumer product you could care to buy online. They were certainly among the first to use affiliate marketing, or associates as Amazon call their affiliate program.

Before we look at the big flaw in the Amazon associates program lets just look at what are Amazon.com's major virtues. Their search system and enhancements are first class. Once you find an item you can find suggestions for similar items in dozens of ways.

Amazon has cleverly incorporated the behaviour and expressed opinions of its huge customer base into enhancements to enable customers to be exposed to similar items. It does this by customer reviews, customer lists of favourites, customer how to guides and lists of items bought by customers who also bought the item you are looking at. Search inside is a All of this adds up to better service to the customer, and of course, more sales for Amazon.

Amazon's A9.com search engine is an outstanding resource with unique featues which are invaluable to all manner of web research.

But let's look at the associates program. The deal is you can use a website or other means to refer potential customers to Amazon. Depending on how you set up your links the customer is referred to a particular item, a group of items in a particular category or the site as a whole. There are plenty of ways to customise this.

If the referred customer buys the item, then the referrer (associate) gets a small commission (5%-7.5%) If the customer orders buys within 24hrs, then the commission is paid, otherwise the referrer gets nothing.

The problem with this arrangement is that the associate gets very little reward for his or her effort. Many people do not buy items on their first visit. Because the Amazon name is already so well known many customers will go straight back to Amazon to find the item, and the sale will not be credited to the referrer.

So all of the work of the referrer in pre-selling the item is wasted, at least for the associate. Amazon, on the other hand, gets another customer, probably long term. I'm not sure what proportion of Amazon's sales are return sales from existing customers.

The first sale is the hardest to achieve, once a customer has broken the ice they will keep coming back for more. This is especially true of books, we are never satisfied with just one book, whereas there is a limit to how many TV's or digital cameras we may buy.

I believe Amazon is being very short-sighted in its associates program. Associates could be rewarding associates who deliver them customers, rather than sales. they could do this by extending the life of the cookie, by giving some credit for subsequent sales, and by giving associates some sort of credit for introducing new clients to Amazon.

The guys who are running the show at Amazon are smart enough to devise a better scheme and do all the technical stuff to make sure it is tracked. They just have a blind spot when it comes to adequately rewarding associates. they need a new paradigm, associates are giving them customers, not just sales.

My advice is to use Amazon with caution, you may be better served by putting Google ads on your site and picking up a few cents per sale, rather than trying to sell through Amazon and seeing the commissions slip through your fingers.