Provide your affiliates with special links/banners to your store and track clicks/sales on your site.

This is quite a classic way. The mentioned affiliate links or banners, which lead visitors to your site, contain special affiliate IDs that help to identify where a customer comes from. If a user follows an affiliate link and purchased something in your store, they are tracked as "referral" of that affiliate. Affiliates then get the referral commission from such sales. Here is how to set it up.

  1. In order to automate clicks and sales tracking and calculating commissions, you will need to use a 3rd Party affiliate system. Register in such a system and follow the instruction given by it in order to configure your account. 
  2. Almost all systems ask to add some specific conversion/affiliate tracking code to your conversion page, also known as “Thank you for your order” page, i.e. the last checkout page a customer sees when he placed an order successfully.That code, being placed on your site, tracks referrals and sync sales data with the affiliate system's servers. The store has an easy way to add such codes. Just open the “Settings → General → Cart” page, find “Checkout Settings” section and enter the code there. 
  3. Ask your partners to register as your affiliates at the affiliate system's backend. They will be able to get the affiliate links or banners there. In order to find out the exact way of configuring the affiliates backend and getting the links, refer to the affiliate software documentation or their support service. 

It's all. With such a setup, you and your affiliates will use their own control panels in the 3d-party affiliate system you are registered at. There, you and they can track clicks and sales, calculate partner commissions, generate reports and so on - all what a 3rd-party affiliate software allows.

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