By Paul Lang, Editor, Sell It!
August 15th, 1998
| Product: | TechWave PersonalStore |
| Description: | “Peer-to-Peer” affiliate program for software titles |
| Available: | Now |
| Pricing: | $199 set up then $9.95 per month maintenance |
| Commission: | 10% for downloaded titles 5% on titles that require physical delivery |
In last week’s column I focused on the relative immaturity of Web based commerce and the need to review the structure of your Web store with the eyes of a Web newbie. However, despite this immaturity, Web commerce has quickly settled down in to two broad methods of selling goods and services online.
The first approach is for the merchant to set up the cyberspace equivalent of a bricks-and-mortar store. They build a Web storefront, market their products, and take orders and process payments. And in most cases they also take responsibility for order fulfillment and post sales customer support.
The second approach is through the rapidly growing number of affiliate programs. Here merchants do the initial selling on their own site and then pass the customer on to the primary affiliate. The primary affiliate then completes the sales process, ships the goods and passes a commission payment back to the originating affiliate.
Both of these approaches have advantages and disadvantages for the wannabe Web merchant.
Creating their own Web store allows merchants to keep complete control of the sales cycle and fulfillment process. And most importantly, they also get the opportunity to retain their customers. Repeat business is the most profitable for any store – real or virtual –, as the costs of retaining a customer are significantly lower than the cost of attracting new ones.
However, many merchants either lack the necessary skills or the motivation to cope with the mechanics of building and running a store, processing credit cards and fulfilling orders. And thus an increasing number are tempted to sign up for affiliate programs in order to satisfy their Web commerce aspirations.
Whilst affiliate programs do overcome most of the disadvantages of building and running your own store, they are not the perfect solution. For although the primary affiliate will take care of all the back-end order processing and fulfillment, the drawback is that they will usually take ownership of the customer. Even the most generous of affiliate programs tend only to pay commission on sales for a certain period – say 30 days – after the customer is first sent to them. And the meanest of programs will only pay commission if the customer buys immediately they enter their site.
To make matters worse, customers will tend to bookmark the store where they actually made their purchase, and not the initiating affiliate’s site. As a result the affiliate will lose the customer and thus commission on any repeat sales. To many, this might seem grossly unfair. The affiliate is left to bear the high cost of continually attracting new customers whilst the primary partner benefits from the increased profit margins generated by repeat business.
This problem points to a gap in the market. What is needed is a solution where the merchant can concentrate on marketing, whilst off-loading the order processing and fulfilment to a third party. And crucially, the merchant must be able to retain ownership of their customers.
Step forward then, TechWave and their latest offering PersonalStore, which has been designed to fill this gap.
Dubbed “peer to peer commerce”, the PersonalStore program enables anyone to operate their own online software superstore, which comes fully stocked with more than 30,000 brand name software titles, 3000 of which are available for instant download.
The PersonalStore set up process is straightforward. A simple, seven-screen wizard guides the would-be merchant through the sign up, collecting all the necessary store personalization information on the way. Based on this input, TechWave then create a personalized storefront for the merchant.
Once set up, the merchant can choose to either market their PersonalStore as a standalone Web store or link to it from an existing Web site in the same way they would link to an ordinary affiliate program.
Either way, TechWave maintains the store, decides what products it will stock and how they will be merchandised. And leveraging its suite of Commerce Trust merchant services, TechWave manages all the back-end operations, including real time credit card processing, order fulfillment, and customer service support.
However, the important difference from the merchant’s perspective is that the store is unique to them. And so, instead of customers being diverted and lost to a third party affiliate site they always remain with the merchant.
So how much does it all cost? A PersonalStore costs $199 to set-up, in addition to a $9.95 monthly maintenance fee. In return, TechWave send out sales commission checks quarterly at the rate of 10% for each downloaded software title and 5% for each title that requires physical delivery.
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