By Paul Lang, Editor, Sell It!
November 24th, 1999

See Also   The Insider Secrets to Marketing Your Business on the Internet   Alternative Payment Solutions   Fraud Prevention Tools   Top Tools to Help You Boost Customer Service   iV-Caller Verification Service   Make Your Price Sell!   FindWhat.com   Make Your Knowledge Sell!   HumanClick   Netship   iFulfill.com   Nexchange   Nothing But 'Net   Netwhistle.com   Bigstep.com   Make Your Site Sell!   AWeber   GoTo.com   Constant Contact   WebAdverts   PersonalStore   SiteInspector   LinkExchange   ClickTrade   Safe   eCHARGE   MilliCent

Product	Nexchange
Description	Affiliate network
Available	Now
Pricing	Free

One of the most common requests I receive from prospective Web merchants is for advice on what products they should sell in their Web store. Now, if they are already brick-and-mortar retailers the advice is pretty straightforward: they need to check that their product is suitable for selling online and that they have the infrastructure in place to fulfil a greatly increased number of orders from all over the world.

However, for those not currently retailing in the real world, the advice is much more difficult.

Potentially, the most profitable approach is for them to develop their own product for selling online (see "How to Develop Online Products That Sell" in our E-commerce 101 section). However developing a new product can take a significant amount of time and money, something most small businesses are short off.

Another seemingly obvious answer is to advise them to concentrate on affiliate or associate programs where they can earn commissions by selling someone else's goods or services. These affiliate programs can be very successful if they already have a popular, content rich Web site, and if they are able to identify affiliate programs that are of interest to their audience.

However, traditional affiliate programs have a number of downfalls:

• Most programs require the affiliate to transfer the visitor permanently to the program owner's Web site. This means that the affiliate loses part of their hard-won traffic and makes it more difficult for them to earn commissions on any additional purchases a customer they introduce might make.

• Although there are many Web sites that provide lists of available programs (for example, AssociatePrograms.com), they only way to be sure a program will work for a particular site is to try it. Thus, it can take a considerable amount of time and effort to build a portfolio of profitable affiliate programs.

• There is always the risk of not getting paid either through outright fraud, because of flaws in the way the affiliate program has been designed or through tough payment rules (for example, checks are only cut once every 90 days and even then only when the affiliate has earned above a specified amount).

These are just some of the problems that Nexchange has been designed to solve. In essence, the Nexchange service is very simple: it allows its members (or Hosts as they are called) to build Web stores by selecting from a number of affiliate product offerings. Nexchange hosts the stores, processes the customer payment, passes the orders to the merchant, and writes commission checks for the affiliates.

Now, this is by no means a revolutionary concept and there are several competing services available. However, the Nexchange service has a number of key differentiators:

1. They are very selective about which affiliate programs they feature, only allowing merchants selling nationally known brands to participate. The benefit of this is that visitors are much more likely to make a purchase from a store that carries well know brand names.

2. Although Nexchange hosts all stores (or NexShops as they are called) on their own servers, NexShops can be defined to have the look and feel of the member's Web site. Even better news is that the customer is automatically returned to the originating Web site once they are finished shopping.

3. Nexchange do not charge their merchants any set-up or monthly fees, and as a result they only make money when their hosts make a sale. This naturally encourages them to be very supportive of their hosts: Nexchange communicate regularly with them passing on merchandising tips etc., and larger Web hosts even have their own Personal Merchandiser assigned to them.

Nexchange already have a broad range of merchants signed up for the program, including athletic footwear from Just for Feet and magazines from MPC marketing. Current commission rates range from 10 to 25%, although most fall within a 10 to 12% band.

Although these rates compare well to those offered by Nexchange's competitors, they are low when compared to the rates of 35% or more that are available from some affiliate programs. However, Nexchange's insistence on featuring only major brand merchants together with the ongoing merchandising support provided to their hosts should lead to a higher conversion rate of visitors into purchasers and thus improved earnings.

Nexchange makes all payments direct to their host site owners, with checks being issued at the start of the month for commissions earned two months previously. So, for example, commissions earned during the month of July are paid to hosts by check at the start of September. Nexchange reserve the right to hold back payments until the amount due exceeds $25. However, at the moment Nexchange are not applying this limit and are writing checks regardless of their value.

Okay, so how do you go about building your NexShop?

The first step is to fill in a short application form on the Nexchange Web site. There is no cost to join the program and non-US merchants are welcome too, although all payments are made in US dollars.

Nexchange are selective about which Web sites they allow to become hosts and so each application is carefully screened. Successful applicants are given access to a Host Manager control panel that allows them to set up and administer their NexShops.

The next step in the set up process is to define the overall appearance of the NexShops. This is done by specifying the HTML code that is to be used as a header and footer on each store page. Whilst this should be a straightforward process for those with even a modest knowledge of HTML, others may struggle. Another disadvantage is that the appearance of every NexShop store page has to be the same.

Once the overall appearance has been specified, the next step is to build the individual NexShops. At least one NexShop needs to be defined for each merchant that the host wishes to represent. However, a major advantage of the Nexchange system is that several NexShops can be defined for each merchant.

Take, for example, a host that wishes to sell magazine subscriptions. The host could choose to build several NexShops, one that contains all magazines, one that contains only Internet related magazines, and one that contains just a single magazine. The host could then use these NexShops in different ways: they might choose to link to the NexShop that contains Internet magazines from an Internet related section of their Web site, or, if they're writing an article that refers to an individual magazine they can link this to the NexShop that contains only this magazine.

Once you have understood the above, it should be clear that the best way to use the Nexchange system is to create many different NexShops. Fortunately, this is a very straightforward process. All the host needs to do is to specify which merchants they wish to sell products for, what level they want the store to be at (e.g. all magazines, a category of magazines or an individual magazine), and finally what page on their own Web site they want a visitor to be returned to once they have finished shopping.

Unfortunately, Nexchange insists on manually approving every application that hosts make to represent a new merchant. This seems an unnecessarily cumbersome process and it would surely make more sense if Nexchange were to pre-approve hosts when they initially signed up for the service.

Once approved, the host is given a simple piece of HTML code for each NexShop that they can then cut and paste in to their own Web site. A library of buttons and banners is also available.

The other main function accessible from the Host Manager is a report generator that can be used to produce reports that span any time period. Reports available include total revenue, revenue by merchant and revenue by NexShop. All reports include not only the number of sales and their value, but also the number of visitors to the store and the percentage of visitors who placed an order.

Verdict: Definitely worth signing up for if the typical visitor to your Web site is likely to be interested in some of Nexchange merchants' products.