Business Idea I would like to see

[newsecular]

Here is an idea I would like to see someone implement.
I want to see this to diversify so I would not mind if several picked up on the idea.

Make ready made PayPal ads and even simple page based PayPal store templates, or eBay for sale items.
Make these extremely high margin items. Like cool USB toys, safety products etc.
Then make the webmasters take part in the profits of selling the product. AND let the webmaster take the payment.

This is how it will work.
You will make templates for ads for these products, easy to use.
- Say a cool USB device that cost USD 1 in China and retails for USD 50.
Webmasters will place these ads on our sites inserting our PayPal codes etc, extremely easy.
The webmaster will collect the USD 50, say on PayPal.
The webmaster will then simply forward the order to you with payment of say USD 10 (making you USD 9 in profit) and you will ship it to the customers (preferably from Hong Kong or from the US or whatever).
The webmaster makes his USD 40.

If you can have a few hundred products with ads and everything you will for sure get customers. Easy for us, easy for you.

This can also be done on eBay slightly modified.

Please go out and do this someone, there is room for more than one.
We are just waiting for you to place our ads and place the orders.
Thank you.

[LifeinAsia]

The webmaster will then simply forward the order to you with payment of say USD 10 (making you USD 9 in profit) and you will ship it to the customers (preferably from Hong Kong or from the US or whatever).
The webmaster makes his USD 40.

The main problem I see right away is that since I have to pay postage, the postage comes out of my profit (which greatly reduces my profit, since postage ain't cheap!).

The second problem is that I have to run to the post office all the time to mail the products. That's a drain on my time (which equals money).

So I don't see too much hope for this happening. Now, if the webmaster made $10 and I made $40, that might change things for some people. (However, I think most people would continue to opt for the traditional adffiliate programs where they can make $40 without having to pay for postage or run to the post office.)

[newsecular]

Hi,
You have to think large. Don't think running to the post office. Think having 50 people in Hong Kong packing and a truck arriving five times per day to pick up the packs. ;)
If you are in Asia (depending on where) you are well suited to do just this.

Amazon also offers a fulfillment service that can be used.
I would like to see the web swarmed with offers like this.

[webmasterworld.com...]

[LifeinAsia]

OK, maybe I read your first post too quickly and confused some of the issues. Let me see if understand what you are saying.

There are 3 people in the distribution channel:
A- you (the manufacturer)
B- me (the intermediary)
C- webmasters (affiliates, who advertise the products)

Customers place an order and pay $50 to C. C send $10 to B. B mails the products to the customer. Is this correct?

More questions:
1) How much does B pay A for the products? That is going to further decrease B's profit. And how does A make much money? (It seems like the margin is way too tight to make much, if any, profit. Instead of sending inventory to a lot of intermediaries, it sounds much smarter to sell to WalMart or some other huge distbutor.)

2) Does B have to pay A for the inventory up front or when a sale is made? Also, if B has to maintain a lot of inventory, that's going to require storage space (further reoding profits).

3) What happens when a customer disputes a charge? Or when a customer wants to return a defective item? Is C left hanging? Is B left with defective product?

[newsecular]

Hi,
Those are details.

What I am doing is sketching up a business plan.
The fine details of what percentage goes to who will need to be worked out by whoever implements this idea. Trial and error.

The important thing is that the webmaster is able to have more control.
That the fulfillment of the order is extremely streamlined.
:)

[Marcia]

Things just about like this have already been done for several years.

-Party 1 carries the goods (physically or by many of the numerous drop-ship type deals around)

-Party 2 maintains a site featuring the goods with shopping cart and all.

-Party 1 actually fulfils the orders and collects the funds (technically, but not obviously). Either (or both) can do the customer support depending on the specifics of the arrangement.

-Party 1 sends a percentage to Party 2 after the payment info (i.e. credit card) is verified and the order is shipped.

That's only one model, there are variations. That's sometimes done on an individual basis between parties who already know each other, other time it's white label affiliate marketing.

[newsecular]

Yes I agree.
But I still have not seen someone do it really well for SMB webmasters.

It is all about getting a higher return on traffic.
Most affiliate programs unfortunately are cheap cheap, most pay out way more on AdWords for the same traffic than they pay to affiliates through affiliate programs.

[Marcia]

But I still have not seen someone do it really well for SMB webmasters.

It's being done all the time, it's just generally transparent to the observer.

It isn't set up like an affiliate program's structure, its a different type of arrangement and it's worked perfectly for small businesses. They might not be publicly recognizable, but they are out there. It isn't affiliate marketing, it's another business model and far more of a bother than straight affiliate marketing, in spite of a few advantages.

Added to address the other issue:

Most affiliate programs unfortunately are cheap cheap, most pay out way more on AdWords for the same traffic than they pay to affiliates through affiliate programs.

Those are two different structures, one is PPC and the other is PPA. And some are paying out hefty SEO fees for organic placement. But as far as cheap, cheap is concerned - there are plenty of merchants and affiliate program managers who will negotiate on terms and higher commission percentages for people who produce well for them or who they want to get on board because they know they've got a track record or good potential.

Private offers have to go through the network at CJ and LS (and they stay private, they're not talked about or obvious); at SAS it takes about 10 seconds to up a commission on the merchant side of the interface.

Incidentally, Shopster (managed by Chris Sanderson) is already doing something similar to what you're describing.There are a ton of different products available that end sellers can choose from, they pick what retail they want to charge and the fulfillment is done for them, along with any customer service issues.

[edited by: Marcia at 12:48 pm (utc) on June 9, 2007]

[anand84]

The biggest problem I see is that the webmaster will get the $50 and do nothing.

Your Paypal account will be blocked because you did not deliver the good!