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Should we give way to affiliate program?

5:39 pm on Mar 2, 2006 (gmt 0)

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We have been operating a major online store that targets a niche market for about 3 years. Our store is very popular and we have a significant amount of sales every day.

One of our major challenges has been stocking items we offer for sale. This has not only limited our inventory selection due to lack of capitol, but also has left some of our customers looking for items in sizes we no longer carry.

Our site gets about 2,000 unique visitors per day. Most recently, we have had problems with returned items and disgruntled customers due to the quality of items (these are major brand name products and have nothing to do with us).

Since this was a spin-off of another project, I found that most of our employees now spend more time on solving problems and accepting returns than marketing/sales. It was recently suggested to me that we give way to the current business model and implement an affiliate program. There are many major programs out there. This wil not only automate the site, but we can increase our selection x100 from what we have now.

Any thoughts?

8:32 am on Mar 3, 2006 (gmt 0)

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We have been operating a major online store...

Our site gets about 2,000 unique visitors per day.

Bit of a mismatch there. [snip] TOS 19 [webmasterworld.com] [/snip]

You also seem to have a misunderstanding of what an affiliate program is.

[edited by: minnapple at 2:33 pm (utc) on Mar. 3, 2006]

4:10 pm on Mar 3, 2006 (gmt 0)

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I apologize for my original post - I certainly wasn't clear enough. What were were thinking is getting rid of our entire inventory and shopping-cart system and implementing/registering with an affiliate/competitor and let them deal with the headaches and focus on the core of our business.
5:40 pm on Mar 3, 2006 (gmt 0)

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I am confused by the "major store - 2000 unique per day - mismatch" comment.

I run an online store with less than 1000 uniques per day that generates close to 2mill in yearly sales - that is major in my niche and serious business for a small operation. I am tired of hearing that you have to have 10,000 employees and do 100mill per year to be major - that is silly.

I would rather make 500,000 per year per employee and stay at 2mill than grow because I have all the free time i want to travel and enjoy my hobbies while still making enough money to live debt free with plenty of toys.

Pick up a copy of "Small Giants" and you may change your opinion of what is a serious/major business.

as to the original question: maybe you could consider a dropship arangement instead of affiliate

a)you still "own" the customer
b)your margins are better than affiliate
c)you can then stock your best sellers to make a better margin on them
d)and have the other products dropped as ordered so you have a better selection.

10:10 pm on Mar 3, 2006 (gmt 0)

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I'm still not quite clear on what the question is. Are you asking if you should implement an affiliate program or are you asking if you should switch to some form of wholesale or dropship business model? Or?
1:21 am on Mar 4, 2006 (gmt 0)

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Is this your current position?

Your overhead has eroded your profits and all that is left is going to paying employees which makes it hard to pay yourself?

You feel like you are working for your suppliers and your employees instead of owning a business?

If this is your postion you need to make some radical changes and cut your loses.

Yes, doing an affiliate scheme, will reduce your payroll, but you will need to make an investment in programming, unless you can do it yourself.

This could open up a new can of worms for you. Been there.

Before you bail from your current path, you might want a good business advisor/mentor take a look at what is currently going on.

I was in a similiar situation and luckly I had someone in my family that had a vast amount of business experience take a look under the hood and he pointed out several things that I needed to be changed asap.

9 months later after the change, my business is healthy. I wish I would have done this a year earlier, but am thankfull I didn't wait another year.

[ added ] There are non-profit groups in many cities that help small businesses. They have retired business people/owners that are there for this type of thing. [ /added ]

6:28 am on Mar 4, 2006 (gmt 0)

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Steelbank, I can relate. I have phases when I seriously consider changing my web site of 17,000 plus skus to an affiliate site after dealing with all the problems and stress of running a business. But after taking some time to let my mind clear I pretty much always come back to realizing that as tempting as it sounds it is unlikely that an affiliate set-up will bring in the same sort of profits. With that said if you have another main source of income it may be worth making the change to improve your happiness... but if you rely on this business as your main source of income I think it would be too risky to make the change.
2:55 pm on Mar 4, 2006 (gmt 0)

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I'd like to know how to set up an affiliate program. Please can anybody give any advice about how to set it up? I have a small direct sales business and I've advertised on google adwords but it's become too costly.
3:40 pm on Mar 4, 2006 (gmt 0)

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Id look to increase my capital in some way, the site makes money from the impression you give, are not able to have an increase in the credit available to you?

Either cash in a business dev loan or supplier credit, personally I wouldnt go down teh pathe of teh aff model, google wont allow an all aff site to rank very well for long.

12:18 pm on Mar 6, 2006 (gmt 0)

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"It was recently suggested to me that we give way to the current business model and implement an affiliate program"

Whoever gave you that idea doesn't know what they're talking about. This is abad idea. For starters, you'll loose any decent rankings you now have and it will be just a matter of time before you're left with nothing.

Your situation is not that uncommon. No offense but the web is filled with a lot of young entrepeneurs who are great at developing and marketing websites but have no idea how to run a business in the real world.

Take a step back and look at your problems. Concentrate on your back-end. Why do you have so many returns? There's no reason for that. Innaccurate descriptions, poor images, lousy packaging? Take your pick. What type of software do you have for processing orders? You should be able to keep track of returns by RA numbers. When someone calls can you pull up their order immediately? Does it contain all the information you need? You should also be able to track a package at the click of a button. If you can't you need to integrate this immediately. Ever heard of Stoneedge order manager? Do any of your suppliers drop ship? If they don't, find some who do. Concentrate your inventory on the less expensive and faster moving items and drop-ship the rest.

There are ways to integrate an affiliate program WITH your site. Add another section, "shop the web" or "browse our partner sites" yada yada, but don't give up your main commerce site. A call center is another option if you don't want to deal with customers direct.