But losses mount for the home furnishings e-retailer that went public in October.
Myonlycatalog.com devises a plan for affiliate marketing sites to keep shoppers from clicking to another site to buy.
Customer acquisition is a never-ending battle for content and other publishing sites on the web. Many of these sites enter affiliate arrangements with online retailers and deliver new customers to their merchant partners on click-throughs for purchase. But they constantly have to replenish their own customer bases-at least for purposes of revenue they generate from affiliate program sales-for chances are, their site visitors will go directly to the merchant next time they want to make a purchase, thus depriving the affiliate of the sales commission.
“The major flaw of affiliate programs is that the affiliates give up customers and future revenue to their merchant referrals for a one-time commission,” says Philip Berlin, CEO at Commerce Syndication Network, which operates catalog aggregator web site MyOnlyCatalog.com.
Berlin is out to change that with a new product, Merchant Partner Plus, now under development, that will offer a way to let visitors buy goods while keeping them corralled on the affiliate’s site. Through technology by Commerce Syndication, Microsoft, and system integrator KORE , a merchant partner will download software from MyOnlyCatalog.com to build a shopping mall on its own site. To stock the mall, merchant partners will access MyOnlyCatlaog’s database of branded catalog products. Participating catalogers pay 15% commission to Commerce Syndication, which pays merchant partners 6% or more, depending on the merchant’s sales volume.
“We’re franchising the MyOnlyCatalog.com business model to a new set of partners that do not have e-commerce capabilities,” Berlin says. Shoppers will order products directly from the affiliate, which will batch orders and transmit them to MyOnlyCatlaog.com for distribution from its catalog partners. The catalog partners execute financial transactions and fulfill orders.
Berlin acknowledges he’s mounting a direct challenge to affiliate networks, but he thinks that if successful he will have built a better mousetrap. He insists the program will be a win for affiliates, who’ll protect sales commissions by driving more sales through their own sites, as well as for the catalogers.
“They’ll be able to push products out to tens of thousands of web sites and only have to deal with one company to do it,” he says. There’s something in it for shoppers, too, he says. “It’s a win for customers because they can access the products from multiple catalogers all in one spot, without re-registering,” he adds. And unless shoppers opt to receive e-mail promotions from a catalogers at the affiliate site, the Merchant Partner Plus program won’t share customer e-mails with retailers.
That’s one reason some of the major branded catalogs haven’t jumped at the chance to sign up for the new program. “Some of the bigger brands have said they don’t want to do anything but links to the MyOnlyCatalog site. They want to control the customer,” Berlin says. The commission rate of 15% is another sticking point because it’s higher than retailers generally pay affiliates.
The program faces challenges: similar models have been tried unsuccessfully, notes Jeff Roster, Gartner Group retail analyst. Aggregating products of catalogers could give more exposure to some niche players, but he notes big retailers aren’t inclined to let third parties get between them and their customers. “I question the idea that retailers wouldn’t want to establish more direct relationships with their customers,” he says. “The customers want to establish the same direct relationships.” Nevertheless, Berlin is confident that Merchant Partner Plus will be up and giving the affiliate networks new competition in time for Q4. Stay tuned.