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Unfortunately, this type of company uses
the same business model as the old offline Multi-Level Marketing
companies, which turned some participants off because they were stuck
with inventory of a product they were not prepared to sell and the
buyers didn’t care to buy. That
said, online programs are different. The sellers hold no inventory, and
therefore assume no risk if the product doesn’t move. They get also get
a percentage of the sales of other affiliates they introduce to the
program. But you want to be sure that every affiliate you add to your
program and feature on your valuable site real estate will earn its
keep.
How should you check them out?
Buy some of the product, and honestly
see if it is of the quality your site visitors would expect. Is it
unique, better or cheaper? Understand why this company would need to pay
you to recruit more affiliates. Are they very small, without the
administrative and sales staff to do affiliate recruiting? Or does
convincing an affiliate to sell their products take so much effort that
it’s not cost effective?
Do they pay you for new affiliate
sign-ups, or just the commission on the sales they make?
What extra administrative work will
such a program bring you, if any? Can you refer them to other affiliates
that aren’t in competition with you, or are your relationships primarily
in your own space, potentially diluting the sales you’d make?
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