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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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