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Storefronts

Though the basic e-commerce banners have been successful for online merchants, the results for affiliates have been negligible. This is primarily because when a web site's visitor clicks an affiliate program banner, the visitor leaves the affiliate site to complete the transaction. The affiliate web site loses the traffic that they have worked hard to acquire, in exchange for the small chance that the visitor would actually complete a transaction at the online store and earn the affiliate a commission. As a result, affiliate web sites like cost-per-click programs much more than banners. If a visitor clicks off their web site, at least the affiliate has the guarantee of being paid for it. Similarly, cost-per-action programs are favored over sales models by many affiliates because their traffic is more likely to convert to a commissionable action.

The storefront affiliate marketing model shows promise to revitalize the sales commission model. With this model, also called a syndicated boutique, visitors don't leave the affiliate partner's web site. Instead, firms such as Vstore.com provide web server space and design templates to mom-and-pop web sites that want to set up shop on the Net but don't possess the requisite technical know-how and resources to do themselves. Such firms pay their affiliates commissions on each sale generated through the storefront. In the storefront model, a web site owner can actually create a complete online store that looks like it resides on his or her web site. The popularity of storefront affiliate programs is growing because, in the words of Roman Godzich, Director of Communities for Vstore.com, "People are beginning to discover the difference between a 'pay-per-action' affiliate relationship and owning their own store."

Storefront affiliates sell no products themselves, but offer the merchandise of many different merchants to their affiliate partners. In effect, they come between the merchant and the affiliate—working for the affiliate sites, not the merchants—by offering complete lines of merchandise built around the theme of each affiliate site. With this model, affiliate partners are offered a way to seamlessly integrate a complete online store, selling products in a variety of categories on their sites.

Why are these program models attractive to affiliates? According to Forrester Research, building a web storefront costs between $2 million and $40 million, with another $2 million to almost $50 million in recurring costs. This is why storefront affiliate programs are so attractive to web sites wanting to enable e-commerce on their sites.

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