If you produce goods, you also need to sell them. That means finding customers, promoting and managing the business with everything that goes with it - from order processing to complaints. You can leave these worries to experienced salespeople and take advantage of the benefits of affiliate sales. Read on to find out what this business model entails and who it pays off for.
Sales through partners or marketplaces
Partner selling is a business model where a manufacturer offers its goods through a partner, usually a large and established e-shop. The latter acts as a distributor and includes products from different suppliers in its offer. It charges a margin for brokering the sale.
Affiliate sales are often referred to as marketplace. A large e-shop functions as a virtual marketplace where small manufacturers and traders offer their products.
B2B2C business model
Selling through a partner combines B2B and B2C business, which is why it is sometimes abbreviated B2B2C (business-to-business-to-customer):
- The manufacturer's salesperson wants to acquire new customers by leveraging the already established network of clients at the reseller-broker,
- the intermediary connects the trader to the customer and earns a commission on the sales,
- the customer has access to more products and relies on a proven dealer.
Examples of sales through partners are usually large e-shops such as Amazon.com or the Czech Alza.cz and Mall.cz. They function as online marketplaces where different merchants offer their products. Similarly, traders can also sell their goods in the partner's brick-and-mortar stores or through a distributor.
TIP: If you want to sell goods through several partners, CRM will come in handy. In it, you record all communication with partners, the status of negotiated partnerships and the development of finances.
Benefits of partner sales
Affiliate sales bring benefits to the merchant. Thanks to the intermediary:
- leverages the credibility and stable background of a large and established retailer,
- does not take care of e-shop management and customer service, because the seller takes care of order processing, communication with the customer or complaints,
- it's easier to reach customers who wouldn't normally come across it,
- has secured promotion of its goods through the retailer's established channels,
- it also promotes its brand, as the goods are usually marked as partner sales on the e-shop with a link to the supplier.
There are also advantages for other parties in the affiliate sale. The seller does not have to deal with the storage of goods and logistics, because the transport is provided by the supplier according to the contractual conditions. The intermediary has a varied offer for its customers and builds trust with its clients by selecting quality products from suppliers.
The customer uses an established e-shop that they trust. At the same time, they have easy access to a wide range of products in one place to compare and choose from.
TIP: Know the key indicators of sales performance.
What to look out for in affiliate selling
Selling through partners comes with potential disadvantages that you need to consider in advance. These include:
- sales commission of usually between 15% and 40% (depending on the contract with the e-shop) and any additional fees for offering products according to the contract,
- the fulfilment of the conditions for inclusion in the offer and for subsequent cooperation - for example, delivery of the products to the customer within a predefined period of time,
- invoices are usually due within 30 days of the sale of the goods, so the manufacturer receives his money later than if he sold directly and has to take this into account in his cash flow.
The manufacturer's sales representative should also take into account any increase in demand, which means an increase in inventory, staff or production expansion.
In order to make it profitable to sell through partners, the trader has to set the price of the goods high enough to pay the commission to the intermediary, but not too high so as not to discourage customers.
Affiliate sales can work as a complement to your own e-shop or store. Or if a manufacturer wants to start selling in bulk and can manage to pay high commissions for distributing goods to clients.
Example: partner sales in Alza
Alza is the largest e-shop in the Czech Republic that offers partner sales - it calls its platform Alza Trade. The beginning of cooperation with them looks like this.
New suppliers register online with Alza Trade. The condition for registration is that the supplier must be a VAT payer registered in the Czech Republic. It then connects to Alza via supported platforms (such as Shoptet or Helios) or via API.
The supplier fills in all necessary settings in Alza Trade, from warehouse, transport to the method of exchange of documents. After Alza approves the settings, the supplier enters the goods on the platform using the listing tables. After approval, Alza will publish it on the e-shop and at that moment customers can buy it.
The e-shop supports sales with personalized performance marketing, and banner advertising spaces can also be used upon agreement. Alza charges a sales margin that depends on the category of goods sold.
As a large Czech e-shop, Alza has digitized this process as much as possible. If you are interested in partner sales with smaller e-shops or chains, the beginning of cooperation will be more administratively demanding.
Define how to approach potential partner vendors in your sales process. Learn more about setting it up in the SalesDriver Sales Manager Hub.
