We have known for some time that the online purchase process is fundamentally different to the offline process. Oddly enough, we often leverage this inefficiently, as evidenced by the relative rarity of impulse offers.
In the physical world, impulse offers represent the highest margin area of most retail businesses: the items placed near the checkout deliver fabulous margins. The classic model is the customer who goes to the soda aisle, chooses the 12-pack that’s on special offer for just $3.95 – but then buys a single can for $1 out of the refrigerator to drink right away. Economically, it makes no sense to spend three times as much for the refrigerated can. But we know that, once a customer has their wallet out and is ready to buy, they are more likely to buy additional, higher-margin items.
In the online world, this has been in play for ages. Through any e-commerce platform, you should be able to cross-sell other of your products during the payment process. And most everyone offers you the ability to sell an Extended Download Warranty or CD on Demand, items that bring you margin at zero investment.
The question is – what do you do if you’ve only a limited product catalog and therefore don’t have a logical cross-sell item? Are you limited to just the EDW or CD offers?
And if you could offer more items to your customers, what would that mean to your relationship with the service provider that made them available to you – would they still be a cost center, or could they in fact become a profit center, guiding net new dollars to your bottom line?
In the coming weeks, Plimus is introducing network selling: the ability to fill your product catalog with 3rd party offers that, properly merchandised, should make it possible for you to bring new revenues into your business. In principle, this should mean that you no longer need to calculate how much of your revenue you’ll lose to fees, but rather how much revenue beyond the face price of your product you can project in your business plan.
Let’s put that into context. When you sell a $20 unit through Plimus, you pay a fee of 10% for the e-commerce transaction. If you were to cross-sell an item that brought you $3 (an entirely reasonable projection), you’d actually receive, net-net, $21 for that $20 initial sale. Throw in a CD on Demand with a $2 margin, and you’re getting $23. Put another way, your fee went from 10% to negative 15% - you’re getting an additional 15% for choosing to use Plimus!
I’ve invited a small number of vendors to participate in a pre-beta release of the functionality. I’ll be writing about our adventures a couple of times a week as we learn how some leaders in the Plimus community leverage network selling (everyone will get access in the next three weeks or so). If you’d like to join that group, drop me a PM at simonj@plimus.com and we’ll get you an invitation.
Imagine – your e-commerce provider as a source of net-new revenue instead of fees. Now that’s, to steal a phrase, change anyone can believe in.