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Tuesday, June 29, 2004
Stay-at-home sales agents cash in on Internet revolution
By TOMOKO OTAKE
Housewife Tomoko Kobayashi puts on her Web businesswoman's hat at 9 a.m., after all her morning chores are out of the way.
She turns on her personal computer and opens the mail box. Of the dozens of e-mails she receives every morning, 10 or so are from companies on whose behalf she is contracted to sell products.
She then logs on to one Web site after another, tallying the value of commissions she earned the previous day by promoting everything from antisnoring mouthpieces to diet supplements and roast beef gift boxes -- all via her Web site.
Her account book shows that she earns an average of 400,000 yen every month, on sales of more than 13 million yen.
Kobayashi and tens of thousands of other online corporate "affiliates" across the country are turning the concept of retailing upside down. A growing number of housewives and moonlighters are becoming advertising/distributing agents of products and services, often using their experience as consumers to their advantage.
Modern-day sales reps like the 36-year-old Kobayashi defy the stereotype of those who don heavy business suits and forced smiles for their pilgrimages to clients' offices.
In fact, Kobayashi, a demure mother of two, hardly ever moves away from her family's two-story house in Sagamihara, Kanagawa Prefecture. Instead, she spends hours surfing the Net -- which she says is a vital part of her trend-spotting routines.
"Since I started this business, I've realized that anything can be turned into a business idea," she said.
Affiliates don't have to brave the heat or rain because all they do is post a link to a product or a merchant they want to promote on their Web sites.
They claim a certain percentage of the sales generated via their sites. This means, for example, that when an Internet surfer looking for a Dell computer visits a Web site run by an affiliate, clicks on a link, jumps to the computer maker's official home page and makes a purchase worth, say, 200,000 yen, the affiliate earns 2,000 yen for the introduction.
While the overall industry picture is hard to grasp, some 3,000 companies in various business sectors use online affiliates, according to Kenichi Shibata, president of BesTag Inc., a Tokyo-based provider of product search services and a founding member of the Affiliate Marketing Association.
Affiliate marketing -- which is now used to sell everything from PCs to clothes or insurance policies -- dates back to 1996, when Amazon.com, Inc. of the United States started using "associates," the firm's preferred term for affiliates, to boost sales.
Amazon.com currently offers commissions of 3 percent to 6 percent to Web site owners whose introduction of online customers leads to business transactions, plus added incentives depending on the volume of sales.
The business spilled over to Japan in the late 1990s. Today, most online merchants use affiliate service providers, which act as intermediaries between them and individual/corporate Web sites.
ValueCommerce Co. is one of nearly 20 major ASPs in Japan, with 74,000 Web sites registered as affiliates. The firm attributes the growing popularity of the business in part to people's changing attitudes toward work.
"Japan's employment models have changed dramatically, what with the collapse of the lifetime employment system and (the predicted arrival of) the era in which an average salaryman's annual income falls to 3 million yen," said ValueCommerce spokeswoman Sachiko Ogawara.
The volume of trade generated annually through the firm's affiliate services, in which 1,000 companies participate as merchants, stands at 120 billion yen, she said.
Some merchants regard affiliates as sales partners, while others view them as an advertising medium.
For major mail-order company Cecile Co., based in Takamatsu, Kagawa Prefecture, affiliates are a mixture of the two but are more cost-effective than mere advertising.
"TV, magazine and Internet banner ads cost us regardless of their financial contributions to our revenue," said Mitsuru Fujita, a Cecile official in charge of affiliate marketing. "Affiliates, on the other hand, are paid solely based on their performance."
The firm, which started using affiliates last July, has endorsed 2,563 Web sites as affiliate partners. All but 200 are owned by individuals, Fujita said.
The volume of orders generated by way of affiliate sites today makes up 10 percent of the company's online sales, which hit 11.6 billion yen in 2003.
Even big brand names with direct sales channels are finding it hard to resist affiliates. Fumie Hayashi, spokeswoman for the Japan subsidiary of Dell Inc., said the major PC manufacturer, known for a business model devoid of sales agents or middlemen, started offering an affiliate program targeting Web sites in 2001.
She declined to release the number of contracted affiliate sites or sales logged via these sites, though she acknowledged that "affiliates are growing to be a very important sales channel for us."
This might sound like easy money, but it certainly isn't, according to the affiliates themselves.
Kobayashi, for one, has put considerable time and effort into making her Web site -- whose theme is promoting goods aimed at easing people's health and other worries -- more accessible to Net surfers. The site now has more than 1,000 pages, which means there are just as many points of entry for potential customers.
Kobayashi also runs a Web site that offers tips on how to become a successful affiliate. She earns commissions from ASPs for introducing affiliate-wannabes to them.
Shibata of BesTag noted, however, that affiliates are treated unfairly by many of the online merchants, adding that the most pressing objective of the association is to boost the status of affiliates.
"Many companies, even when they enjoy gross profits of 20 percent, feel a 1 percent margin to affiliates is more than enough," Shibata said.
The association also wants to promote collaboration of affiliates and merchants on a deeper level, by making proposals on sales promotion and product development to merchants, Shibata said.
"Affiliates as distributing agents are here to stay, as long as e-commerce prevails," he said.