|Thu June 25 2009 22:18:29|
Where Are Online Marketplace Affiliate Programs?
By: Ina Steiner
In March, Etsy officially launched the Etsy Developer Community and API. It's well known that third-party developers can help marketplace sellers be more efficient and market their wares, and they can also develop buyer tools to help shoppers find and purchase items. However, they need a revenue model to make it worth their time and effort.
I noticed some web developers discussing the business model for developing tools on the Etsy platform. One developer wrote that after the release of the API, "I was expecting an explosion of etsy related applications/widgets but given the rather quietness of the forums it seems that developers have a problem to find a real business model around services/apps that would bring real added value to etsy users." And, he suggested an affiliate program. (Spokesperson Adam Brown said this week that Etsy does not have plans to offer an affiliate program at the moment.)
Given that Etsy is a marketplace for unique items, sellers are unlikely to need the kind of bulk listing tools so popular with eBay sellers. Shopping tools would likely be more welcome by Etsy itself, since getting traffic and sales are usually bigger challenges for marketplaces than attracting sellers, and sure enough, the announcement about the launch of its API had referred to shopping-related activities:
"The Etsy API will allow developers access to the code for actions one can do on the Etsy website, such as searching product listings and viewing members' favorite ("hearted") items."
Third-party developers who have created eBay shopping tools (including GetItNext.com and WatchedItem.com) relied on eBay's affiliate program as their revenue model. (While sellers will pay for tools to help them be more efficient, buyers are unlikely to pay for shopping tools!)
Having an API and an affiliate program may be the missing ingredient to marketplaces competing with eBay. However, it does raise another "chicken-and-egg" dilemma for these sites. Unless they are well funded, they will have to pay affiliates with revenue from seller fees. And until marketplaces can prove the sales are there, sellers are unlikely to want to pay higher fees to the marketplace to fund affiliate programs.
Oh, and one more problem: this is a challenging time for companies running affiliate programs as states in the U.S. look to collect tax revenue from companies with affiliates in their states, a trend kicked off by the state of New York.