Power Up Case Profile: The Affiliate Model Revealed

Online Shopping USA is an online retailer with a difference. The brainchild of James Harris and Eisabai Nyo, this website pulls together a whole raft of products from US retailers to sell to the Australian market.

Born of unique market conditions and developing e-commerce technologies, Online Shopping USA is still a relatively new venture. Founded by James Harris and Eisabai Nyo, the website represents a different breed of online retailers.

Utilising an aggregated affiliate model, the online retailer has been able to make inroads into selling American products to Australian consumers without any of the risk and overheads associated with finding suppliers, warehousing inventory and fulfilling orders.

Harris recently spoke with Power Retail regarding the conception and development of Online Shopping USA.

How did the idea for Online Shopping USA come about and what journey led you to its development?

The idea for Online Shopping USA came about with the rise of the Australian dollar and the increasing interest in online shopping overseas. It occurred to us that there wasn’t an authority site that covered the best of these stores and their products, which online stores are safe to use, which provide free shipping to Australia as well as information on the best methods of buying and shipping and feedback for which stores offer the best service.

So we spent six months designing and building the site and launched in July 2011 to positive customer reaction. It took us another six months to build out the product range and establish relationships with the affiliates we wanted to work with, as many stores need to see you as bona fide and have some trading history behind you. In that time we also built a partnership with specialist shipping company Ship2Anywhere, which provides all our members with a free US mailing address (for US companies that don’t ship to Australia) and Turnhills, which provide us with storefront imagery from New York flagship stores.

The business partners behind Online Shopping USA, myself – James Harris – and Eisabai Nyo, have over 20 years media experience between us. Eisabai is a Computer Science graduate who has worked with some of the largest digital media companies in Australia and did all the development work for Online Shopping USA and is also a site editor and key content contributer. Meanwhile, I have worked for ninemsnNews Digital Media and Telstra BigPond in various online marketing roles and manages the business side of Online Shopping USA as well as marketing and affiliate partnerships.

How would you describe your business model?

We work on an aggregated affiliate model, pulling together and showcasing the best offers from our partner stores, building related collections and themes, optimising landing pages for search and then taking a commission for any items we sell.

What particular challenges did you have to overcome in order to successfully launch Online Shopping USA?

The main challenges were building trust and reputation with our site in order to convince affiliate stores to partner with us. This can still be a challenge as we’re only coming up to our first birthday, which is still relatively new for an online retail site.

Besides that, website issues like navigation, optimisation for conversion, SEO, design, build, hosting, content management all have their challenges and we’re constantly testing and tweaking to make sure our customers get an optimal experience.

What technologies do you handle in-house and what do you have to outsource?

We outsource all our web-based technology, but manage it all in-house – if that makes sense. We host our site externally, it’s built on the open-source WordPress platform, we use 3rd party affiliate tracking partners and software like Commission Junction. We also use 3rd party software to manage email marketing and source content from our partners’ websites and rely on bloggers and partners to provide interesting content.

Some of your stores advertise product to ship internationally that is generally very hard to find. How come some retailers are able to ship certain products to Australia while others aren’t?

I think some US retailers have spotted the opportunity and are the early movers. Stores like Shopbop and Revolve Clothing are the ones that many Australians know offer free shipping and returns, so they have the first mover advantage. How are they able to do this? It’s like Amazon offering every Kindle user free broadband access – it’s a cost built in to every item they sell. They have a good handle on their sales conversion rate, shipping costs and expected returns and that information gets factored in to their pricing across the whole range. So the shipping and returns costs are absorbed by all products.

Can you give us an idea of how Online Shopping USA has been performing since launch?

We can’t give actual sales figures but revenues have increased 153% since we launched back in July and are still increasing about 40% month-on-month. We have expansion plans and additional revenue streams in the pipeline so we’re hoping for an even bigger 2012.

Seeking more information on how to get an online retail venture off to a flying start? See our complete A-Z guide, Power Up: The Online Retail Entrepreneur’s Guide.

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