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http://www.ecommerce-guide.com/solutions/advertising/article.php/3422671
By James Maguire October 15, 2004 Altrec, an online retailer of outdoor gear, wanted what every online merchant wants: to increase the total number of eyeballs browsing its inventory. E-tailers typically do this by increasing their marketing campaigns. More money spent on advertising -- hopefully -- equals more customers at their site. But Altrec found an additional way. Using Mercent Commerce System, the outdoor gear e-tailer also offers its inventory through other sites. Mercent, explains Altrec CEO Mike Morford, "is a tool that takes our inventory data and feeds it into multiple locations." The Mercent application is what's known as an "aggregator" -- it aggregates a number of marketplaces into one outlet. Mercent is a Web services-based application that sends an e-tailer's SKUs out to a raft of other marketplaces, like Amazon, MySimon, PriceGrabber, Yahoo! Shopping, MSN and others. In short, it's an aggressive sales technique: in addition to attracting customers to your site, it sends you out to your customers. Build or Buy The Mercent system was implemented quickly and is simple to use, Morford says. Since beginning to use it in May of 2003, Morford has found working with Mercent to be almost seamless. "I would describe it as incredibly efficient and easy." Although the Mercent technology requires little administrative effort, Altrec manages its own feed to the various aggregated marketplaces, checking for pricing and inventory levels. Mercent offers the option of maximizing a feed, "so you can limit product flow to high performance goods," Morford explains. In most cases the actual purchase transaction is handled by Altrec itself; the traffic is routed to its site. In some cases the third party marketplace handles it, if Altrec has approved this. How's It Working? The marketplaces that Mercent aggregate take a commission, and "that limits your end margin. So you may be able to acquire a customer, but it's not a situation where the business model works in perpetuity," Morford says. "The lifetime value of the customer has to pay off relative to customer acquisition costs. If that scenario works, then a retailer who's doing this, their goal is going to be to deal directly with the customer." If this aggregator approach does not create customers who later buy from the merchant directly, it offers minimal profit, he says. In essence, the system works best as a customer acquisition method rather than a sole method of maintaining a business, in Morford's view. However, "It's definitely a positive relationship, and I think it depends on the retailer as to whether it makes sense," he says. "Certainly for us it has made sense."
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