Benoît l’Archevêque: It’s like the 411 service in North America where people call to get services. In China, they have salesmen receiving the call. People call and say, “I’m looking for this.” The person receiving the call will not only give the information but also go and complete the sale. Azzimov is included in that. They have the affiliate program already in place.
Sramana Mitra: I understand the advertising and lead generation, but how does the affiliate program work?
Benoît l’Archevêque: Let’s take a concrete example. You have a bottle of wine that is being sold for $10. They buy it directly from the platform. They go to GS Telecom powered by Azzimov and buy that $10 wine. Assuming that they make a profit of $5 on that bottle, we get 70% of that $5 up to a million. After we get the $1 million, we have a 5-year contract where we’re going to get 40% of their revenues. We know how much profit was done and we know our share of that product, which actually goes into our own analytics.
Sramana Mitra: I’m not sure if I got this. There’s a retailer, from some of whom, you’re taking affiliate commissions? There’s a retailer that’s paying affiliate commission to China Telecom and China Telecom is sharing that commission with Azzimov?
Benoît l’Archevêque: Yes.
Sramana Mitra: So what are the numbers? Are we talking about 70% affiliate commission to China Telecom or 70% of the revenues to Azzimov?
Benoît l’Archevêque: Each product has its own percentage of profit. A piece of clothing that was sold at $100 may have $80 profit. For another product that’s being sold at $200, there maybe only $20 of profit. For me, the only thing that’s important is the profit that’s left there – the amount of money that’s being left for China Telecom. Then, we take a percentage of that profit.
Sramana Mitra: Who determines the affiliate commissions that China Telecom makes out of an affiliate transaction?
Benoît l’Archevêque: It would be their own sales team with each retailer.
Sramana Mitra: So China Telecom has a sales team who is going out and selling affiliate deals and selling advertising deals to small businesses?
Benoît l’Archevêque: Exactly.
Sramana Mitra: They are basically doing the function that Google Small Business Team or Google Advertising Team does in working with small businesses and large businesses?
Benoît l’Archevêque: Absolutely.
Sramana Mitra: How many of these kinds of relationships do you have?
Benoît l’Archevêque: In China, that’s the only one. There are three other big companies that we are dealing with, but we haven’t done a solid contract yet. I have another one in Japan and a few in Canada. We also have one in the States. We’ve been developing this company for two years. We launched our first portal eight months ago.
Sramana Mitra: The company was pitched to me as a $5 million revenue generating company. Does that mean that your China Telecom deal is generating more than $5 million in revenues?
Benoît l’Archevêque: I have other clients as well including several retailer websites. We take that same model and install that to several retailers. They can actually use the search engine, which is product-centric and people can actually go and ask information. Their sales team will answer the queries. We have several clients like that and bigger clients like China Telecom. Our goal is to actually go and get the big ones. What we’re doing right now is a lot of small businesses. We’ve been doing that for many years. Azzimov was not built from one but from 14 years of building websites like that.