Checklist: online reseller channels.

Six months ago, PGSoft president Gary Gysin faced a tough question: How to get retail distribution for a new file recovery utility his company had just launched. "Utilities are a tough market these days, and we'd never done a retail launch before at this company," says Gysin. "We didn't want to spend $5 million dollars on channel promotions and then have nothing to show for it, either."

Instead, Gysin decided to focus on major online ESD resellers--stores like Beyond.com, Egghead, Cyberian Outpost, Download Warehouse, Chumbo, and Buy Direct. "It took us approximately a month to get into these stores--much quicker than traditional retail," he says. "And the cost of getting into each store was very low, basically just the effort and about $500 per title."

The downside, Gysin concedes, is that even the biggest online resellers still don't seem to generate much volume. "We're getting 90% of our sales off our own Web site," he says, "though the online stores do give us good visibility that probably drives some of this business."

So what does it take to put together an online reseller channel? Gysin says he learned to pay special attention to a few key questions:

* Who really controls the store's shelf space? Unlike traditional retailers, online resellers often give all of their ESD business to a single distributor, says Gysin. "For example, to get into the ESD section for Cyberian Outpost and Download Warehouse, you need to do a deal with Digital River. For Egghead and Chumbo, it's Release Software." In addition, a few major stores--notably Beyond.com--also run private label stores for portals like Yahoo!, Excite, and Netscape, which further complicates the question of who's in charge.

* How do you get physical product into the store? "The ESD section of most online stores generates approximately one-fifth of the sales volume of the main store," Gysin says. "To be in both areas of the store, you'll need to set up a distributor agreement with someone like Ingram or a smaller firm like Vanguard, which we used." It's important to get physical product into stores for another reason: Often, the main store's search engine only retrieves listings of physical SKUs. "If your title is only available in ESD format, customers who search for you may get zero hits."

* What about merchandising materials? "Be prepared to create many variations of your product copy and bitmaps," Gysin warns. "Some stores will want a 10-word summary, others want 15 words. Some want product logos, some don't. And the image sizes for your box shots are going to be different for every store and reseller."

* Will you get customer names? Online stores collect registration information on virtually all of their customers, Gysin points out. "This is your gold mine. When you sign a contract with a reseller, make sure the store agrees to send you names and addresses of your customers."

* How much traffic does your sub-category get? "Before you spend any marketing dollars with any of the stores, ask how many unique visitors they get to the section you care about (utilities, Internet, developer tools, etc.). The store may generate a lot of traffic for its home page but relatively little in your section," says Gysin. "If the store's marketing people can't answer these questions, they probably don't have tools in place to do the monitoring--and therefore the store is too small and not worth spending dollars with."

* What's going to attract buyers? Stores will aggressively pitch banner ads and "Friday morning specials" on unsold promotional slots, says Gysin, but he says these deals rarely pay off. A better way to generate traffic is with e-mail campaigns to the store's mailing list, especially when the campaign clearly identifies the store's association with the product. "But by far the most effective way to generate sales in the stores is with public relations and reviews. Send copies of all your positive reviews to each store, and ask if they'll link your product page to your reviews."

Gary Gysin, president, PGSoft, 510 Lighthouse Ave., Pacific Grove, Calif. 93950; 831-647-4832. E-mail: [e-mail].