PC reseller distances itself from Global Verge

NextDay Network has signed up 3,000 resellers from Global Verge, the company recruiting people to sell a forthcoming mobile service from Zer01, but the PC reseller says it doesn't have a relationship with the multilevel marketing company.

Earlier this week IDG News Service reported that it's unlikely Zer01 could be technically able to offer the unlimited mobile voice and data service it is advertising. The service, originally targeted for a July 1 launch, does not appear to be available yet. It's being marketed through a multilevel marketing program run by a company called Global Verge whose founder, Mark Petschel, in 2005 pleaded guilty to securities fraud. Petschel is currently on probation.

NextDay Network has a program that allows people to become resellers for its catalog of more than 600,000 electronics products. NextDay provides each reseller with a customizable Web site and handles the product fulfillment.

The system attempts to ensure that the reseller who first markets the service to a customer gets the sale, even if the person returns at a later time to the NextDayPC Web site to make a purchase. For instance, if someone follows the nextdaypc.com/globalsolutions link, a NextDayPC Web site pops up with a Global Verge headline across the top. Doing so drops a cookie on that person's machine, so if the person later follows a different URL, such as nextdaypc.com/greenearl, they'll still see the Global Verge headline even though that site has a different company name at the top.

Late last year, Petschel approached NextDay, saying that he had a large sales force and asking if he could offer the NextDay Network reseller program to the sales agents, said Arthur Smaal, chief operating officer for NextDay Network. NextDay was happy for the opportunity to attract more resellers. It set up an easy way for Global Verge agents to get set up as NextDayPC resellers, but has otherwise had very minimal contact with Global Verge or Petschel, he said.

Petschel did not immediately respond to a request for comment.

In the past five months, NextDay has signed up about 3,000 resellers from Global Verge, Smaal said. Before the Global Verge arrangement, NextDay had signed up about 10,000 resellers in total since 2000. The volume of new sign-ups peaked around July 1 to around 120 per day and has been gradually declining, Smaal said.

In NextDay's experience working with similar multilevel marketing plans, it usually has a less-than-50-percent sign-up rate. That means Smaal estimates there are between 6,000 and 10,000 Global Verge sales associates. In a recent interview, Zer01's CEO said about 50,000 people had signed up to the Global Verge sales program.

Smaal was surprised to learn that the resellers are paying to be part of the Global Verge program. "We had no idea," he said. Typically, when NextDay works with people from multilevel marketing programs, they aren't paying to be part of the plan, he said.

The basic Global Verge sales associate program costs an initial $70, then $40 each month thereafter for back office support.

Smaal has been working hard to support the influx of new resellers, many of whom tell him that they've signed up with Global Verge to sell the mobile-phone service. In fact, some have told him they thought they had to sign up to become NextDay resellers to be part of the mobile sales program.

NextDay is torn about the arrangement with Global Verge. The resellers haven't really paid off. Combined, all 3,000 Global Verge resellers have only made a total of 10 sales, Smaal said. But sometimes it takes time for resellers to ramp up sales, he said, and so he's hopeful they may pay off.

Still, he's worried about what might happen to Global Verge.

"If this thing blows up, I don't want to be a part of this," Smaal said.

"I'm not saying it won't work out because you never know, they might pull something out of the hat. Then they'll be laughing. But if it doesn't, then a lot of people are going to be very disappointed," he said.

Copyright © 2009 IDG Communications, Inc.

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