Big Changes with Amazon Associates Commission Rates

by kilgore 29 replies
I had a call with an affiliate rep from Amazon, and since I wasn't asked to keep it a secret, I thought I'd relay what I was told.

Starting March 1, Amazon is moving away from a volume based fee structure and moving toward a category based fee structure. In other words, you'll get the same rate whether you sell one product or one million products, but you'll likely get very different rates depending on what types of products you sell.

Unfortunately, the actual rates that Amazon will be giving haven't been announced, so I don't have any information on that. That said, Amazon Associates in the UK already gives category-based commissions and you can see their rate card here: https://amazon-affiliate.eu/en/about...ertising-fees/. I'm not sure how closely aligned the UK and US rates will be, but I'd guess they'd be somewhat similar. I suppose we'll find out soon.

This may well be good news for those whose volumes are low, but it's likely going to really hurt businesses like mine that easily hit the maximum volume-based rate of 8.5% every month. How each of us should respond will depend on what we sell and how much we sell, though on our end we've already started making plans to de-emphasize Amazon or perhaps even to eliminate it completely within our portfolio of revenues.

Anyway, sorry I don't have more info right now -- the actual rates should be announced sometime mid-month -- but since I didn't see anyone else talking about this here, I thought I'd at least share what limited knowledge I have.
#main internet marketing discussion forum #amazon #associates #big #commission #rates
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  • Profile picture of the author Sergio80
    That is what I hate when dealing with Amazon and Ebay type affiliates.

    Actually any type of affiliate program as you dont have control over.
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    • Profile picture of the author kilgore
      Originally Posted by Sergio80 View Post

      That is what I hate when dealing with Amazon and Ebay type affiliates.

      Actually any type of affiliate program as you dont have control over.
      To be fair, small businesses tend not to have much control over much of anything.

      If you persue an e-commerce model rather than an affiliate model, suppliers and shipping companies can easily raise prices. If you get money through advertising, your clients may decide to stop buying ads from you. Social media marketers have to deal with Facebook algorithm changes, SEO marketers have to deal with the vagaries of Google updates, email marketers have to deal with ISP blocks or systems like Gmail deciding they want to do thinks like filter marketing emails into tabs.

      In this case, as in all others, it's up to us to adapt to whatever the world throws at us. Maybe we can reduce or hedge against risk in certain ways -- but you'll never be able to eliminate it.

      Right now for us Amazon is our biggest income source, but it's not our only income source. Moreover, our business model isn't dependent on Amazon. There are other affiliate programs out there. And we've even started thinking about shifting to a more traditional e-commerce model. What we sell on Amazon we can certainly sell elsewhere or even sell ourselves. It certainly won't be a painless transition, but we'll get through it.
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      • Profile picture of the author brytespaklz
        If you persue an e-commerce model rather than an affiliate model, suppliers and shipping companies can easily raise prices. If you get money through advertising, your clients may decide to stop buying ads from you. Social media marketers have to deal with Facebook algorithm changes, SEO marketers have to deal with the vagaries of Google updates, email marketers have to deal with ISP blocks or systems like Gmail deciding they want to do thinks like filter marketing emails into tabs.

        In this case, as in all others, it's up to us to adapt to whatever the world throws at us. Maybe we can reduce or hedge against risk in certain ways -- but you'll never be able to eliminate it.
        IMHO, i think the e-commerce model offers more control than the other models u mentioned above.
        However i agree with you that none of the models is free of challenges and willingness to adapt to changes is key to success online (or offline)
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  • Profile picture of the author Sergio80
    eCommerce suppliers has a lot of competition so they have no reason to increase their prices. If they so, you can just go to another supplier.

    Other things you mentioned are sustainable, you can adjust with the changes.

    What I am trying to say is both Amazon and Ebay are big players with little to no competition and want to take advantage of this. And they have the most product variety compared to other networks.

    In 2009 I was banking over 15K/month with EPN (ebay partner network) after they changed their pricing structure I wanted to switch to another network and was not able to find the same products.
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  • Profile picture of the author Brent Stangel
    If you persue an e-commerce model rather than an affiliate model, suppliers and shipping companies can easily raise prices. If you get money through advertising, your clients may decide to stop buying ads from you. Social media marketers have to deal with Facebook algorithm changes, SEO marketers have to deal with the vagaries of Google updates, email marketers have to deal with ISP blocks or systems like Gmail deciding they want to do thinks like filter marketing emails into tabs.
    Just when you think you've got it all figured out...
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  • Profile picture of the author DWaters
    I am wondering what is Amazon's logic behind this. ?? It seems like they would want to stay with volume based incentive to encourage higher sales volume. Perhaps I am thinking of it too simplistically. Perhaps there are categories that they want to significantly boost up the sales ???
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  • Profile picture of the author Kay King
    My own guess? Amazon is moving into the fashion/apparel/personal products in a big way ...at least that's what I've read in news recently.

    Amazon has established itself as a go-to for much of tech products people buy - moving into fashion and personal care and home items in a bigger way means focusing on THAT portion of the market and encouraging affiliates to do the same.

    Just a guess but makes sense.

    Paypal and many other services used "affiliate commissions" to increase their business when they started out. Once the company is well established as a brand - they don't need affiliates to the same degree.

    MLMs do it all the time - when new signups lag - they change their payouts to be more generous with newbies and that hurts long time members - if members are dropping at a certain point such as one year - the mlm may change again to 'rebalance' and provide incentive payouts for longevity. It's business and it can be frustrating.

    Will be interesting as I'm sure there will be a lot of crying over this one if the changes are significant. It's the downside of building your business relying on someone else's platform...but there are upsides to.
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    • Profile picture of the author jan roos
      Originally Posted by Kay King View Post

      My own guess? Amazon is moving into the fashion/apparel/personal products in a big way ...at least that's what I've read in news recently.

      Amazon has established itself as a go-to for much of tech products people buy - moving into fashion and personal care and home items in a bigger way means focusing on THAT portion of the market and encouraging affiliates to do the same.

      Just a guess but makes sense.

      Paypal and many other services used "affiliate commissions" to increase their business when they started out. Once the company is well established as a brand - they don't need affiliates to the same degree.

      MLMs do it all the time - when new signups lag - they change their payouts to be more generous with newbies and that hurts long time members - if members are dropping at a certain point such as one year - the mlm may change again to 'rebalance' and provide incentive payouts for longevity. It's business and it can be frustrating.

      Will be interesting as I'm sure there will be a lot of crying over this one if the changes are significant. It's the downside of building your business relying on someone else's platform...but there are upsides to.
      Your guess is right Kay.

      That's all I can say for now.
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  • Profile picture of the author ChrisBa
    It seemed like only a matter of time, I think we'll see more and more adjustments like this until they eventually weed affiliates out.
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  • Profile picture of the author kilgore
    Originally Posted by Kay King View Post

    My own guess? Amazon is moving into the fashion/apparel/personal products in a big way ...at least that's what I've read in news recently.

    Amazon has established itself as a go-to for much of tech products people buy - moving into fashion and personal care and home items in a bigger way means focusing on THAT portion of the market and encouraging affiliates to do the same.

    Just a guess but makes sense..
    You may be guessing, but I think it's a good guess. I remember a conversation I had with a UK Amazon affiliate rep a while back and he was definitely pushing fashion and apparel. You'll also note on the UK rate card that I linked to above, Amazon gives its highest rates for Shoes, Jewelry, Apparel, Watches, and Luggage. That's not a coincidence.

    Originally Posted by DWaters View Post

    I am wondering what is Amazon's logic behind this. ?? It seems like they would want to stay with volume based incentive to encourage higher sales volume. Perhaps I am thinking of it too simplistically. Perhaps there are categories that they want to significantly boost up the sales ???
    It doesn't make much sense to me either. If the Pareto principle applies to Amazon affiliates (and I'm guessing it does), 20% of Amazon affiliates are responsible for 80% of the sales. If the bigger affiliates decide that Amazon isn't worth it anymore, that could hurt their entire program. That said, I'm guessing that affiliates rank fairly low for Amazon as a traffic source, so even then it'll be far from the end of the world for them. As Kay rightly pointed out, as companies get more established they need affiliates less and less.

    Originally Posted by ChrisBa View Post

    It seemed like only a matter of time, I think we'll see more and more adjustments like this until they eventually weed affiliates out.
    I don't think Amazon is going to kill their affiliate program any time soon. They've actually been investing in it quite a bit of late. They completely revamped their affiliate portal; they introduced native shopping ads; and they're actively developing other systems (which I can't detail due to an NDA I signed) to automatically solve one of the most common issues people post about on the WF in regards to Amazon. Why invest so much in something you're just going to kill?

    That said, there's no doubt that they're making a huge shift in their affiliate strategy. They'll be targeting strategic product categories rather than just trying to drive traffic more generally. If your business overlaps with one of their strategic categories, it could still be a very lucrative program for a long time to come -- assuming they don't change what categories they want to emphasize.
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  • Profile picture of the author Janice Sperry
    Amazon has dominated online shopping but they see Walmart, Jet, Zappos, and many others making big commitments to get a bigger piece of the pie.

    I have wondered for a long time why they didn't pay commissions according to category (I didn't know they already did that in the UK). They sell just about everything and there is a vast difference in mark-up, traffic, storing and shipping costs, competition, etc., etc.

    It sounds likely that there may end up being some niches/categories that are no longer very profitable for some affiliates if they can't get lots of volume.

    @kilgore - thanks for the heads up by the way.
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  • Profile picture of the author JohnMcCabe
    Ever since Amazon went to the volume incentives, one of the primary strategies has been to promote a lot of low cost items to raise the commission rate on higher priced items.

    If an affiliate moves 10,000 items, but 9,900 of them are $0.99 Kindle books, Amazon doesn't make that much money.

    In the real world, retailers have used commissions and special promotions (we called them SPIFs) to sculpt their sellers' efforts.

    Sounds like that strategy is moving online more and more, too.

    kilgore, thanks for the heads up...
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  • Profile picture of the author shiftyeyes
    I thought I already saw the category changes. Most of the stuff will be stuck at 4%
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  • Profile picture of the author writeaway
    This actually makes a lot of sense

    After all, different product categories have different average profit margins

    This new fee structure might just move affiliates to promote more profitable items for Amazon

    I view this as a LONG TERM win/win

    Sure, there's short term PAIN but in the long term, it should even out
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  • Profile picture of the author jackyjack1
    Do you guys think we'll know this before March?
    I hope so. So basically who's been called, has been said only that rates will be cut? That is it?

    Thanks for the heads up
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    • Profile picture of the author jackyjack1
      ALSO,
      How on earth would the New York Times invest so much money just a few months ago for TheWireCutter and TheSweetHome if followed by a cut in rates? Their earnings rely mainly on amazon associates.

      The Sweet Home sells exclusively Home-related products.
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      • Profile picture of the author myob
        It's highly unlikely Amazon will ever kill off such a lucrative cash cow. Even though affiliates generate perhaps less than 10% of total sales volume, the in-house conversion rates from this traffic source alone is soaring.
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      • Profile picture of the author inetguru_987
        Originally Posted by jackyjack1 View Post

        ALSO,
        How on earth would the New York Times invest so much money just a few months ago for TheWireCutter and TheSweetHome if followed by a cut in rates? Their earnings rely mainly on amazon associates.

        The Sweet Home sells exclusively Home-related products.
        Do you think Amazon really cares about the New York Times? I don't. It was a good sell by Briam Lam. Looks like he got out just in time.
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  • Profile picture of the author sandra98
    If Amazon cuts their commission rates drastically, it's because they don't have much to lose. Where will existing affiliates go?

    Walmart pays 4%, eBay pays more, but neither of them converts like Amazon. For selected products, you may be able to find offers through CJ or Rakuten that offer better commission rates. But if you developed your site mostly to promote Amazon products, you may or may not be so lucky to find those offers.

    I don't know if they will change their rates or not. But there are a lot of risks involved with relying on the Amazon program as a main income source. Or for any other affiliate program where a single player is dominant in the niche. Time to include more diversification.

    I believe there are always opportunities for those who are willing to do good work. Even if there is a short-turn slump, as long as I can change and evolve, my business will emerge stronger and better. So will yours.
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  • Profile picture of the author Gary Chapple
    Yes I have noticed over the last 12 months are starting to burn affiliates with a view to getting into fashion,m something they've wanted for awhile.
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  • Profile picture of the author hardworker2013
    Well that should be good news, however my main concern is there low commission rate.
    I do not waste time promoting Amazon products with that low rate.
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  • Profile picture of the author CCarter
    Looks like it was confirmed by @andrient : Changes Coming to Amazon Affiliate Commission Rates

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    • Profile picture of the author kilgore
      Thanks for the update. I had been waiting nervously for the official announcement from Amazon as to what their rates are going to be. It was about what I was expecting -- if anything, it was a little worse than I was expecting. What's most disappointing is that for sellers earning the maximum volume rate, there is only one category where the rate is unchanged and for every single other category, the rates have declined. Significantly.

      I guess it's time to increase our pace in de-emphasizing Amazon from our revenue portfolio. I'll be sure to write them a note expressing my displeasure too -- though it's unlikely to have any impact, they've been willing to modify the operating agreement for us in other ways and it's worth a shot, right?

      Originally Posted by CCarter View Post

      Looks like it was confirmed by @andrient : Changes Coming to Amazon Affiliate Commission Rates
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    • Profile picture of the author Amores
      It was confirmed from Amazon... not some society do com

      Funny how insightful link get's deleted but another just copying stuff from other site is welcomed
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  • Profile picture of the author marketing4321
    Well this is ugly. Using new category reporting feature, I applied this new rate schedule to my results in Dec when I sold 600 items. My site is perhaps fairly representative of the holiday shopping market but with fewer electronics. Under the new rates, revenue declines 25%. My effective rate declines from about 7% to just over 5%.

    This is especially bad for folks doing a lot of volume in books or toys/games. I imagine they will put some out of business with this move.
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  • Profile picture of the author kindsvater
    Wow. Just wow.

    A lot of affiliates are going to be road kill. "All Other Categories - 4%"

    Only apparel and furniture categories kept a commission rate above what a newbie affiliate could previously make.

    Even worse is this will create an excuse for eBay and big merchants to further decrease their commissions in the name of "being competitive".

    IMHO Amazon is saying it has reached a point where it does not need affiliates.

    .
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    • Profile picture of the author wAvision
      This change puts a major cap on high volume affiliates.

      I have wrote amazon about this, and hopefully if enough people do, maybe they will do something about it.

      There is no longer incentives to go from selling 1200 to 1600 products a month or more.

      I was getting 8-8.5%, with the new module it looks like my commissions will be cut by about 25%.

      Here is what I received as a response to one of my emails...can someone explain how they are "removing earning caps?". Doesn't this new fee schedule do just the opposite with no incentive to sell more and get the higher %??

      The new plan simplifies our fee structure, removing earnings caps as well as the volume tiers.
      > >
      > > We have received feedback from associates that the advertising fee structure could be made clearer, especially with respect to understanding which products are in fixed-fee categories and which products are in tiered-fee categories. These changes simplify the fee structure, clearly defining the advertising fees you can earn by referring traffic to Amazon. By offering higher advertising fees in certain
      categories, we want to reward associates that can refer sales across those categories.
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      • Profile picture of the author JohnMcCabe
        Originally Posted by wAvision View Post

        This change puts a major cap on high volume affiliates.

        I have wrote amazon about this, and hopefully if enough people do, maybe they will do something about it.

        There is no longer incentives to go from selling 1200 to 1600 products a month or more.

        I was getting 8-8.5%, with the new module it looks like my commissions will be cut by about 25%.

        Here is what I received as a response to one of my emails...can someone explain how they are "removing earning caps?". Doesn't this new fee schedule do just the opposite with no incentive to sell more and get the higher %??

        The new plan simplifies our fee structure, removing earnings caps as well as the volume tiers.
        > >
        > > We have received feedback from associates that the advertising fee structure could be made clearer, especially with respect to understanding which products are in fixed-fee categories and which products are in tiered-fee categories. These changes simplify the fee structure, clearly defining the advertising fees you can earn by referring traffic to Amazon. By offering higher advertising fees in certain
        categories, we want to reward associates that can refer sales across those categories.
        I think they might be addressing certain categories in some marketplaces where the commission had a dollar cap. As I recall, at one point the computer category was capped at $25, rather than a percentage. In other words, if you sold a PC that would have earned you more than $25 based on percentage, you still only got $25.

        It does simplify things (for Amazon) by removing the tier structure. I think they're taking away the incentive to sell a lot of high-volume, low priced items in order to pump up the rates on more expensive items.
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      • Profile picture of the author myob
        Originally Posted by wAvision View Post

        I have wrote amazon about this, and hopefully if enough people do, maybe they will do something about it.
        Don't even bother complaining about these changes. It won't make any difference, as affiliates are now barely significant to their bottom line. Rather, I suggest realigning your marketing efforts to match Amazon's product line emphasis.
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