Big Changes with Amazon Associates Commission Rates

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.

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.

Just when you think you've got it all figured out...

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 ???

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.

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.

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.

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.

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.

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.

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...

I thought I already saw the category changes. Most of the stuff will be stuck at 4%

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

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

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.

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.

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.

Looks like it was confirmed by @andrient : Changes Coming to Amazon Affiliate Commission Rates

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.

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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