Amazon Slashes Affiliate Commissions Amid Coronavirus Pandemic
Over just the past few days ago, in the middle of the coronavirus pandemic– when the business world is struggling to navigate through such a “black swan" event, the e-commerce giant Amazon made an official announcement over the huge reductions in the commission rates adopted by its affiliate program - one of the largest affiliate networks in the world.
The slashed affiliate payouts, which will take effect on April 21, will drastically reduce incomes of millions of website owners, media outlets, and publishers who depend on the revenue from affiliate links – especially with some product categories dropping referral fees by whoppingly over 70%. The negative repercussions resulting from such an abrupt change are both unavoidable and terribly timed for small business owners who already tackle an existential threat in the form of the global pandemic lockdowns.
Amazon Affiliate Program: A Brief Look
Before delving into the particulars, it’s significant to first grasp the basic understanding as to the Amazon Affiliate program!
For those who are not in the know, the Amazon Affiliate program, or better known as Amazon Associates, is an affiliate marketing program that allows content creators, publishers, and website owners – who then become Amazon Associates - to monetize their traffic.
With millions of products to choose from on Amazon.com, Amazon Associates can employ easy link-building tools to direct their readers to products and earn from qualifying purchases. Not only do Associates earn commission on products they refer traffic to, they may also earn on other products their readers may purchase on Amazon. Besides, Amazon Associates can be granted full access to a suite of reporting tools, enabling them to learn what resonates best with their readers.
As a result, affiliate revenue is commonly paid out on a Pay Per Click or Pay Per Sale model, where the Associates get a proportion of the item’s value once the sale is completed. So, how much you can expect with Amazon Affiliates? Being an Amazon Associate, you can possibly earn from $100 to $25000 from an Amazon affiliate website. Nonetheless, it won’t be wise to answer this in just one sentence – actually, there exist several variables to take into account when it comes to calculating affiliate revenue, which include:
- The amount of traffic a website can expect
- The number of visitors who will click on the affiliate links
- The number of people who can be real buyers
- The average price they may spend
- And, most importantly, the commission rate your chosen product categories get to have
An Anticipated Change: Amazon Slashes Affiliate Commissions Amid the Coronavirus Epidemic
Amazon’s Official Announcement by April 14
For the time being, Amazon emerges as the largest e-commerce retail platform with a huge customer base who are making regular purchases from the company. And over times of COVID-19 pandemic lockdown, while a myriad of businesses struggles to weather the economic storm, the sales from the Amazon platform have spectacularly skyrocketed. Even, the e-commerce giant has hired 100,000 people last month and plans to hire another 75,000 to cope up with an unprecedented increase in demand
With that scenario, Amazon’s affiliates are also earning a “handsome” cut from the company’s affiliate program by advertising Amazon products on their websites. Everything seemed to go well, and both the parties, both affiliates and Amazon, were quite satisfied until Tuesday, April 14 – when a spokesperson from the company confirmed its plans to decrease the referral percentage of affiliates program from the following Tuesday, which means April 21.
Below is what Amazon is telling members of its affiliate program in the email notice:
We hope you are staying well during this time. We are writing to inform you of upcoming changes to the Amazon Associates Program Operating Agreement, which governs your participation in the Amazon Associates Program. All changes are effective as of April 21, 2020.
Visit the What’s Changed page to see a summary of these changes. You can also find the Operating Agreement, Program Policies, and the Fee Statement if you would like to refer to the current, pre-change versions.
The Amazon Associates Program-Amazon
For years, Amazon has operated the affiliate program, which turns out to be a significant source of revenue for online websites that link out to Amazon products in their content. It's especially crucial and even indispensable for online publishers such as BuzzFeed, The New York Times and Vox Media that publish buying guides that drive readers to buy products from Amazon for a cut of the sales. Amazon’s announcement of implementing dramatic cuts to the affiliate payouts, as a consequence, hurts the bottom line of millions of Associates.
Speaking of this sudden change, the company spokesperson did not give clarity on whether the change has anything to do with the COVID-19 crisis or not. The spokesperson shared Amazon regularly evaluates its program offerings to ensure it’s competing with the broader industry and added that such rate evaluations are a standard industry practice.
In reality, Amazon’s business has been impacted on a number of fronts as a result of the coronavirus epidemic. Hit with a surge of online orders, the company moved to prioritize shipments of essential items in its warehouses, though it has since begun winding down those restrictions. What’s more, the virus forced Amazon to temporarily pause its Prime Pantry delivery service, while its Amazon Shipping pilot program will also be halted in June.
Prior to Tuesday’s announcement, Amazon had already made some cuts to its commerce marketing deals. According to The Information, last month, the company just informed digital media firms that it would temporarily suspend commerce marketing deals.
Slashed Affiliate Payouts Across Categories by April 21
Understandably, there are different affiliates program fee rates for different product categories under Amazon Associates Program. And here are the rates for product categories before the change of April 21:
|Product Category||Fixed Standard Program Fee Rates|
|Luxury Beauty, Amazon Coins||10.00%|
|Furniture, Home, Home Improvement, Lawn & Garden, Pets Products, Pantry||8.00%|
|Headphones, Beauty, Musical Instruments, Business & Industrial Supplies||6.00%|
|Digital Music, Grocery, Physical Music, Handmade, Digital Videos||5.00%|
|Physical Books, Health & Personal Care, Sports, Kitchen, Automotive, Baby Products||4.50%|
|Amazon Fire Tablet Devices, Amazon Kindle Devices, Amazon Fashion Women's, Men's & Kids Private Label, Apparel, Amazon Cloud Cam Devices, Fire TV Edition Smart TVs, Amazon Fire TV Devices, Amazon Echo Devices, Ring Devices, Watches, Jewelry, Luggage, Shoes, and Handbags & Accessories||4.00%|
|Amazon Fresh, Toys||3.00%|
|PC, PC Components, DVD & Blu-Ray||2.50%|
|Televisions, Digital Video Games||2.00%|
|Physical Video Games & Video Game Consoles||1.00%|
|Gift Cards; Wireless Service Plans; Alcoholic Beverages; Digital Kindle Products purchased as a subscription; Food prepared and delivered from a restaurant; Amazon Appstore, Prime Now, Amazon Pay Places, or Prime Wardrobe Purchases||0.00%|
|All Other Categories||4.00%|
Here are the new program fee rates after April 21:
|Product Category||Changed Fixed Standard Program Fee Rates|
|Furniture, Home, Home Improvement, Lawn & Garden, Pets Products, Pantry||3.00%|
|Headphones, Beauty, Musical Instruments, Business & Industrial Supplies||3.00%|
|Health & Personal Care||1.00%|
And here are the differences:
|Product Category||Percentage of change|
|Furniture, Home, Home Improvement, Lawn & Garden, Pets Products, Pantry||-62.5%|
|Headphones, Beauty, Musical Instruments, Business & Industrial Supplies||-50%|
|Outdoors, Tools||- 45%|
|Health & Personal Care||-77.77%|
Product Categories That Are Affected
From the figures above, it’s apparent that not all the product categories are affected. The changes appear to relate to products that are currently in high demand by consumers because of the COVID-19 quarantine. Products related to the home and working from home, such as grocery, furniture, home maintenance products, pantry or headphones tended to be the categories that were heavily slashed.
Looking at the number, for many of the products, the referral rate has dropped by more than 50%. The products that have a scale with a drastic drop includes the food items. Outdoor products, tools, sports items, baby products, and healthcare products are also affected.
Whereas the announcement email gave no mention as to why the rates are changed, it’s obvious that all the major product categories are in market demand, which could be the reason that Amazon is not letting the affiliates make much out of their sales.
Product Categories That Are Not Affected
By and large, the cuts are not across the board - besides some groups with drastically cut commission rate, there are other product categories that remain unaffected, including Amazon Coins and Luxury Beauty – which will continue to have a 10% referral rate like before. Digital music, physical music, homemade items, and digital videos will also keep on benefiting the affiliates with 5% payout rates.
Besides, other product categories that remained unaffected by the new change in rate policy do include physical books, kitchen items, and Automotive that still have a payout rate of 4.5%. There is still a referral rate of 4% for some Amazon products like fire tablet, kindle, fashion labels for women, men and kids, cloud cams, smart TVs, echo devices, watches, jewelry, shoes, handbags, etc. Toys, PCs and their components, DVD, Blu-Ray, TVs, Digital video games, physical video games, as well as video game consoles will have the payout rates like before, ranging from 1% to 2.5%.
Whilst affiliate commission rates for the mentioned categories stay unchanged, those categories may be tough ones to earn a payout from – for instance, the digital and physical music category, since these days most people tend to listen to music via streaming services.
Harsh Words for Amazon on Social Sites
Back to the impacts on Amazon Associates, one member of the program shared they “cannot afford” the fee cuts that were announced, since a main portion of their income comes from commissions earned via Amazon links. The member runs several Facebook groups that advertise shopping deals across the web, including Amazon products.
“All the affiliates I talk to make the majority of their money from these categories,” the member said. “It’s going to hurt a lot of people.”
In fact, Amazon Affiliates reaction is predictably negative. After the announcement of April 14, a dark mood has descended over the affiliate world, which revolves around …
- Should Amazon have shared their bounty with their affiliates?
- Is Amazon being greedy and disloyal to their associates?
Several bloggers and online businesses voiced their frustrations about the cuts on Twitter and Reddit. In a Reddit forum for affiliate marketing, one member of the program wrote: “These slashes are ridiculous. Together with a high chance of upcoming recession, SEO/affiliate outlook is pretty gloomy, to be honest.” Also, Amazon got bad-hit on Twitter:
Viable Alternatives for Affiliate Professionals to Consider
There goes without saying that Amazon’s announcement of implementing dramatic cuts to the affiliate payouts does hurt the bottom line of millions of publishers. Nonetheless, it's not the time for getting panic – to tackle the hurdles and mitigate potential losses, website owners, publishers as well as other affiliate professionals can choose to shift to other affiliate programs. Whereas Amazon offers the most popular and widespread referral pipeline, more industry-specific affiliate schemes may turn out to be a good fit for some businesses to consider.
In case of authors, bookstore operators, or influencers in the book world, for instance, there’s Bookshop.org, an indie Amazon alternative that offers an appealing 10% affiliate fee, with the added bonus of every book sold benefiting the local bookstores that supplied it.
Another attractive option is Narrativ that uses dynamic links to update the brand or products it directs customers towards. Up to now, the company has mapped more than 100 million products and seen over $33B in retail transactions. Those in Narrativ’s portfolio — which includes SEO publishers Hearst, The New York Times’ Wirecutter, Vox, Conde Nast, and Meredith, among others — can replace Amazon’s dwindled affiliate fees with fees offered by partners like Best Buy, Sephora, Ulta, Bed Bath and Beyond, HP, L’Oreal, and much more.
Furthermore, as Amazon’s fees are dropping sharply in some categories, Narrativ’s partners get golden opportunities to generate more traffic to their e-commerce platforms.
“We’ve transformed expert reviews into a performance marketing channel where brands can manage their campaign and access performance insight. In our dashboard, they can discover the specific publishers, articles and recommended products that drive the most traffic to their sites and optimize accordingly,” Narrativ founder and CEO Shirley Chen shared with Forbes.
From publishers’ perspective, the big drew is revenue diversification, a striking trend for media companies that had been largely dependent on advertising in past decades, and are now broadening their revenue to include subscriptions, donations, and affiliate fees. And amazingly, Narrativ does offer a way to further diversify within the affiliate revenue category.
“Narrativ’s patented dynamic link technology has the unique ability to change the destiny of a click in real-time,” Ms. Chen said. “This makes it possible for publishers to diversify their affiliate links so they are not dependent on any one retailer like Amazon… Narrativ checks stock and fulfillment status, then shoppers are directed to the retailer most likely to convert the visit. This capability makes it possible for brands and publishers to maximize their revenue opportunities.”
Moreover, at present, brands are just as interested in the service as publishers. “We’ve also seen a surge in brands eager to join Narrativ’s marketplace,” as Ms. Chen shared. “Brands see growing consumer demand for product recommendation and the once-in-a-lifetime opportunity to win traffic from recommendation content now up for grabs. They’re looking for ROI proven performance marketing channels like ours that drive ecommerce revenue and provide rich insights they can use to optimize their investments.”
Here at EnvZone, we also offer an affiliate program - offering extremely competitive commission rates as well as providing ongoing support and education. Our Affiliate partners wear many hats, from website owners, bloggers, web developers to business coaches, marketers and more – should people trust your business or technical expertise, we 100% trust you to represent us. Actually, just get your links live and wait to collect $45 for every sale you make. Since we do not and will never put a limit on our affiliates’ payout, your earning potential is boundless!
Furthermore, we always offer secure and fully custom support for SMB owners with a dedicated online presence manager - a SaaS Professional Service assisting small businesses build online presence for a fraction of what would normally cost.
In addition to these appealing affiliate alternatives, affiliate professionals may come out of the passive mode and navigate the business direction for sustainability. What does this mean? To put it simply, you can actively build out your own business – to establish a website or ecommerce site, design your own portfolio of products or services, promote these unique offerings, apply drop-shipping management method,...
These things may turn out too overwhelmed for you to handle by yourself? Don’t panic! We are going to lend you a helping hand. With our on-demand online presence manager, even you’re a newbie to the business world, you will be assured that your business is in the good shape. Our ever ready, dedicated team will empower you to work smarter, walking you through the most frustrating problems that comes with running business.
The Bottom Lines
Beyond any doubt, the bad news that Amazon slashes commission rates for its affiliate program has been a hard hit for website owners, publishers as well as other affiliate professionals, leaving the negative repercussions amid coronavirus pandemic lockdowns. Nonetheless, given Amazon’s recent rate cuts, there are appealing alternatives that remain open to the affiliate world!
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