If you are reading this, we assume you are somewhat interested in Amazon Associates Affiliate Program. Recently Amazon changed its commission structure that has given jitters to the webmasters who rely on Amazon affiliate commissions for their income. In this post, we provide a succinct summary of how it impacts you, it at all.
Update (3/11/2017) – based on first 10 days of data, we estimate that on an average, the revised commission structure will yield about 25% less commission to the affiliates. This is a average across the websites that use BestAzon service and the impact surely depends on the category of items the affiliate is selling. We will update this estimate at the end of the month as we get more data.
First of all, what changed in Amazon Associates Commission Rate?
You can read the details – here. In summary, this is what happened:
Instead of providing a sliding scale commission % (i.e. affiliates selling more items earn a higher percentage commission), the commissions are now flat (i.e. an affiliate selling 1000 items will earn exact same % commission on the product as someone selling 1 item). Moreover the commission rate is determined by the product category (e.g. Amazon Gift Cards give you 0% commission, while AMazon echo devices give you 7% commissions).
Amazon made all the right sounds about making the commission structure simpler etc. However, the real reason of course is that it suits their business!
Amazon has figured out (perhaps correctly) that in some categories, its highly likely that people will buy from Amazon irrespective of where a blog owner choose to link to. There are certain categories where Amazon is the de-facto retailer most of the visitors will anyways explore first if they decide to buy it and in that sense, the influence of blog writer is somewhat limited. Amazon does not want to pay commission if it can make the sale without it.
Secondly (and this is pure speculation on our part), someone at Amazon perhaps figured out that the risk of alienating some of the big affiliates (who will be impacted the most) will be more than offset by incentivizing several small affiliates (who will potentially earn more). We are not convinced by the assumption – but Amazon likely has done enough homework on data available to them to feel confident about this.
Hmnnn.. so what does it mean for me?
There is no sugar coating – for most affiliates, it will mean lower commissions (that’s the entire idea why Amazon did it). However, there are a few silver linings.
- If you are a affiliate selling products in categories that Amazon does not want to pay for (e.g. Amazon gift cards, Video Games, TVs), you are going to get much smaller cheques from now on. Bad news! You may want to explore other affiliate programs that may pay better and do an A/B test to see which program gives you better payout than Amazon.
- If you are a small affiliate selling products in categories Amazon wants (e.g. High end apparel, Amazon Echo etc), you are in luck – the big guys selling 1000s of products have no advantage over you in terms of commission rates. On a per product basis, you will earn as much as them and will likely see a 2X increase in your payments. Pretty Sweet.. huh?
If you do not fall into any of these categories (i.e. you are a large affiliate selling products in categories Amazon wants to pay for, or if you are a small affiliate selling products in categories that they don’t want), there is not much impact for you.
What did we learn?
Nothing new – but it’s a great reminder that in Amazon Associates, Amazon holds absolute power. It is still a great program to build business around, but you’d do well to keep other options open. With one single change in Associate terms, thousands of affiliate sites built with the previous commission rates in mind (more volumes instead of specific categories) will go out of business soon. No doubt new ones will emerge as well that try to focus on where the money is (specific categories that Amazon wants to pay for) – till the time Amazon changes the structure yet again.
And this also places premium on getting every cent out of your visitors traffic – use a link localization service like BestAzon to ensure that you earn something from every visitor that buys from Amazon, no matter where in the world they are.