The Amazon Affiliate Program is Officially in Free Fall.
Over the years, Amazon has become ubiquitous with online shopping. Most people have an Amazon account, and most people make more than one purchase through Amazon through the course of a year. In fact, last year Amazon had $280.52 billion in sales, most of which was driven by their online shopping platform.
But to understand the success of Amazon, you also need to understand how they got there, and specifically, WHO helped them get there.
Amazon is an affiliate driven shopping platform. They have over 1 million affiliates. They have also been one of the premium affiliate programs over the years in terms of their commission structure, and the way they have evolved their affiliate program with technology and affiliate tools.
Unfortunately, Amazon is running a low margin, high octane business with leadership that seems to care only about investors and their bottom line. They have forgotten one of the key things that have helped them become the "ecommerce giant" they have become today; Affiliates.
The Breakdown of Amazons Latest Changes
The latest commission changes are pretty drastic and impact almost every Amazon affiliate negatively. Before I get into the new updates, lets look at the "PRE April 21st" commission structure that Affiliates got to benefit from. It is as follows.
Although these commissions were still on the lower end of the spectrum, they were still acceptable because of the sheer number of products that you can promote on Amazon along side the purchasing habits of Amazon customers (they tend to buy quick, and fill up their carts with other items that you got credit for).
On April 21st, 2020 these commissions, known as their "fee" rates, are radically changing for the worse. Affiliates are going to be getting a minimum of a 50% cut in their affiliate commissions without much warning and without adequate reasoning.
Let's have a look at the new rates.
If you were promoting Furniture before, you earned 8% commissions. This means that if you sold a sofa chair that cost $1,000 you were going to see an $80 commission in your account. Now, selling that very same chair through your affiliate links will only earn you $30. That is a 62.5% cut in your commissions and revenue!
This is one of the most radical and unethical moves we have seen out of the Amazon engine in many years. Once one of the best and most lucrative affiliate programs in the world, they are moving in a direction where they cannot be trusted by affiliate marketers because you never known where their "next cut" will come from.
In reality though, all hasn't been good with Amazon for some time. We have recommended people do not put all their eggs within the Amazon basket for many years within our training, because of some other glaring issues that have existed for some time. There are many flaws to the Amazon Associates program, and this recent "shifty" move I think it is a good opportunity to exploit the other problems with their program.
The Glaring Faults in Amazon Associates
Outside of the obvious "rug pulling" antics that Amazon has been doing to their affiliate commissions, there have been ongoing complaints and frustration within the affiliate marketing community about various aspects of the Amazon Associations program.
I want to break down a few of the faults in Amazon, and a few of the things I believe they NEED to work on if they look to regain the trust of affiliates moving forward.
- Incredibly Short Cookie Life. Amazon has a 24-hour cookie, which means that if you send someone to Amazon through your affiliate links and then don't purchase within 24 hours, you don't get any credit at all. It doesn't matter about the effort you put into "getting the sale" or helping this customer. Amazon in essence takes your audience and profits off of them in "totality" outside of this tiny window. 24-hour cookies are the lowest that I am aware of in the industry, and as a comparison our Affiliate Program here at Wealthy Affiliate offers LIFETIME cookies.
- Issues with Fake Reviews, or Fabricated Reviews. Amazon has had ongoing issues with product owners publishing or sourcing out fake reviews. This is something that Amazon has been proactive about dealing with, but based on the quality of the reviews that you get within Amazon, it is often times very difficult to get any substance from the "first impression" reviews that say the product is great. This is an ongoing issue that will be difficult to mitigate, but it also hurts the customer whom buy products/services based on their high star rating, when in reality the products could be low quality.
- Slashing Affiliate Commissions. This is not the first time that Amazon has adjusted their fee schedule in a way that has hurt affiliates. This happened a few years back, so this is becoming an all-to-common of an occurrence within their Associates program. Every slash they make is basically stinging affiliates out of commissions they worked hard to achieve.
- No Commissions for Friends/Family. Instead of spending time on improving their affiliate tools and making that their focus, Amazon has utilized a lot of their resources to figure out ways to prevent affiliates from earning commissions. An affiliate program, is in essence a referral program. If you are responsible for driving revenue to a company, you get paid. That is how affiliate programs SHOULD work. Not in Amazon's world, they have sophisticated tracking in place to make sure you don't get commissions from friends or family members.
- Product Image Bans. Amazon requires you to use their product widgets, even if you are promoting them. This has been a bone of contention for some time with affiliates. I mean really, you want to promote a Vitamix and you can't use the Vitamix image anywhere within your product/review or your post explaining it? That has been the stark reality for affiliates and affiliates have gotten banned for using images.
- Amazon is Overpriced in Many Cases. People use Amazon Prime for everything now, but in order to retain decent and operational margins (that is, not losing money), Amazon & Amazon Sellers has been forced to inflate their prices. You in most cases are much better off to go to your local grocery store to buy items than to purchase them through Amazon. You will save a lot of money doing so. Amazon's current business is relying on people being "lazy" and not double checking prices before purchasing just because it is convenient to purchase on Amazon. I was looking for some snacks for our little ones the other day on Amazon and they were 10x more expensive on Amazon than the local grocery store. No joke.
- Lots of low quality products on there through their FBA program. Basically anyone can now source out and white label their own brand/product from China these days. You have people creating products (sometimes even in the health supplement/vitamin world) without any expertise or knowledge. This has lead to a lot of low quality products, and sometimes even unsafe products.
- Account Closures. Lots of affiliate marketers have felt they have been subject to wrongful account closures. with no opportunity for rebuttal. There is also the scenario where Amazon has a policy if you don't make a sale within the first 3 months of opening your Associates account, you will have your account suspended.
I'm sure others will have other issues or frustrations outside of this with Amazon, and if so feel free to share them below int the comments.
Based on history and the fact that affiliate conditions seem to be worsening within Amazon, I am doubtful things will get much better for affiliates. If you are putting all of your eggs in the Amazon basket, you are at the demise of their decision-making and potentially another slide in the commission fee.
I believe they have crossed the ethics chasm with their latest update and they are either in financial trouble and running off of margins that are too thin to pay their affiliates properly, or they are looking to cut costs and prop up their earnings for Wall Street (or potentially both). Either way, their affiliates have gotten the short end of the stick.
This Time They Shouldn't Get a Pass.
What is happening here is Amazon has used this timing to pitch the idea that they are the Good Samaritan. On one hand, they have moved to stocking and selling primary essentials like grocery items to help with the worldwide lock downs and social distancing measures. On the other hand they have effectively killed a lot of affiliate marketing businesses recommending products on Amazon. The sellers outside of the essential product categories are really being hurt from this as well.
I know affiliates that have built their businesses around selling through the Amazon Associates Program (their affiliate program) that are literally going to see their gross sales increase, and their overall revenue split in half overnight.
If you look at the fee structures, someone that was selling items in the Health & Personal Care business has drastically been impacted. Here is a screenshot of the sub-categories within this broader category.
If you were marketing products within any of these categories as an affiliate, you have just experienced a 78% decline in your affiliate commissions overnight. Not the best news to be handed, in particular when you have been advocating Amazon and being helping drive their business...yet they have the audacity to cut your commissions without adequate notice, and without reason.
And that leads me to...
How to Pivot Away From Amazon Associates.
What do you do now if you have Amazon ads all over your website and have ultimately tied your entire business to Amazon's Associate program?
Well, the world isn't over. I first want to make you aware of that. You are still going to earn commissions through Amazon if you continue driving traffic to them, it just may be less depending on what type of products/services you are promoting. It however may be a good opportunity to seek out alternative affiliate programs and networks, and in some cases, deciding on different products to align with your audience through your promotions.
As much as Amazon is synonymous with online shopping, they aren't always the cheapest. Often times this is not the case. It isn't always the best in terms of shipping costs, and the overall customer service...and certainly not cookie life.
There are plenty of viable alternatives to Amazon, almost all the biggest companies and smallest companies in the world have affiliate programs now. Some alternatives and affiliate programs that you can find within the Affiliate Programs search here at Wealthy Affiliate include the following.
When doing your affiliate program research, you should be looking into these networks and seeking out affiliate programs that offer better affiliate commissions while also offering great products/services. Most companies are offering really good customer service, great shipping (and free), and in many cases it is much more cost-efficient to buy a brand from their actual website.
This way you are going to earn more revenue, you are still promoting really high quality products, and you are not supporting the unethical behavior that Amazon has been exhibiting in recent years.
Why This is Good News for Affiliates
As much as this may feel like bad news, this news is impacting a smaller percentage of affiliates than you make think. We have always taught members here to promote the most relevant products/services to their audience, and to leverage affiliate programs that are offering these products/services. In most cases this does not require Amazon.
The reality is that it was just too "easy" for many affiliates to just rely on Amazon. They have a significant subset of products on their website, and it only required to people to join one affiliate program.
But you need to remember you are running a business. Most affiliate programs are offering 10%+ commissions, with many offering 30-50% commissions on their product/services. These commissions can add up quickly versus earning 1% within many of Amazon's categories under their new fee schedule. I don't known about you, but I would rather earn 10% on something than 1%. A simple economic decision.
You can still use Amazon's affiliate program when you have to. You can still earn commissions through their platform, and you can still potentially earn a full time income. BUT, now more than ever you should seek alternatives and promote products/services that are comparable (but may be a different brand), or sell products through their own affiliate program versus selling them on Amazon.
While on this topic, there are 100's of millions of products on Amazon that you can create a "better' review for. You can promote what you like at the end of the day, as in, the best products/services for your audience. Nathaniell recently wrote an excellent article on this topic and it will give you perspective on a really significant opportunity in the "review" space and showcase just how important YOU and your expertise is when it comes to helping consumers make educated purchasing decisions. You can check out his blog post here.
The Hurt Will Not Be With Affiliates, Rather Amazon.
There is a quote that I think is very relevant here, "If you don't known where you've come from, you don't known where you're going."
I think that over the years Amazon has forgotten where they have come from. They built their business largely based on affiliates and through operating a quality affiliate program (and subset of affiliate widgets). Somewhere in recent years they have lost their way and ultimately the real HURT resulting from treating affiliates with such utter disrespect is going to be fewer affiliates, fewer websites advocating Amazon, and less consumers.
The affiliate opportunities have never been so vast and affiliate loyalty takes years to build, but can vanish overnight. I have had many people contact me indicating they have lost all respect for Amazon as a result of this, and they will be boycotting them moving forward.
That is absolutely your right as an affiliate marketer, and to be honest, when you buy through other websites outside of Amazon you are helping other affiliates, and helping the Internet economy as a whole. When a company like Amazon feels they are too good for the people that helped get them there, they have truly lost sight of their future and where they are going.
These are my thoughts on the situation and I would love to hear your feedback in the comments, concerns, or share your experiences below.