Amazon has discreetly made massive changes to its affiliate rewards scheme, with huge implications for sites that have come to depend on monetizing this way.
The Amazon affiliate reward program, which pays websites with commissions in return for sending users to Amazon, is used by thousands of websites (including Tech.co) to generate revenue. The buyer doesn't incur any extra cost, but Amazon does have to split some of its healthy-looking profits with other websites.
Needless to say, people aren't happy.
Time to pivot away from Amazon? See our guide to How to Make Money from a Website
Why Has Amazon Cut the Affiliate Rates?
At the moment, there's no official reason being given. Amazon told us it “does not have an on-the-record comment to share.” That's not particularly helpful, when the reduction in the rates has been so dramatic.
So, what are the rate cuts, and what kind of items are affected?
- Furniture, Home, Home Improvement, Lawn & Garden, Pet Products, and Pantry rates have dropped from 8% to 3%
- Headphones, Beauty, Musical instruments, Business & Industrial supplies rates have dropped from 6% to 3%
- Groceries have dropped from 5% to to 1% and Amazon Fresh has dropped from 3% to 1%
These measures are likely to have a significant effect on the revenues of smaller online businesses.
However, the reduction clearly isn't connected to the retail giant's own trading. Amazon – even amid the coronavirus pandemic – is in ruder health than normal.
While businesses worldwide struggle through the impact of Covid-19, Amazon's stock is at an all-time high. Yes, Amazon is worth more now than it ever has been, even during a global crisis.
In fact, Amazon has seen fit to hire an extra 100,000 workers to fulfil orders and is mulling over hiring another 75,000. The more people stay at home, the more money Amazon is set to make.
However, despite the company's success with capitalizing on a catastrophe, Amazon isn't protecting the workers who have built the company's fortune. The company has fired two tech workers, Emily Cunningham and Maren Costa, for fundraising to provide protective equipment to limit the spread of coronavirus in the company's warehouses.
Amazon said it fired the workers for “repeatedly violating internal policies.”
What Impact Will the Rate Reductions Have?
Hundreds of businesses are set to lose out. Naturally, a lot of the chatter has come from those at large publishing businesses that use Amazon's affiliate scheme to generate revenue.
This is really bad for the media industry. The amount of money that publishers generate from Amazon affiliate links is significant. https://t.co/1lDuSut2Z3
— Josh Stermberb (@joshsternberg) April 14, 2020
However, the changes will most acutely affect small and medium-sized businesses.
“I think I'm going to lose about 40% of my revenue,” said Matt Giovanisci, owner of MoneyLab.co. “That's the math we worked out we worked out based on current traffic. If I switch out the links to higher paying affiliate programs, I'm not sure how much it'll soften the blow.”
The changes are due to start next week. But again, Amazon gave precious little warning to members of the scheme.
“Amazon sent one email and gave all publishers a week before they implemented the changes,” said Giovanisci. “I've never seen this before. Usually, they give a month[‘s notice]. But I guess with the pandemic, they used this as an excuse to act quickly.”
What can I do to Protect my Business?
If your site's fortunes depended on Amazon's generosity, then you were always walking a tightrope. Amazon's affiliate scheme has been noted for being particularly miserly when compared to other retailers. Clickbank, for example, will pay up to 75% in its affiliate scheme.
The changes are even more stark when you compare a brand's own affiliate scheme to Amazon's, when buying that brand through Amazon links. If you wanted to buy a pair of Samsung Galaxy Buds+ through Samsung's site via an affiliate link on Commission Junction, the referring site would typically make somewhere between $8.99-$11.99 from your purchase. However, buy the same product on Amazon and the referring site would now make just $4.49 from the same sale. Tech.co itself uses Commission Junction for some affiliate links, as well as Amazon's scheme.
“I plan to use GetLasso.co to switch out the URLs in my affiliate links to some better programs I've been talking to behind the scenes,” said Giovanisci. “I'd like to give visitors a choice where they buy from with multiple buttons. I'll be able to see which programs people like the most and fully switch to that once I have the data.”
There are alternatives, but finding one as familiar and as easy as Amazon's is going to take up more time and money for the smaller businesses.
Amazon, and Jeff Bezos, meanwhile, will probably carry on just fine.