Amazon is one of the largest retailers in the world. In fact, in the U.S. alone, it’s responsible for nearly 40 percent of all online sales. And anyone can access a share of the retail giant’s profits — all you need to do is have a website or social media presence and sign up for the Amazon affiliate program.
In the course of a single generation, Amazon has grown from a fledgling online bookseller to one of the most valuable and powerful corporations in modern history.
Today, 25 years later, Amazon has reshaped retailing permanently. It is one of the top three most valuable companies in the world, with a market capitalization hovering around US$1 trillion, greater than the GDP of nearly 200 countries.
What is the Amazon affiliate program?
Amazon’s affiliate program, also known as Amazon Associates, is an affiliate marketing program that allows users to monetize their websites, blogs or social media. It allows Amazon affiliate users to drive traffic from their affiliate links to Amazon products on their site, and when a customer makes a purchase via one of their links, the user receives a commission.
Unfortunately, they are running a low margin, high octane business with leadership that seems to care only about their bottom line, not remembering what got them in the first place.
The latest shake ups of Amazons drastic changes
The latest commission changes are downright crazy and the worst part is that it impacts almost every Amazon affiliate, in a very negative way. Before I get into the new updates, let’s look at the “PRE April 21st” commission structure that Affiliates got to benefit from. It is as follows.
Keep in mind that these commissions were still on the lower end of the program, there were still acceptable because of the sheer number of products that you can promote on Amazon and 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, (aka fee structure), are changing in a very bad way to the point where Amazon Affiliates are going to be getting a minimum of a 50% cut in their affiliate commissions. This is without any kind of ‘heads up’ warning and without any kind of rhyme or reasons. See the new rates below.
If you were promoting lawn mowers before, you earned 8% commissions. This means that if you sold a lawnmower that cost $1,000 you were going to see an $80 commission in your account. Now, selling that very same lawnmower through your affiliate links will only earn you $30. That is a 62.5% cut in your commissions and revenue! That is what I call highway robbery!
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 for online business owners because you are never known where their “next cut” will come from.
But all hasn’t been good with Amazon for some time, and this is one of the key reasons we have recommended people do not put all their eggs within the Amazon basket for many years within our training. 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.
Franklin Hatchett, a well known affiliate marketer that creates niche websites around Amazon.
The decline 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 worst that I am aware of in the industry, and as a comparison, you can check out my #1 recommendation.
- Issues with Fake Reviews, or Fabricated Reviews – Amazon has had ongoing issues with product owners publishing out 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 oftentimes very difficult to get any substance from the “one-line” reviews that say the product is great. This is an ongoing issue that will be difficult to mitigate, but it also hurts the customer who buys products/services based on their high star rating, when in reality the products are low quality.
- Slashing Affiliate Commissions – This is not the first time that Amazon has adjusted its 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 Associate’s program. Every slash they make is basically robbing 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 figuring 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 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 (IE, not losing money), Amazon 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 and through the course of a year, 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.
- 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 and products without any experience (sometimes even in the health supplement/vitamin world) without any knowledge. This has lead to a lot of low-quality products and 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 Associate’s 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.
Why Amazon should not get a pass on this one…
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 stock and selling primary essentials like grocery items to help with the worldwide lockdowns and social distancing measures, on the other hand, they have effectively killed a lot of businesses for those selling their products on Amazon (that have bills to pay) and affiliates that also have bills to pay.
I have friends who are Amazon 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 or even in a quarter overnight.
If you look at the charts, someone that was selling items in the Health & Personal Care business. Here is a screenshot of the sub-categories within this broader category.
If you were selling 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 known 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.
The reality is, 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 cookie life, shipping costs, and the overall customer service.
There are plenty of viable alternatives to Amazon, almost all the biggest companies and smallest companies in the world have affiliate programs. Some alternatives and affiliate programs that you can find.
I like to promote tools and what’s great about tools is that you don’t limit yourself to just one niche. You can broaden your scope by offering software solutions to all industries and niches. The best part is that they are true passive income and it’s not just a one time commission.
They include the following.
When doing your affiliate program research, you should be looking into these networks and seeking out affiliate programs that offer healthier 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. If you have been following me, you know that I am big on promoting 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 need to have anything to do with Amazon.
The reality is that it was just too “easy” for many affiliates to just rely on Amazon. They have a large subset of products on their website, and it only required people to join an affiliate program.
But you need to remember you are running a business here. 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 know about you, but I would rather earn 10% on something than 1%. A simple economic decision, and regardless of a marketplace impact.
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 maybe a different brand), or sell products through their own affiliate program versus selling them on Amazon.
The Hurt Will Not Be With Affiliates, Rather Amazon.
There is a quote that I think is very relevant here, “If you don’t know where you’ve come from, you don’t know 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 having at a point in time, one of the better subset of affiliate tools. 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 their website, 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, 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.