Amazon changes affiliate commission rates for all participants of their associate’s program.
If you’re an affiliate of the Amazon associates program, you probably received an email from them notifying you about advertising fee rate changes (commission rates earned by affiliates).
These changes come to effect on March 1, 2017. Some will be hardly hit with their income from Amazon affiliate program and only few affiliates will benefit.
As I am Amazon affiliate participant and know many of my readers are, I wanted to notify everybody who is not aware of this changes and its effect.
The biggest change is that Amazon commission rates will go from having both variable and fixed commission rate schedules to only one fixed fee rate schedule.
Participants in Amazon Associates program know that the more you sell (refer people to buy on Amazon), the more you earn.
No more “sell more/make more” volume-based commission rates. Now you are probably thinking that this change could be good for smaller affiliates which didn’t had high commission rates.
And you are right. If you sell about 10 or less items as an Amazon affiliate each month, this change probably won’t affect you. You maybe will earn little more.
But, all is not so black and white. Even smaller affiliates are affected depending in which category are products you promote.
NOTE: I am writing about Amazon.us affiliate program. Other locales may have different fee rates. Amazon Associates in the UK already gives category-based commissions.
They are removing their entire “Variable Standard Program Fee Rates” so you are no longer able to earn commissions based on volume of sales.
The variable rates used to be applied to “Other Products” which are majority of the products on their massive online retail shopping site.
These were products not found on their fixed fee rate schedule.
Amazon old fixed rate fees for particular categories
Amazon old volume-based program fee rates for other products which are not in fixed fee rates category
Above fee rates will no longer be valid on March 1, 2017. New commission rates come into play.
This means no more volume based fee structure as it will be just fixed fee structure. But fixed fee rates are also getting changes.
Amazon new (and only) fixed commission fee-based rates
Now, as of March 1st, you can sell one item, or 30 million items. It doesnt matter. You get the same commission rate for that item (category).
So if you are a high volume seller and earning the top rate of 8.5%, you will feel an impact if the products for your niche are ones that will have a low fixed rate as of March.
On the other hand, if you were a small volume seller earning 4% – 6.5%, but your products will change to a higher fixed rate on March 1st, then you’re going to be happy affiliate.
By checking this you can see approximately how this changes will affect you. Will it be more or less money in your pocket.
For me it will be slightly lower. Products which I promote have higher rates now. But most of my affiliate earnings are from products which I dont promote (other categories which is now 4%).
It all now depends on buyers and what will they buy through your affiliate link. Will it be something from high rate category or low rate category.
It also depends on Amazon third party sellers. I have often seen that products which by logic should be in particular category are in entirely different category.
This is Amazon advantage. You earn no matter which product buyer purchases from Amazon. You could promote tools but the customer can buy toys and you still get commission.
We just need to wait and see how will this affect our earnings in long run. I just hope your niche is not in wine category as then you need to find new affiliate program.
What Can You Learn From Amazon Changes in Rates?
Don’t put all your eggs in one basket! As an internet marketer, you should always have plan B, C, D.
Long time ago I have started to add price offers from different shops next to my products using Content Egg plugin.
If I write review about some product I put price from Amazon, Ebay, Walmart, Target, etc (using Content Egg prices get automatically updated).
Let buyer compare prices and choose where he wants to buy. In this case if it comes to drastic changes or your get banned from one of affiliate programs, you have others.
There are also different ways you can monetize your blog. Affiliate marketing is just one way.
Whatever you do, diversifying your streams of income will help avoid any negative changes made out of your control.
On the other hand, you can now build new niche websites that can take advantage of the new higher fixed rates.
Is This Death of Amazon Affiliate Program?
The question is will smaller affiliates now have higher chances if bigger players decide it is not anymore worthy to be Amazon affiliate?
Does this mean categories with higher fee rates will now have more competition as everyone will want to promote those?
How many affiliates will now look for alternatives and if this is steps of soon Amazon affiliate program shutdown?
What is Amazon’s logic behind this new fee structure? Perhaps there are categories that they want to boost up the sales significantly.
It seems Amazon is moving into the fashion/apparel/personal products if to belived recent news. Amazon has established itself as a go-to for much of tech products people buy.
Moving into fashion and personal care and home items in a bigger way means focusing on that portion of the market and encouraging affiliates to do the same.
Paypal and many other services used “affiliate commissions” to increase their business when they started out.
Once the company is well established as a brand, they don’t need affiliates to the same degree.
I don’t think Amazon is going to shutdown their affiliate program any time soon. They’ve actually been investing in it quite a bit.
They completely changed their affiliate portal dashboard, they introduced native shopping ads, and they’re actively developing other affiliate tools.
So why invest so much in something you intend to shutdown? That said, you can be sure Amazon affiliate program is here to stay.
They are just targeting strategic product categories rather than just trying to drive more traffic generally.
They sell just about everything, and there is a vast difference in mark-up, traffic, storing and shipping costs, competition, etc.
Ever since Amazon went to the volume incentives, one of the primary strategies has been to promote a lot of low cost items to raise the commission rate on higher priced items.
It makes sense making this affiliate rate changes. After all, different product categories have different average profit margins so Amazon wants affiliates to target products which bring more margins.
I would love to hear how these changes at Amazon Associates have affected you and your online business. Let me know what you think in the comments below.