Recently, Amazon announced a significant rate cut for affiliates, with some categories seeing a cut down to 1% commissions. As expected, discussions and petitions followed Amazon’s announcement. As a frequent user of Amazon’s affiliate program, I’d like to share my thoughts on the commission rate cut.
Below are a few quotes from a change.org petition to restore affiliate rates.
This happening has RUINED thousands of Facebook groups who provide income for their families by posting promotional codes, price decreases on certain products, or super good deals in general for their following they have obtained through very hard work. It is a revenue decrease of over 62.5% for us and has left us all at a loss as to how we are going to be able to pay our own bills or contribute to our households finances.
Let’s get something straight – the timing of this commission rate cut was terrible. We are in the midst of a global pandemic, and a non-zero number of people who rely on Amazon’s affiliate program are likely hurting. At the same time, from a business perspective, it totally makes sense for Amazon to do this now.
- Online shopping has exploded over the past few weeks. The purpose of an affiliate program is to incentivize others to promote your business in exchange for a commission. Since Amazon is already the default choice for shoppers, there is no financially-driven reason for Amazon to pay affiliates to promote its business and drive sales.
- Amazon has consistenly cut commission rates over the past 4-5 years – the trend was clear. We were bound to reach this 1-3% commission rate at some point. By leveraging the current COVID-19 situation, Amazon effectively achieved this goal without a huge PR backlash. If people complain, they can play the COVID card. If people don’t complain, that’s even better.
You’ve taken food off our table, and roofs over our heads. We were given ZERO reason as to why beyond DRASTIC change to our pay rate, leaving us all scrambling to find other ideas/affiliate sources to sign up with.
This is the kind of entitled BS I hate. Amazon hasn’t taken anything off your table. In fact, Amazon was the reason you had food on your table and a roof over your head in the first place. As history has proven over and over again, people all your eggs in one basket is almost always a terrible idea. If you built a website that only relies on Amazon’s affiliate program for income, then you are the one who screwed yourself – not Amazon.
I would be more understanding if this rate cut truly came out of nowhere, but that’s not the case. The trend over the last decade has been crystal clear. As Amazon grew as a business, commission rates for affiliates went in the opposite direction. It’s really not that difficult to grasp.
Countless affiliates rely on fair compensation for their marketing efforts. This cut is unreasonable and a slap in the face to those that put in the work and effort to promote the platform on the good faith that they would be compensated adequately for said efforts.
The funny thing about “fair compensation” is that it actually depends on a variety of economic factors. Unfortunately, the majority of affiliates ignore this reality and view “fair compensation” as “the same amount of money that convinced me to start, forever”. This mindset makes no sense, and it’s easy to see why. As Amazon grew from a big company into a gigantic company, its reliance on affiliates to drive sales decreased, causing commission rates to fall.
You probably know what my opinion about this rate cut is by now. I think it’s reasonable and expected. The reality is that Amazon converts really well, and it’s the default option for most online shoppers – especially in the USA. It’s 2020 – Amazon doesn’t need affiliates to make money, so you have two options. Take the 1-3% commission rate and continue promoting a business that knows how to sell, or move to another affiliate program that doesn’t convert as well.
Update (April 20, 2020): Wow, this post got a lot of negative attention. Grab some popcorn, and check out this follow-up post.