In Q4 of 2019, Amazon made $87.4 billion in revenue. North American sales were up 22% and international 14%.
Since the coronavirus lockdown across the globe and the shuttering of small and medium-sized businesses, Amazon is having a heyday with sales. I wouldn’t be surprised if their revenues shoot through the roof this quarter.
So, why in the wide effing world has Amazon cut their affiliate rates? There is no way they’re feeling the squeeze of the recession just yet.
But there it is.
Below you’ll find out what’s going on with Amazon’s affiliate rates right now and what a you can do about it.
Amazon’s Rate Cuts
The cuts went into effect on April 21st 2020. And these cuts are massive. Some are a large as 50%!
If you are in the furniture, home improvement, lawn and garden, and pet products categories, you’ll see a drop from 8% to a mere 3%. If you’re in the musical instruments, headphones, or beauty products categories, it’s six percent down to three.
Some categories such as baby products are dropping all the way down to somewhere between three and one percent!
Who relies on these rates? We’re looking at major media outlets. Buzzfeed, NYT, Vox Media. Most of these organizations run on thin margins as it is. They rely on ad revenue and affiliate marketing revenue. I mean, who of you actually subscribe to the news?
But it’s not just media organizations that will feel the pain. Small mom and pop websites built on years of sacrifice rely on revenue from Amazon’s affiliate program and ad program.
YouTube channels, plug-in makers, and all the attached industry surrounding affiliate marketing is going to take a huge hit.
Why is Amazon Doing This?
So, why is Amazon doing this? They won’t say.
All we have is mere speculation. Are they preparing for a major slump in the coming months as people who are laid off can’t afford things on Amazon anymore? Or are they just getting greedier?
They are hiring thousands of new workers just to keep up with demand. There is no way this isn’t just a cash grab. Maybe it was just a planned demotion, but no matter what their motive is, it’s a sleazy move on their part.
How to Mitigate the Rate Cut
Find a different affiliate program. Don’t let Amazon do this to you. If they’re going to treat you like crap, then you need to tell them where to stick their rate cuts.
Let’s say you run a tech review site. Find a technology provider who has an amazing affiliate rate. Something either on par with Amazon’s original rates or (most of the time this is the case) find one that’s better.
Yes, it will be a lot of work going back through your articles and changing every URL. Yes, it will be a massive burden combing through your entire PPC marketing portfolio and changing keywords and links. But once you make it to the other side, you’ll either be making more money or you’ll have slavaged your affiliate business.
Affiliates That Are Better Than Amazon
When you’re searching for a new affiliate to replace Amazon, you’ll need to keep your audience in mind. What can they afford?
Even if you’re a travel blog who linked to travel accessories it doesn’t mean you can sign on for a private jet booking company. Your audience would have to be top-earning individuals who love to travel in style. If you review high-end travel good, then great!
If you’re looking for a new affiliate, I’ve got you covered. Here is my list of the best affiliates you could jump into right now.
If you’re as pissed as I am about the Amazon rate cut, then you’ll be on board with this one. Why not jump over to one of Amazon’s online competitors. While both Walmart and Google have eclipsed eBay in the eCommerce world, nobody does exactly what eBay does.
And that’s where you’ll make your money. Auction fees. You can get 50-70% of auction fees depending on your category.
Now, that’s not the entire price of the item. But you’re earning a percentage of the amount eBay brings in. You’re getting some of eBay’s direct profits.
That’s not a bad deal if you ask me.
While Target may not exactly replace Amazon as far as specialization, some categories will be portable. You want to make sure it’s a fair trade too. Some categories aren’t as lucrative in Target as they are in Amazon.
The cookie life is seven days. That’s another major boon. This means that if someone clicks on your link, looks at the product, shops around for a few days, then comes back to Target within seven days, you get your percentage of the profit.
And, unlike Amazon, your rate could increase the more your links sell. This is called volume-based commission. You might start off at 3% for baby gear, but if you sell 10k volume or more, you’ll hit 5% instead. That’s a great incentive program.
3. Hammacher Schlemmer
Now, I’m going to tell you the rate here, but there is one thing you’ve got to remember. Hammacher Schlemmer isn’t on everyone’s mind when it comes to eCommerce. If they’re like me, they’ll remember only the mall store front from the 90s where you could play with nifty gadgets you might buy your uncle for Christmas. Often there was nothing truly useful in the store.
They’ve pivoted to be more like the big ecommerce stores like Amazon. And they have an 8% rate on any sales. Oh, and the cookie life is incredible at 30 days.
But you would need a loyal audience who gives you tons of sales on the regular. Or your PPC game would have to be so on point, you’re able to land those fish through your marketing funnels.
Either way, Hammacher Schlemmer could schlep you some mighty piles of cash if you’re savvy.