Amazon Affiliate Update

I have previously given an overview of the Amazon Affiliate program, which can be found HERE. While I’m not an Affiliate for Amazon, I did say that it wasn’t a bad way for an affiliate marketer to go.  Amazon covers a broad range of products for all niches, which makes it a desirable business to partner with.  However, recent changes made to the affiliate program make it far less desirable than before.

From the affiliate marketer perspective, these new changes are an affront to those who did so much to make Amazon the behemoth it is today. Yes, its tremendous growth can be attributed to more than just the business savvy and vision of Jeff Bezos. He had a lot of help from affiliate marketers along the way, who drove tons of traffic to Amazon.  Without all that traffic, Amazon wouldn’t have grown nearly as fast.

Even though some of the previous fees paid to affiliate marketers were a bit on the low side, you could make up for it with a higher conversion rate.   Things have recently changed.

It was bad enough that the cookie life for a referral was only last 24 hours.   This means that if no purchase was made within this time, no commission (or fees, as Amazon calls them) would be made, even if that person you referred bought the product the next day.  This short cookie life makes it more difficult to get referral fees.

This is not something unknown by the Amazon affiliates, and while this is worth noting, it’s not the reason I wrote this update.  Call it a prelude to the tipping point.

Referral Fees Reduces Dramatically

For many products/product categories, the commission an affiliate marketer has been cut, without warning or reason. What this has meant for many affiliate marketers who have solely been Amazon affiliates, is that they’re income has been cut dramatically. Keep in mind that affiliate marketing is about niches. If Amazon targets that niche for a reduction in % for the fees they pay for referrals, then that entire business can take a serious pay cut… overnight.

Here is the recent change in fee %:

Compare the above categories with the original list (not all categories have been changed):

If your niche was furniture, and you had a referral sale from a $400 couch, you originally made $32 in commissions (fees). With the new fee rates, you’d only make $12. This is a rather large (62.5%) decrease in commissions. If you were making a living in this niche, say $5000/mo, you now make $1875/mo. For many, this is going from a full time income to not making ends meet. Overnight. Without any warning or time to prepare.

While Amazon can legally do this, I find the ethics involved in this decision quite questionable. In the affiliate marketing circles, there is quite an uproar about this, and rightly so. Some will bail on Amazon, some will slowly restructure away from Amazon. This is a serious problem for many affiliates who counted on income from Amazon, who have driven many sales to the company.

Imagine if you were called into your manager’s office to be told that you were taking a 62% pay cut. Would you continue working there?  This is the type of decision many Amazon affiliates will be making, starting now.

Not The End Of The World

In the end, affiliate marketers will partner with companies who appreciate the hard work and effort it takes (and expense, at times) to drive business their way. As an affiliate marketer, I will be very careful about adding in Amazon to the mix.   There are great products worth sending traffic to on this site.  However, it takes a lot of effort to build an online business, and I can tell you that I’m not going to focus any attention on driving traffic for 1-3%.  My time is far too valuable to focus it on something that doesn’t pay well.  This would go against the very purpose of this website, and a core belief of mine, that time really is our most precious commodity and shouldn’t be wasted.

A 1-3% commission is simply not worth it for most products – even ones I would otherwise recommend. I’m a business man, I want my hard work (and  precious time) rewarded, and there are plenty of affiliate opportunities out there that are far more appreciative of sending them business.

For many of the products sold on Amazon, you can partner with the company that actually makes the product.  Many pay a better commission than Amazon.  Why not go to the source?

My Take-Away

If you were thinking about being an affiliate for Amazon, my previous post on the subject still holds mostly true. You can still make money as an Amazon affiliate.  Not all commissions were cut to the bone.  Some remained the same, and life goes on.  However, for many niches, the commissions are now too low, in my opinion, to be worth your time.  Some are still profitable, but for how long?  On a whim, Amazon can cut other commissions, leaving you high and dry should you be depending on those commissions.  Do you really want to put in a lot of time and effort (and potentially money for ppc or ads), knowing that your livelihood can be cut in half or more on a whim, without warning?

My advice going forward is to be very picky about what you market for Amazon, and that you diversify with other affiliate programs. Don’t put all your eggs into one basket.  Some have been “all in” for Amazon, and are suffering the consequences of the recent changes.

I find it much harder to recommend partnering with Amazon.  That’s really sad, because I like Amazon. I’ve been a Prime member for many years.  They are good to their customers, and a trusted company.  While you can trust them as a customer, I’m not so sure about how much you can trust them as an affiliate.  This is not the first change they’ve made that has hurt their affiliates, which makes this an unfortunate pattern that makes it look like they no longer value their affiliates.

Because of this and previous changes, the reduced number of profitable categories, the unpredictability towards its affiliates, 24-hour cookies, and the disrespect shown in making this significant change without any warning; I have to put them into what I call the “marketer beware” category.  I won’t say “avoid”, just proceed with caution.

Feel free to share your affiliate experiences with Amazon, below.

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