Amazon Associates program: What the New Rates Mean for Your Business
The Amazon Associates program is a way for web page owners and bloggers to capitalize on the traffic their websites generate.
Website owners and bloggers who are Amazon Associates create links on their pages that redirect customers to buy products on Amazon.com. Amazon Associates then receive referral compensation directly from Amazon for their help in generating a sale.
Amazon Associates are paid when visitors to their websites click links to products on Amazon and subsequently purchase them. While Amazon is not eliminating its Associates program, the rate structure is being overhauled. Amazon has quietly let Associates know via a March 1, 2017 email that it is eliminating its “Variable Standard Fee” commission structure.
What Do The New Rates Mean?
Under the original Amazon Associate terms, Associates are able to earn up to 8.5% commission from sales generated by their site so long as Amazon sold more than 3,131 products from their affiliate links. Previously, it did not matter what category the products were in. Under the new system however, the commission rate is dependent on the category of the product sold.
The new rates are now strictly dependent upon the types of products being sold, rather than volume.
This change means different things for those promoting different product categories. For example, Affiliates who drive large volumes of sales for items like books, and physical (non-downloadable) video games are facing a fairly significant cut in commission. On the other hand, even though the majority of rates have decreased, Amazon has actually raised the commission rates for sites that draw traffic to some other categories. Digital (downloadable) video games, luxury beauty products, and Amazon coins have all been given a higher sales commission.
According to Amazon, changes to this strict fixed rate system are a result of:
“Feedback from associates that the advertising fee structure could be made clearer, especially with respect to understanding which products are in fixed-fee categories and which products are in tiered fee categories.”
However, the majority of current Amazon Associates seem to feel nervous that their profits will be taking a significant hit. Associates who were once able to count on reaching a certain volume of sales and thus a certain amount of profit, are now left with a system where volume is irrelevant.
Amazon seems to be focusing its attention towards new ventures and is clearly limiting its desire to sell physical products when a downloadable alternative is available. With Amazon’s introduction of Alexa and other personal assistance devices, they are likely feeling pressure from investors to show a profit. Therefore, it does not seem so surprising that Amazon is making these cuts as an attempt to squeeze out higher profit margins.
Rob Segall is a paralegal with Amazon Sellers Lawyer. He has a bachelor’s degree in business administration with a focus in finance. Robert is currently pursuing his Juris Doctor as a third year student at Maurice A. Deane School of Law and will graduate with a concentration in Intellectual Property Law. Robert’s financial background and experience provide him with unique insight into the needs of Amazon Sellers and allow him to efficiently identify and serve client’s needs.