Amazon has made a big change in its commission structure and Amazon affiliates aren’t happy.
They’ve gone and shifted the commission structure from a numbers-sold approach to a category-of-product approach. Most successful affiliates think that they will be losing money as a result of that change.
How it used to be
Until a couple of weeks ago, Amazon rewarded its loyal and more productive affiliates by boosting their commissions when they hit pre-determined volume levels. In the old days, if you sold between one and six items — of any type or description — your commission would be 4.00%. But then once you sold your seventh item in any given month, your commission would jump to 6.00%.
Your commission rate would go up incrementally until you maxed out at 8.50% once you sold 3131 items or more in a single month. And that was great for affiliates — and, you’d think, for Amazon. Affiliates had a great incentive to strive to sell more — not just because you’d make a commission on more items but because you’d make MORE commission on those items.
It made sense from a customer-focused perspective, too. If you had an affiliate site on, say, outdoor grills, you would sell the grills. But you would also sell charcoal, fire starters, and accessory kits for grills. Each of those items, though not a high-priced item, counted toward the number of items sold in the month.
You’d think it would have worked out for Amazon, too. Scads and scads of hungry affiliates working their fingers to the bone, focused with laser-like intensity on bursting past the 630 item mark so that their commissions would increase from 7.50% to 8.00%. That helped propel Amazon to the largest retailer on the planet.
But now everything is different.
How it is now
Now it doesn’t matter how many items you sell. You get the same percentage per item whether you sell one or 3131 items. But you get a different commission depending on the category your item falls in.
Here’s a screen shot from the Amazon website. You can have a better look at the new Amazon commission structure on the Amazon site.
Under the new structure, the commission varies from 1% for video games and video game consoles to 10% digital video games, luxury beauty, and Amazon coins.
Which products fall into the “Kitchen” category with a 4.50% commission and which fall into the “Home” category with an 8.00% commission? Or which products fall into the “Outdoors” category at 5.50% and which fall into the “Lawn and Garden” category at 8.00%? I don’t think we have a way to find out.
So now what?
A high-volume seller will probably lose some income under the new fee structure. But that doesn’t mean you need to give up on Amazon.
Amazon is still recognized all over as a reputable retailer. When your customer clicks on your affiliate link and lands on Amazon, they can feel comfortable coughing up their credit card number. In fact, if your customer is a regular Amazon customer, they’ve saved their credit card number and are ready for one-click ordering.
Amazon still has Amazon Lockers. Amazon Prime customers still have free two-day shipping. There are still all those customer reviews for your customers to consume.
And they still sell almost everything. No matter what your niche, from fountain pens to pie plates to singing bowls, you can find it on Amazon and become an affiliate of that product.
If you are facing a decrease in income because of Amazon’s change in its commission structure, there are actions you can take. Move up to the higher paying categories when you choose new products. Research other affiliate platforms to see if you can sell your existing products elsewhere at a better rate. Add AdSense ads to your site to increase revenue. Create your own product. Add information products that may pay a higher commission. Create some new affiliate sites so that you have more income streams.
These changes in Amazon’s commission schedule can have a real effect. But you probably don’t want to abandon Amazon. Just rethink your revenue sources so that you can find ways to make up your lost income.
And what about you? Please leave us a comment and tell us what impact these Amazon commission changes will have on your business.