Amazon Cut Affiliate Commissions To Reduce Its Losses – Amazon’s move to cut commissions for its affiliate marketing program is the latest example of how a few large retailers appear to be tightening up an area of digital marketing that is known for significant fraud.
For instance, commission rates under the categories home improvement, furniture, lawn and garden, and pet products will see a commission rate of 8 percent per sale drop down to just 3 percent. For headphones, beauty products, and musical instruments, commission rates will go from 6 percent down to 3 percent.
Many other categories including grocery, sports, baby products, and outdoors and tools are all dropping down to 3 or 1 percent, CNBC reports, from 4 percent or higher.
The changes will be a harsh blow to digital media organizations, many of which spent the last few years building out commerce divisions dedicated to recommending products that are largely purchased, at least in the US, on Amazon.
Other retailers, like Best Buy and Walmart, also run affiliate marketing programs, but Amazon remains the leader in US e-commerce with nearly half of all online sales.
Last month, Amazon and other retailers also began suspending dedicated commerce marketing deals, which are separate from the standard affiliate program, with big digital media firms amid the COVID-19 pandemic.
While an Amazon spokesperson told CNBC, the changes are being made as part of Amazon’s standard business evaluations, the timing of the shift during the coronavirus pandemic— which has significantly impacted retail sales in numerous ways— could help the e-commerce giant make up for losses across some categories.
Some of the biggest cuts to commissions are for categories like groceries that are expected to be a significant growth opportunity for Amazon as consumers change their shopping habits during the health crisis, a shift that is expected to provide a boost to online grocery shopping overall.
Grocery sales were up almost 26% in March, in all channels, the largest increase in at least 25 years, per a Digital Commerce 360 report on the Commerce Department’s advance monthly figures. This comes as sales have tanked across many other categories seen as non-essential.
The news follows reports that Walmart cut its influencer affiliate programs with social commerce site MagicLinks and e-commerce giant Rakuten. Previously, Amazon’s affiliate marketing program removed third-party vendors Skimlinks, Sovrn and CJ Affiliate.
Third-party affiliates can earn a larger percentage of a final sale than simply a commission on a single item.
Publishers are likely to be impacted as large affiliate programs retract since a number have built revenue-generating product recommendation engines over the past few years that benefit from affiliate links, per Folio. Bloggers and others who have built businesses around product recommendations will also take a hit, per CNBC.
Whether or not it is a response to the COVID-19 pandemic, it’s clear that Amazon is tightening up its affiliate marketing program in a way that will help it retain a larger portion of referral sales.