Amazon changes affiliate commission rates for all participants of their associate’s program. If you’re an affiliate of the Amazon associates program, you probably received an email from them notifying you about advertising fee rate changes (commission rates earned by affiliates).
These changes come to effect on March 1, 2017. Some will be hardly hit with their income from the Amazon affiliate program, and only a few affiliates will benefit.
As I am an Amazon affiliate participant and know many of my readers are, I wanted to notify everybody who is not aware of these changes and their effect.
The biggest change is that Amazon commission rates will go from having both variable and fixed commission rate schedules to only one fixed fee rate schedule.
Participants in Amazon Associates program know that the more you sell (refer people to buy on Amazon), the more you earn.
No more “sell more/make more” volume-based commission rates. Now you probably think that this change could be good for smaller affiliates that didn’t have high commission rates.
And you are right. If you sell about ten or fewer items as an Amazon affiliate each month, this change probably won’t affect you. You maybe will earn a little more.
But, all is not so black and white. Even smaller affiliates are affected depending in which category are products you promote.
NOTE: I am writing about the Amazon.us affiliate program. Other locales may have different fee rates. Amazon Associates in the UK already gives category-based commissions.
BIG UPDATE: Amazon has again made a significant change and decided to drastically reduce affiliate commission rates effective April 21, 2020. You can read more about it below.
Amazon Changes Affiliate Commission Rates
They are removing their entire “Variable Standard Program Fee Rates,” so you are no longer able to earn commissions based on the volume of sales.
The variable rates used to be applied to “Other Products,” which are the majority of the products on their massive online retail shopping site. These were products not found on their fixed-fee rate schedule.
Amazon old fixed-rate fees for particular categories
Amazon old volume-based program fee rates for other products which are not in fixed fee rates category
The above fee rates will no longer be valid on March 1, 2017. New commission rates come into play. This means no more volume-based fee structure as it will be just a fixed fee structure. But fixed fee rates are also getting changes.
Amazon new (and only) fixed commission fee-based rates
Now, as of March 1st, you can sell one item or 30 million items. It doesn’t matter. You get the same commission rate for that item (category).
So if you are a high volume seller and earning the top rate of 8.5%, you will feel an impact if the products for your niche are ones that will have a low fixed rate as of March.
On the other hand, if you were a small volume seller earning 4% – 6.5%, but your products will change to a higher fixed rate on March 1st, then you’re going to be a happy affiliate.
By checking this, you can see approximately how these changes will affect you. Will it be more or less money in your pocket.
For me, it will be slightly lower. Products that I promote have higher rates now. But most of my affiliate earnings are from products that I don’t promote (other categories which are now 4%).
It all now depends on buyers and what they will buy through your affiliate link. Will it be something from the high rate category or low rate category.
It also depends on Amazon’s third-party sellers. I have often seen that products which, by logic, should be in a particular category are in an entirely different category.
This is Amazon’s advantage. You earn no matter which product buyer purchases from Amazon. You could promote tools, but the customer can buy toys, and you still get the commission.
We just need to wait and see how this will affect our earnings in the long run. I just hope your niche is not in the wine category as then you need to find a new affiliate program.
What Can You Learn From Amazon Changes in Rates?
Don’t put all your eggs in one basket! As an internet marketer, you should always have plan B, C, D. Long time ago, I have started to add price offers from different shops next to my products using Content Egg plugin.
If I write a review about some product, I put price from Amazon, eBay, Walmart, Target, etc. (using Content Egg prices get automatically updated).
Let the buyer compare prices and choose where he wants to buy. In this case, if it comes to drastic changes or you get banned from one of the affiliate programs, you have others.
There are also different ways you can monetize your blog. Affiliate marketing is just one way. Whatever you do, diversifying your streams of income will help avoid any negative changes made out of your control.
On the other hand, you can now build new niche websites that can take advantage of the new higher fixed rates.
Amazon Commission Rate Changes – April 21, 2020
Amazon is again making a significant change to its affiliate program. They’re making changes to their commission payout structure for some categories.
They’re changing the rates and, it is not in favor of Amazon affiliates. Here are the categories being affected:
- Furniture, Home, Home Improvement, Lawn & Garden, Pets Products, Pantry – 8% down to 3%
- Headphones, Beauty, Musical Instruments, Business & Industrial Supplies – 6% down to 3%
- Outdoors, Tools – 5.5% down to 3%
- Grocery – 5% down to 1%
- Sports – 4.5% down to 3%
- Baby Products – 4.5% down to 3%
- Health & Personal Care – 4.5% down to 1%
- Amazon Fresh – 3% down to 1%
Most of the major product categories, with typical topics covered on websites or blogs, took a significant hit. Here is one quick example. Let’s say you have a site in the ‘Lawn & Garden’ niche blogging about lawnmowers, and all your products promoted are in the same category.
Your commission rate is going from 8% down to 3% for products in that category. If your site was previously earning $1,000 per month from Amazon Associates, now it will earn only $375.
I am sure many will now try to find alternatives. The change has still not come into effect, and already people started selling their Amazon affiliate sites while they still can get decent money for them.
Is This Death of Amazon Affiliate Program?
The question is, will smaller affiliates now have higher chances if bigger players decide it is not any more worthy of being Amazon affiliate?
Does this mean categories with higher fee rates will now have more competition as everyone will want to promote those? How many affiliates will now look for alternatives, and if this is steps of soon, Amazon affiliate program shutdown?
What is Amazon’s logic behind this new fee structure? Perhaps there are categories that they want to boost up the sales significantly.
It seems Amazon is moving into the fashion/apparel/personal products if to believe recent news. Amazon has established itself as a go-to for many tech products people buy.
Moving into fashion and personal care and home items in a bigger way mean focusing on that portion of the market and encouraging affiliates to do the same.
Paypal and many other services used “affiliate commissions” to increase their business when they started. Once the company is well established as a brand, they don’t need affiliates to the same degree.
I don’t think Amazon is going to shut down their affiliate program any time soon. They’ve actually been investing in it quite a bit. They completely changed their affiliate portal dashboard, they introduced native shopping ads, and they’re actively developing other affiliate tools.
So why invest so much in something you intend to shutdown? That said, you can be sure the Amazon affiliate program is here to stay. They are just targeting strategic product categories rather than just trying to drive more traffic generally.
They sell just about everything, and there is a vast difference in mark-up, traffic, storing and shipping costs, competition, etc.
Ever since Amazon went to the volume incentives, one of the primary strategies has been to promote a lot of low-cost items to raise the commission rate on higher-priced items.
It makes sense of making this affiliate rate changes. After all, different product categories have different average profit margins, so Amazon wants affiliates to target products that bring more margins.
I would love to hear how these changes at Amazon Associates have affected you and your online business. Let me know what you think in the comments below.
DISCLOSURE: My posts may contain affiliate links. If you buy something through one of those links, I might get a small commission, without any extra cost to you. Read more about it here.