Amazon is planning to make dramatic cuts to commission rates for its affiliate marketing program, which allows media organizations, e-commerce companies, and small and independent businesses to receive a cut of revenue from a sale if a customer lands on the product page and purchases the item through a provided link. The cuts go into effect on April 21st, according to CNBC, and some product categories will see drops of more than 50 percent.
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, CNBCreports, 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.
MANY DIGITAL MEDIA COMPANIES RELY ON AFFILIATE MARKETING FOR REVENUE
Digital media companies like BuzzFeed and New York Times-owned Wirecutter are among the more prominent commerce providers in the industry. The Verge’s parent company Vox Media is another, with affiliate partnerships that include Amazon. (For more information, see our ethics policy.)
But there are scores of other news organizations that do the same and non-news companies that have spun up small to medium-sized businesses around online deals and product reviewing. Quoted by CNBC, one person — who runs some Facebook groups dedicated to sharing online deals — says they “cannot afford” the cuts and that the changes will “hurt a lot of people.” The change will hurt not just websites, but also prominent deal and e-commerce YouTube channels and even deal plug-in makers and stores like Honey and Rakuten.
Amazon isn’t citing any one reason for the commission rate cuts, according to the email it sent to program members obtained by CNBC, and the company declined to comment on the situation.
Amazon is one of the few US businesses that has only become more vital during the COVID-19 pandemic. The company is hiring hundreds of thousands of new workers to keep up with demand in its warehouses and for its grocery and package delivery platforms.
Yet despite the huge surge in demand for Amazon’s services, the company is struggling to maintain operations like its Amazon Fresh grocery delivery option, which now has a waiting list to use, and is outright pausing some services like its Prime Pantry service for ordering bulk household goods and nonperishables. It only just yesterday said third-party sellers can now resume sending in nonessential products for shipping to customers, after the company restricted its warehouse shipments to essential goods like health and cleaning products and nonperishable food.