What a fine time to take money off the table. Millions of businesses are staring down the risk of failure, and Amazon cut commissions for Amazon affiliates.
The changes were scheduled to take effect on April 21. And in some categories, the reduction is up to 80%.
Take food, for example. Amazon has been cranking out groceries in a frenzy, even paring back other elements of its operations to focus on this “essential” category. Yet, the company cut commissions for Amazon affiliates from 5% to 1% for the grocery category.
For items, such as headphones, beauty, musical instruments, and business and industrial supplies, Amazon was paying 6% but now will only pay 3%, reported CNBC.
The Cost of Commission Cuts
Amazon’s decision is going to create money problems for a lot businesses that rely on that affiliate marketing for as a major revenue stream.
“Our calculations estimate Amazon’s immediate changes will affect at least $300 million in opportunity lost—likely much more as everything progresses,” said CJ, an affiliate marketing network.
And it’s not just small publishers that will feel the pain. Major names like BuzzFeed, The New York Times and Vox Media will be affected by the lowering of affiliate commissions.
To make matters worse, Amazon hasn’t provided any solid explanation for the cuts.
According to CNBC, an Amazon spokesperson merely said the company “regularly evaluates its program offerings to ensure it’s competing with the broader industry and added that such rate evaluations are a standard industry practice.”
Still, that doesn’t answer why this from Amazon and why now.
What Do Commission Cuts Mean for Readers
If you don’t run a blog and you’re not an influencer, the talk about affiliates and commission cuts may sound like gibberish.
The Amazon Affiliate program is one way that websites, like this one, make money.
If I write about a book, say Stephen King’s latest release, If It Bleeds and I include a link like I’ve done here or I place an ad for it on one of this site’s pages, if you click through and buy the book, KnowGoodWords gets a share of the purchase price.
People also use affiliate marketing on social media as way to generate revenue from their groups and channels.
Amazon isn’t the only company that offers affiliate marketing, but its program is extremely popular. And the cuts it has made could make it difficult, if not impossible, for some sites or social media operations to continue conducting business as they had been.
You may find some online publishers impose or increase membership fees.
The cost of websites’ products and services may rise, and items that were free may start carry price tags.
And then, there’s the chance that some web publishers or social media businesses may not be able to survive and may disappear.
What Readers Can Do To Help?
Does this mean that as a reader you should boycott Amazon?
Definitely not if the sites you use are running Amazon ads or displaying its links.
Many of those web publishers are going need even more of your support.
So if you see offers on their sites for products or services you’re interested in, whether or not they’re linked to Amazon, remember that making purchases through them helps them financially.
What Should Web Publishers Do?
It can’t be stressed enough that you need to…
Make it a priority to diversify your revenue streams.
If you have sorta-kinda dabbled with the idea of other affiliate programs but haven’t acted on it, now is the time to get serious.
Consider companies, such as CJ, which as formerly named Commission Junkie, ShareASale, Clickbank and Rakuten Advertising, to name a few.
This is a good time to think about direct relationships with advertisers. By that I mean allowing companies to buy ad space on your site or in your newsletters and emails.
And if you aren’t selling products or services, this is also the time to start thinking about launching some. If you already have things to offer, ramp up your efforts to boost revenue from them.
One of the very real effects that we’re likely to see in a COVID-19 economy is a pullback in marketing and ad spend, so you should be preparing alternative streams of revenue.