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First off, before I even begin, I need to say: This potential new commission structure for Amazon Associates (affiliates) has NOT been confirmed nor announced officially by Amazon.
Update 2/23/2017: This change is now OFFICIAL
Today, I logged in to check my Amazon affiliate earnings (as I do everyday) and noticed a new layout for my detailed earnings reports.
Earnings and ordered items were broken down by category now as opposed to just a list of products ordered that day and earnings.
That made me say, “Hmmmmmm…. I wonder what Amazon is up to…”
Then, inside a private Facebook Group I participate in, a link was shared to a page where someone claimed to have some inside information about what Amazon is about to do to their Affiliates payout structure – and you may not like it.
Instead of a tiered commission structure offering a higher commission percentage based on your volume of sales, it looks like Amazon is working towards a “Flat Fee” type of commission structure.
So, what does that MEAN for those of us that are Amazon.com affiliates?
Important Update To This Post:
Lost Earnings Due To Amazon Commissions Change? Here’s How To Fix It
Summary of Topics on This Page:
Amazon Affiliate Commission Change Details
This post in the Warrior Forum was started by a fellow Amazon affiliate who said:
“I had a call with an affiliate rep from Amazon, and since I wasn’t asked to keep it a secret, I thought I’d relay what I was told (bold emphasis mine).
Starting March 1, Amazon is moving away from a volume based fee structure and moving toward a category based fee structure.
In other words, you’ll get the same rate whether you sell one product or one million products, but you’ll likely get very different rates depending on what types of products you sell.”
As I said in the opening of this post, I do not have PROOF that this is a confirmed change with the Amazon.com Associates program, but it looks like it could very well be on the horizon… sooner, rather than later.
Today, when I logged in to check my Amazon affiliate earnings from yesterday’s sales, I saw my new “detailed reports” looking like this (note: this is the “real time” reports view – not the “classic” reporting option)
Currently, and how it has been ever since I became an Amazon affiliate in 2007, commissions (what Amazon calls “Advertising Fees”) were based on the volume of product sales you made each month.
These commission percentages are “tiered” – meaning the more you sell, the more you earn.
It doesn’t matter WHAT you see (other than a few specific categories that are capped at a set percentage), once your products shipped hits a new volume tier, you earn a higher percentage.
That payout looks like this (and to note: the Amazon.com compensation information page has NOT changed and still has this chart)
New Payout Structure for Amazon Affiliates
The talk is that Amazon.com will be starting a new commission structure either the same as, or very similar to the current payout structure that Amazon UK Affiliates have.
That looks like this:
In short, this new rumored payout structure for US-based Amazon.com affiliates, will be based on the CATEGORY of the the products sold – NOT based on overall sales volume anymore.
What Does This Change Mean To YOUR Amazon Earnings?
As it stands right now, as an Amazon.com affiliate, if I sell 500 blenders for $50 a piece in a month, I would be at the 7.5% commission rate and earn $1875 in commissions (Advertising Fees) for that month.
Based on the new flat percentage commission structure based on the category of products sold, in that example above I would only earn 5% of those sales = $1250.
That would mean I would earn $625 LESS that month based on the potential new payout structure.
Now, on the other had, if I sold 500 pieces of jewelry for $50 a piece in a month, instead of the current 7.5% earning me $1875, I would instead be paid a flat 10% commission for products sold in the jewelry category earning me $2500.
That would mean I would earn $625 more than with the current Amazon commission payout structure..
Not bad at all.
So, what does all this mean for YOU?
It all depends on what category your main product sales come from.
WHY Would Amazon Do This?
A natural reaction I am seeing online is pretty much the feeling of “Amazon hates affiliates – Amazon is phasing out affiliates…. etc etc”
I do NOT think that at ALL.
To me, this makes perfect sense.
And I have to say…
The IRONY of all this in relation to my previous post about building an online business on “free” does NOT escape me.
But, as I said, to me, this potential change in payout makes sense to me.
It all comes down to profit margin – and encouraging affiliates to direct people to certain product categories.
In other words, paying affiliates in a closer proximity to what Amazon earns per product sale.
But we can discuss WHY they’re doing this all we want to… we can be as mad and scream “that’s not FAIR!!!” all we want to.
What we affiliates think really doesn’t matter.
It is THEIR company and they can do whatever they want to (with the exception of stock holder opinions).
And let’s remember this: the Amazon Associates affiliate program is FREE to participate in.
In other words, they allow us to earn FREE MONEY from our clicks that convert to sales.
The only thing that really DOES matter is this:
What will YOU do in relation to the affect this potential change will have on YOUR business?
For their business – they do what they need to do.
For our business – we do what WE need to do.
If you need some help keeping your business mind straight through changes like this…
So, what do YOU think?
Does this potential change make sense to you?
Will YOU continue to work the Amazon affiliate program if this all DOES happen?
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Most of my current sales for the categories would fall into the 7% range so not a huge difference. I will continue to focus on my current categories if this change happens.
I also have the new Amazon report format today and although my total earnings and category I could were displayed I could not tell which of my sites generated the sale. I had to change the Tracking ID from “all” and put in my individual tracking ID I have for each site until I found the sales, more time consuming as I track sales by site.
I was looking for the “by tracking id” report too – I really liked that report to get a glance at how all tracking ids did without having to open them one by one.
Hopefully they’ll bring that report back.
A quick update on the new reporting:
Apparently, you CAN get the same “by tracking ID” etc reports, I just didn’t see the option.
Under Detailed Reports, look to the right at the top – it says “Group By:” and you can choose way to view your reports in that drop down menu.
This doesn’t worry me as much as Smile.Amazon.com. It seems whenever I shop at Amazon, they try to direct me to Smile.Amazon so what might have been someone’s commission will go to charity. I’m not sure they try to redirect if someone arrives on an affiliate link, but I’m pretty sure most people (outside of affiliate marketers) will be inclined to support their favorite charities rather than bloggers they don’t know if they are asked to join Smile.
When I was asked to join I assumed it would be a list of charities similar to the ones on Squidoo. I was wrong. I found a charity I very much did want to support. If a review I read convinces me to buy, I will definitely follow the link from the author of that review. If I’m just shopping, I now buy from Smile. I’m wondering how many others do the same. Some may read the reviews and instead of clicking go straight to Smile to search and purchase. For Amazon, it’s a win. They get the write-off for donating to charity. Customers may buy more since they know some of the profits support their favorite organizations.
Do you think I’m concerned for no reason?
If our structure ends up being the same as the UK, it won’t be much change for me as I mostly promote pet products and rarely get above 7% anyway. I will however start promoting more jewelry that’s pet themed though 🙂
I can see a LOT of jewelry and clothing in our future, Cathy…lol!
That’s odd – I’ve done quite a bit of shopping on Amazon and can’t recall being redirected, or even OFFERED to go to the Smile program.
I’ll have to look into that.
I’m just taking the wait and see attitude at this point.
That’s probably the best attitude of all, Jeanne!
I was just shocked to hear that March 1st was when this is rumored to start – and we still haven’t heard anything officially from Amazon.
It won’t make a great difference to me I don’t think (hope) lol.
I have been anticipating some kind of commission structure change after I read that over 50% of online shoppers now go directly to Amazon to research products.
The proposed change is much better than what they could have done eg 12 hour session window, 4% commission on all sales etc. YUK!!!!
On the positive side any established players or new entrants to the marketplace seeking to challenge Amazon in high profit niches will most likely offer a much more attractive commission structure.
For me these type of changes just strengthen the general theme of your last post…..don’t rely on any one income source or any one platform….which I mainly do at present….gulp, but recently I have been putting changes in place to overcome these weaknesses in my business.
Will I continue promoting Amazon?
Yes, but with a view switching my main vendor at the click of a button 😉
I’m not ditching Amazon either – why would I? To me, it’s free money, and the work part is already done.
I’m just happy that they’re keeping their affiliate program!
I hope Amazon doesn’t do this it be a real bummer. If they do however it’s good advice not to have all your eggs in one basket. Check out flex offers they have tons of merchants that allows deep linking to products you want to advertise. Has anyone ever sold a ebook and not received a commission from Amazon? I sold a ebook but did not receive a commission. Everyone tell me your thoughts on this.
Note sure about eBooks, Brittany – if I’ve ever sold one, I’ve never paid any attention to it.
Maybe the order was canceled or something?
I was reading about this yesterday too. It doesn’t really scare me, but I think the consequences will be interesting. for example, is it going to push affiliates into certain (higher-commission) niches and out of others?
For affiliates with sites in diffrent areas, I think it will even itself out though (much as in your example above) hat we lose in one area, we may well find in another. As always, we’ll see!
Good point, Nick. I imagine we will see a lot of “PLR” and “insta-sites” being promoted in the higher paying niches if all this happens.
But, like you, I think it will even itself out.
How can you earn free money?
Either the money is earned OR it’s free.
In our case…every bit is earned through comprehensive hands on reviews, buying guides, and supporting articles and recipes.
So in my mind…that’s EARNED commission and very far from free money.
That being said…Amazon’s commission structure is/was overly generous IMHO. Sure, I wish it would stay as it is but it makes sense for them to change it.
You’re right, Mike – there is a “cost” to everything. And yes, their commission structure is generous – especially being able to earn on all someone buys in a session as opposed to only the one thing we link them to.
UK amazon affiliate here.
When we moved to the flat fee I found my earnings went up. I was a big winner from it!
Why? They also lifted the cap on electrical items and I specialise in tech products. Before the maximum I could earn was £7 per item. It didn’t matter whether I sold a £500 or a £2000 item. That was the max I could earn.
And then when they lifted the cap i get a flat 3%. So when I sell a £1000 item… cha ching! So yeah, if you sell fewer but more expensive items – it was a good thing on the UK scheme.
Not sure if the US scheme has a cap? I seem to remember maxing out at about $25 when I promoted stateside.