Amazon is planning to make drastic cuts to affiliate commission rates from next week. The affiliate program allows media organizations, eCommerce companies, and small independent businesses to receive a cut of revenue from a sale if a customer lands on the product page and purchases the item through their provided link. According to CNBC, the cuts will go into effect starting April 21st and some categories will likely see a drop of more than 50%.
For instance, commission rates for home improvement, furniture, lawn and garden, and pet products will see a commission rate drop from 8% per sale drop to just 3%. For headphones, beauty products, and musical instruments, commission rates will go from 6% down to 3%. Many other categories — including grocery, sports, baby products, and outdoors and tools — are all dropping down to 3% or 1%, CNBC reports, from 4% or higher.
These changes are a harsh blow to digital media organizations, many of which spent the past few years building out commerce divisions dedicated to recommending products on Amazon. Other retailers, like Best Buy and Walmart, also run affiliate marketing programs, but Amazon is the leader in US e-commerce with nearly half of all online sales. Last month, Amazon and other big retailers also began suspending dedicated commerce marketing deals, which are separate from the standard affiliate programs, with big digital media firms amid the coronavirus pandemic.
Digital media companies like BuzzFeed and Wirecutter are among the more prominent commerce providers in the industry.
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 giving any single reason for the affiliate commission rate cuts, according to the email it sent to CNBC, and the company declined to comment on the situation as of now.
Amazon is one of the few businesses that has only become more vital during the coronavirus pandemic. It is hiring thousands of new workers to keep up with demand in its warehouses and for its grocery and package delivery platforms.
Despite the huge surge in demand for Amazon’s services, it is struggling to maintain operations like its Amazon Fresh grocery delivery option, which now has a waiting list to use, and is pausing some services like its Prime Pantry service for ordering bulk household goods and nonperishable items. It only just yesterday said third-party sellers can now resume sending nonessential products for shipping to consumers, after the company restricted its warehouse shipments to essential goods like health and cleaning products and non-perishable food.