In a power move, Amazon has planned to introduce dramatic cuts to commission rates for its affiliate marketing program.
This will allow media organizations, e-commerce companies, and small independent businesses to receive a cut of revenue from a sale if any customer goes to their product page and buys the item using the provided link.
According to CNBC, the strategy will be put into effect from April 21st and some categories are expected to drop by more than 50 percent.
Commissions for categories like home improvement, furniture, lawn and garden, and pet products might experience a drop from 8 percent per sale to just 3 percent. As for other items like headphones, beauty products, and musical instruments, the commission rates will decrease from 6 percent to 3 percent. A further drop from 3 percent to 1 percent will be seen in categories like grocery, sports, baby products, outdoors and tools.
This does not come as good news for digital media organizations that have spent years building their reputation in the market and organized commerce divisions dedicated to recommending products largely purchased at least in the US.
Walmart and Best Buy also cater to affiliated programs but being the leading retail service in the world, Amazon basically owns the US e-commerce, contributing to more than half of all online sales.
Just last month, Amazon and other retailers suspended some dedicated commerce marketing deals that do not even fall under the category of affiliated programs. Digital media companies like Buzzfeed and Wirecutter are two of the leading commerce providers in the industry so when Amazon cut back on deals with these digital agencies, it came as a major shock to them.
Making such dramatic cuts will hurt a lot of people who have recently started affiliated programs. Amazon has not even given any specific reason for this move and when CNBC questioned the executives about the email the company sent out, they refused to comment on the matter.
It is quite disappointing that a company like Amazon, which is “promising” minimum wage workers employment opportunities during the pandemic, while their own operations are struggling is cutting down budgets of small and medium businesses.