It has been over 10 years now that Amazon has offered a commission to their associates for advertising their products. The commission is given for any advertisement on a website that leads to a sale. Anyone can become and associate and this has provided a great deal of income for many websites large and small.
There are two types of qualifying purchases – direct and indirect. A direct purchase is one that is made within the product category of the product advertised. An indirect purchase is one that is made in a different category from the product advertised.
One of the major advantages of an associate was the fact that they received commission not only on the product that they advertised, but they also received commission on the entire basket. This meant that even if their products were in a category with a low percentage of commission, they could still get a good return because of other products bought with higher commission rates.
Changes in Commission in April 2020
Changes already took place back in April 2020 lowering the commission given to associates for sales in many categories. It was thought by many that these changes were the result of the corona virus and would be temporary. A conclusion made since many of the ‘essential’ categories were the ones that were decreased the most. It was possible that Amazon were protecting themselves because of the unusual circumstances. However, with further reductions, it looks like these changes may be here to stay.
Recent Changes in commission
As of February 1st, 2021, the amount of commission has been significantly decreased on indirect purchases. This decrease affects sales made on the UK, French, Italian, Spanish and German marketplaces. Amazon have reduced this commission to 1.5% across most categories. Game consoles have a 1% commission and gift cards have no commission. Direct purchases range from 1 – 12% commission. There are many websites that have come to rely on this source of funding. This could have some major knock on affects for them.
Amazon have made some other changes in the associate’s agreement:
- changing of the name Audible Gold Digital Membership to Audible Premium Plus Membership
- the earning of commission on Prime Wardrobe Purchases via other categories
- the discontinuation of Amazon pantry
- an update on the Amazon Influencer policy.
It may be confusing to know how these changes will affect your business. Here at MergersCorp, we can help you work out what the implication is for you. There may be opportunities where positive growth could offset the lower commission rates. You may consider ways you are able to diversify and find other sources of income. We have the expertise to guide you through the options available. You may, however, decide that it is time to sell and move on. If so, we have an expert team of M&A advisors that can help you through the whole process.