Amazon will cut associates’ commission rates beginning April 21st. The decision was announced by email on Tuesday — the same day Amazon’s stock closed at an all-time high. These changes to their Program Operating Agreement will potentially slash some partner’s revenue by more than half. We think this is the wrong way to manage relationships with partners and particularly inappropriate as the world is dealing with an epidemic.
Think about it: The COVID-19 pandemic and related stay-at-home orders have generated uniquely high demand for the retailer’s e-commerce business. Cowan analysts have even characterized this spike as “an extended Prime Day/Black Friday type of situation.” Amazon’s business is booming.
What the cuts mean for partners
While commission rate cuts vary by category (furniture/home goods dropped from 8% to 3%; beauty goods from 6% to 3%), Amazon associates are commiserating on online forums like Reddit that the affected categories are where they make the majority of their earnings.
This income disruption could not come at a worse time for many of the content creators, review sites, and bloggers that constitute Amazon’s partner base. These associates are commonly experiencing the other end of COVID-19’s market impact: wage/employment instability and economic uncertainty.
Why the partnership channel works — and why Amazon’s decision violates those principles
Partnerships provide an incredibly powerful growth channel when they’re supported — Amazon has long known and benefitted from this fact. A successful partnership program is based on the concept of mutual benefit to both the brand and the partner, assured by sustained collaboration, term optimization, and trust. This is where Amazon has failed.
Here’s what we know: In operationally mature partnership programs, partners are more than just hired guns for brand awareness or promotional offers; they’re an extension of the brand itself. Steadfast partnerships can secure new audiences, enhance customer loyalty, and multiply customer lifetime value — these are benefits that withstand market upturns and downturns. In short: Reliable partners are indispensable, and enduring partnership investment matters.
What Amazon associates can do to avoid losses
While the immediate impact of Amazon’s rate cuts seems scary, there are steps partners can take to hedge against losses and even increase their revenue:
- Establish direct relationships with a range of brands. When you deal directly with a variety of brands, you gain greater control over your earnings. Impact’s Partner Marketplace connects partners like you with more than 1,000 top global brands, spanning verticals, markets, and enterprise sizes. There are no limits to the number of programs you can apply to, and each new partnership is an opportunity to establish terms that make sense for your business.
- Continue to use your promotional model. Similar to Amazon’s easily shareable product catalog, Impact supports access to more than 1.5 billion SKUs and makes it just as easy to grab and share a product-specific link.
- Leverage the cachet of being an Amazon associate. Many brands are eager to collaborate with partners like Amazon’s associates — and they understand the powerful audience access and engagement that content creators have now more than ever.
Learn more about Impact’s Partner Marketplace — or go straight to the sign-up page. We’re ready to help — if you have questions about the process, please reach out to welcome@impact.com for assistance.
