As Amazon cuts commissions, publishers divert customers to alternative retail sites
Publishers are moving away from Amazon as a destination to send their sales referrals, since the e-commerce giant slashed their share of the commission, according to shopper marketing executives.
Last week, Amazon adjusted its affiliate marketing program, in which it splits a small percentage of sales with websites that post links to its products. In some cases, affiliate commission rates were halved—cuts on sales of furniture went from 8 percent to 3 percent; and headphones used to deliver 6 percent of the sale to the referring publisher, now Amazon offers 3 percent. The change means that publishers relying on those commissions make less money. But, already the e-commerce lifeblood of the internet is starting to recirculate to other corners of the web, with publishers diverting customers to sites offering higher commission rates.
“This was a really big reminder right now,” says Shirley Chen, CEO of Narrativ, an e-commerce publishing platform, “And just like publishers diversified and became less dependent on Facebook, Amazon is yet another large mega-platform that they need to diversify from.”
Facebook had a history of promising riches to publishers that coveted its large readership, but publishers also struggled to keep up with its evolving priorities. Now, Chen says, Amazon occupies a similar role for those same publishers that are chasing new revenue sources with e-commerce content.
Chen says the internet is already feeling the effects of Amazon’s affiliate rate cuts, because publishers are updating links on their websites to route shoppers to Amazon rivals like Walmart, Target, Bed Bath & Beyond and other retailers that also offer affiliate incentives. Chen points to the recent release of Apple’s iPhone SE. With past iPhone releases, internet shoppers would have searched Google, clicked over to sites with reviews that would have linked to Amazon, but now those websites are looking to fulfill sales with other places, Chen says.
“In the last three weeks, [publishers] from The Verge to People.com to Best Reviews have recommended Apple products like the new SE phone,” Chen says. “Shoppers typically routed to Amazon are now being directed to Best Buy.”
In recent years, publishers like BuzzFeed, Vice, Hearst, Condé Nast, The New York Times and Business Insider have all upped their retail portfolios, producing more shopper-friendly articles and videos.
It’s created a symbiotic relationship between sellers like Amazon and the publishers. The news sites create stories about the best products, and provide reviews to consumers, who are always searching for recommendations, and they take a piece of the sales. “It’s a huge benefit to Amazon getting people coming to its site,” says Mike Seiler, director of search and shopper marketing at AKQA.
Amazon has good reasons to change the terms of its affiliate program, however, especially right now as the coronavirus crisis has forced it to shuffle its business. Every industry is reacting to the global shutdown and the stresses it created. For Amazon, the pandemic has led to a surge in shopping, but it’s also tested the company’s logistics. In March, Amazon even told partners to stop shipping nonessential products to its warehouses, while it handled a delivery crunch on essential items like food and medical supplies. There have been weeks-long backlogs on delivering to consumers, who had grown accustomed to Amazon’s typical overnight delivery promises.
With those kinds of strains, it makes sense that Amazon would discourage affiliate marketers. “Amazon does not need to be trying to goose up extra traffic,” Seiler says. “They’re already struggling to try and handle the orders they’re getting now.”
Narrativ is looking to capitalize on the moment, too, because it works with publishers on the technology that manages the e-commerce links on their websites. If a website has a months-old story about the top phones, Narrativ can update those links at any time. A publisher could push sales to any site based on a number of factors, such as whether the retailer could fulfill the order, or commission rates that are more favorable to the publisher.
Chen says that in the past month, Narrativ has rerouted more than 40 percent of the Amazon links on its platform to other sites. “Any publisher dependent on Amazon for 70 percent to 80 percent of their revenue should be aware of that risk,” Chen says.
Evan Dash, CEO of Storebound, a company that makes popular cookware that are hot sellers on Amazon, says that affiliate marketers have been diversifying away from Amazon for months. Storebound, which makes Dash brand air fryers, egg cookers, skillets and other kitchen items, has its own affiliate program. The company mostly relies on Instagram influencers to post links to the products. “The influencers that we deal with would rather drive sales away from Amazon at this point,” Dash says.
Even before the rate cuts the marketers were making better money from sales that went directly through Dash’s website.
Dash has always treated Amazon as an important sales channel, but has been careful not to become overly reliant on the platform. “It’s one of our largest channels, but we’re healthy across the board in TV shopping, brick and mortar,” Dash says. “The bulk of our business, the majority still comes from store retailers.”
With the pandemic altering everyone’s shopping patterns, retailers are generating more e-commerce sales, and the retailers need to plug into the online affiliate ecosystem, Chen says. Narrativ works with brands like Best Buy, Bed Bath & Beyond, Sephora, Ulta Beauty, HP and Samsung.
“We are on-boarding more ecommerce partners,” Chen says. “So, we hope to see that continue to rise. Publishers have to diversify their affiliate links and ensure that they’re not dependent on any one retailer.”