TAS 822: (BIG NEWS) AMAZON Slashes Affiliate Commissions and HURTS Businesses

Speaker 1: 00:00 Hey, Hey, what's up everyone? Welcome back to another episode of the amazing seller podcast. This is episode number eight 22 and today, yes, this is looking a little bit different if you are watching this and if you are listening, you don't, you don't hear the difference because it sounds the same or right now I am side by side with a good friend of mine. Also, the brains behind TAs really is Chris Schaffer. So Chris, glad to have you back here in person on the show. But I brought you on

Speaker 2: 00:30 cause we're going to talk about some big news on Amazon. So what's happening man? How you doing through all this crazy, you know, other than being stir-crazy from being locked in, um, at this point I think we're at day 20 something. Yeah. Um, I kinda lost count, you know, I feel like, you know, you know, every time somebody is in prison in a movie, they're in like solitary confinement or like scratching the days in the wall. I don't have, I have concrete walls here, so I can't really do it. It's not really, you know, not really conducive to that. Um, so I kind of lost count at this point, but it's good. You just called me the brains behind T a S and I'm not, I'm not sure how I feel about that. I don't know if that's a good thing. Uh, or if that's a bad thing, you know, cause that thing, I feel like I get blamed for all of that stuff now.

Speaker 2: 01:16 Like, and anything that anybody doesn't like, they're like, Oh, it's Chris and anything that they do, like, they're like, Oh yeah. You know, it's not, it's not the brains behind it. It's definitely Scott and that beautiful voice. No, I'm just, I'm just screwing with you. Um, I'm not that smart. I'm just stubborn. And I, I was having this conversation with my dad the other day. Um, he said, you know, he didn't call me dumb, unlike some of our mutual friends, um, who shall remain nameless, but they run any commerce conference. Um, but he, he basically said, you know, the thing, one of the things that you've done that's made you kind of successful is not like, you're not super intelligent, like hyper intelligent. You're just stubborn as hell. Right? And I started thinking about it. I was like, you know, that's kind of true. And he was telling me this story.

Speaker 2: 02:02 He was telling me the story about, you know, when I was like 13 or 14, they got a wireless router and some stuff and my mom couldn't figure out how to use the printer. And I basically stayed up all night just trying to figure it out. Not because I wanted it to print, it was because it made me mad because I couldn't figure it out. Right. And that's kind of been my life up to this point is like, Oh, I'm just going to go figure this thing out. It's not that I'm that smart, so I don't, I don't know. I'll take it as a compliment. I guess. Long story short, you a compliment, you're going to accept it and you are very smart and uh, but also you, you do it in a way that you can, you can dumb it down for us, other people to actually understand it.

Speaker 2: 02:42 So I thank you for that. The secret is I have to dumb it down for me to understand it. So it's really easy to translate everybody. Uh, so today we are going to dumb down this big news because it has really shaken up, you know, the world of just, you know, bloggers, not even like people just selling on Amazon because that has its own twist and mix. But what we're talking about here today is Amazon associates, like basically being an affiliate for Amazon products. And it's funny Chris, cause last week, I believe it was last Friday, I came out with an episode, actually I should look at my notes here. I saw that this morning and just started laughing by the way, cause this was a question that came in and it was like what's the best practices for affiliate marketing on Amazon or an Amazon? And I answered that question directly and that was really more of like, okay, it's not saying like you're going to go all in on Amazon associates or you know, being an affiliate.

Speaker 2: 03:36 But it was like what are the best practices? And I still think that is exactly what you know you want to do no matter what program you're using. We're just talking about Amazon as being that program right now. And what I mean by program is that's their affiliate program that they have. eBay has, there's a, you know, Etsy has theirs. Every major channel pretty much has one, but there's also smaller ones. And I want to talk about that today. But what I really want to talk about is, you know, Chris Scott, you guys been talking about building out your traffic and then monetizing it and you have talked about using Amazon associates and now because they cut their commissions by a lot, is that still worth it? And what else should we be thinking? What should we be doing? Is this the end of the world?

Speaker 2: 04:20 And I wanted to kind of sit here and talk with you about it and uh, and kind of get to the bottom of this. Like what does this mean? So where do we want to start here? Let's, I guess let's start with what actually it was and what it is now. Uh, so it is the end of the world and there's absolutely nothing that we can do. Uh, that's the end of the show. I don't know what else you really wanna talk about at this point. You know, there's no other affiliates. It's only Amazon associates is the only thing that you could possibly ever use to monetize outside of, you know, direct e-commerce. No, and basically what Amazon did is, and they've been doing it for years, um, really the thing that built Amazon is the associate's program, right? It was loggers, people with traffic driving traffic to Amazon.

Speaker 2: 05:04 Hmm. Millions of page views a day to Amazon to buy stuff that built Amazon. Most people's first interaction with Amazon was via an associate's link, which people don't remember that, right? They just, they just remember that they've always bought stuff from Amazon. But chances are you didn't buy books from Amazon when Amazon was only a bookstore. Right. As I started to open up their catalog, they went out and they actively recruited people who had traffic to drive traffic to those categories. And the way that they incentivized people to do that was by paying them a portion of the sale. And over the last few years, they started to make some changes to the program, which I, I don't fault them for it, but the, the areas that still had the highest commissions, Mmm. Where some of the places where they were still struggling. Right. Because you have a lot of competition in things like sports and outdoors locally.

Speaker 2: 05:56 Everybody has a Dick's or a sports authority or, uh, what's the, what's the big one near you, Scott? That's, it's bigger down South. Um, Oh yeah. Yeah. It's uh, not American sports, but it's uh, Oh gosh, uh, I can see their logo and it's driving me insane. I can too. Cause I was just there not that long ago looking for volleyball stuff. Uh, Oh. Um, Oh gosh. Academy Academy Academy sports and outdoors. Right. And they're, they're a big competition. And then you also have, you know, Lowe's who sells grills academies, sell smokers. Um, I know because I almost bought one at an Academy and you know, all of those things have a lot of brick and mortar retail locally. Right. Electronics has less of that now. Right. So that was one of the things that they had kind of reduced previously. And so what Amazon did is they basically across the board in any of the categories that had had some of the higher commissions, they reduced it.

Speaker 2: 06:53 So things like, uh, furniture, lawn, pet and pantry, they were paying an 8% commission. It's now three mm. Uh, beauty like business, like home office type stuff went from six to three, right? Cut in half. Roche grocery went from five to one. Okay. Well, yeah, right. And it's because [inaudible] and in my opinion it's because they have less competition on the retail side. No, right. Amazon owns a few grocery stores. If you guys didn't know they own whole foods, they also own Amazon fresh. They on some of those other kinds of things. And so, you know, they're kind of competing with themselves and that type of category. Sports maybe products, health and personal care got reduced a little bit. Health and personal care got reduced from four and a half down to one, which is a huge drop. And then Amazon fresh got reduced from three to one.

Speaker 2: 07:45 Um, but basically kind of across the board, they slashed their commission rates and so everybody was just panicked. Okay. For a few days, everybody that has an income related to the Amazon associates program just saw Owen's head pop up on video, um, has been kind of freaking out for the last few days. Um, and you know, this comes back to something Scott, that you and I preach all the time, which is single channel dependency, right? If you had traffic outside of Amazon, right? If you were doing what we're talking about, you were building your brand and the only way that you were monetizing your brand and the traffic that you own us through the Amazon associates program, your paycheck just took a hit. And you know, that's the problem with being reliant. The rules can change it any point. And Amazon does it time and time again. If you are relying on YouTube, a couple of months ago there was a YouTube ad apocalypse, right where they basically went through and they massively changed their rules on what can and can't be monetized. And there's still a lot of fallout from that. Right? And so anytime we're dependent on a single channel like this, it results in, you know, the, the, the chicken little, the sky is falling syndrome. Um, but we wanted to kind of get on and, and talk about the big change that they made and then kind of how we can get around it.

Speaker 1: 08:59 Yeah. Okay. So I mean, first and foremost, okay, we've been talking about just being dependent on one source of anything, right? It doesn't matter if your traffic source, right? If you're getting all of your traffic from YouTube, you better start diversifying your traffic, right? If you're getting, you know, all of your sales through one product on Amazon because you private label that you gotta diversify, right? And so it doesn't matter what your business is or if we're talking about the Amazon associates program or for talking about ClickBank, which is another digital affiliate place, which if you're not using that, you probably should add that to the mix, which we can talk about. But it just again goes to prove that if you've built a business around or on a platform or a supplier. So really to me, I look at it like the Amazon associate's program is like a product supplier.

Speaker 1: 09:54 They're supplying you with product that you can earn a commission. Okay? And if, if your whole business model was building out an Amazon associates site, then yes, you're going to take a 50% or more hit right now. Right? It's, there's nothing you're going to do about it because your, you know, your profits just got cut in half. Okay. Just because of that one change that they decided to do that you have no control over. Same thing with your supplier. If you have one supplier and you're private labeling a product and that product now it costs more for them to make and they have to increase your price. They have to change it. You can go find someone else. You should have already been finding that backup. The meantime, do you have a content writer and they're supplying the content for you and you're depending on them and guess what?

Speaker 1: 10:38 They happen to go away. Or maybe the writer is a woman and she's having a baby and she has to leave for a few months. You're, you can't be dependent on anything. So yes, we're talking about like this one thing right now, which is please let me just again say it one more time. You want to diversify all aspects of your business and this is just another example of that and it just happens to be Amazon and we always kind of beat up on Amazon because you know, they always change the rules or you know, they, you know, they don't take care of, you know, the, the really good sellers and they'll let the ones that are hacking the system and the black hatters like we can sit here and we can condemn them all day long. Yeah. The thing is is we still want to use them. We just can't be dependent on them. That's really what I want to, I just want to really make sure that we're clear there, Chris.

Speaker 2: 11:21 Right. Like I, I don't fault Amazon for doing this. Right. I have an issue with their timing of it. Yeah. Given everything that's going on right now, right. Like Amazon. Amazon honestly is making money hand over fist and I understand that they have the same issues that every other business has. Right. They've got a ton of staff they have to take care of, but it's not like they're starving for money right now. Right. Um, I, I completely agree that they have the right to make the change. The thing that I disagree with is the timing. It's kind of like, I don't know, Scott, if you saw the news, but you've heard about the paycheck protection program. We've talked about that a little bit. It was supposed to be for small businesses, Ruth's Chris steakhouse, which is not a small business, got a couple of million dollars out of it. Wow.

Speaker 2: 12:03 Right. And their stock yesterday took a beating because of it. And I think it should, right? It's not about whether or not you should do something. It's, it's about the, the way that it looks, right? Like it just looks really bad to do it right now and you're going to make a lot of people really mad. It's the, I'm trying to think of what the word is that they use. It's like the only word they ever say on cable news, right? The optics optics, that's the word, the optics of the situation bat. It's kind of like a, it's kind of a slap in the face from Amazon right now. Outside of that, I would have zero issue with it. You were just talking about something and you and I were talking the other day, I, somebody had listened to one of our YouTube live videos about what to do kind of in this situation and, and they asked me to give a little speech to a group here and one of the things that we were talking about was what I call the 30% rule, right?

Speaker 2: 12:54 If anything in your business is over 30% of what it is, right? So if, if you're making $100 and $31 of that is coming from the Amazon associates program, that's a point of failure. If you have organic traffic coming to your website and 30% of it is coming from one article, that's a point of failure in your business, right? And so just kind of as a general rule of thumb, every area of your business, if any single thing is more than 30% you need to take a look at that and address that. And that was just something I wanted to bring up in general, cause you were talking about that, right? If your traffic is 30% from one source or more, we need to try to diversify that. If our sales are more than 30% from one channel, we need to try to, to diversify that.

Speaker 2: 13:38 If 30% of our sales are coming from one product, we need to try to diversify that. Right? And eCommerce businesses, we have a lot of times what you, you've referred to as a hero product, right? It's selling 70% of all of our revenue. Right. That's great. But we need to try to diversify where the revenue is coming from because if that goes away, we're going to be in trouble tomorrow. Yup. All right. So okay, so anybody listening right now? Well I want you to be doing in this time of crisis anyway, like we've done an episode on this, right? So this is another part of that, right? Where it's just another thing, another, you know, another bucket or I'm sorry, another, let's call it, uh, uh, you have your bucket in your business, you're pouring water into it. This is another hole in the bucket.

Speaker 2: 14:21 So we need to fill that or we need to fix it. And this is a great way for you to do a little self audit on your business and do that 30% little, uh, you know, test there is your, is your business 30% dependent or getting more than 30% on this one channel? If it is, and you need to fix that and diversify against that. So again, I look at this as a time of opportunity, not a time of like, Oh my gosh, like the sky is falling. What are we going to do? Yes, there's, there's a little bit of time for that, but it also is about, okay, can we do now what's the question that you should be asking yourself? What is the hole that you need to work on and fix? Not the next shiny object. Like, Oh, we can do messenger bots, we can get more sales that way.

Speaker 2: 15:02 Well wait a minute here, that's great. Is that going to help you versus you taking that and then driving more sales over to Amazon? Maybe not. Maybe it's going to be now driving that over to build your email list and then from there getting people over to your blog that you can start monetizing through. You know, maybe your content that's not affiliate, uh, you know, offer whatever. But what I'm, I guess trying to have you guys do is take this as a time to look at your business and go, is my business dependent on one channel, on one product, on the Amazon associates program or Etsy or whatever? If it is, now's the time to address it. And so Chris, let's go through like now let's say that you're in this situation or if you're about to start building out your brand like we have, we have a members in brand creators Academy that had started building out their brands, their websites, they're starting to get some traffic so they haven't committed all in on affiliate stuff.

Speaker 2: 15:54 And we don't recommend that they do. What would you say to someone right now, Chris, what other opportunities or what should we be doing moving forward versus just focusing on those products? And should we not keep recommending products on Amazon? Like, uh, as an, as an affiliate? Well, the, the beautiful part of kind of affiliate marketing, Scott and using that as an additional strategy to monetize your business is that it is fairly passive, right? So like would you rather take 1% of whatever it is, right? About a hundred. Would you rather get paid a dollar every day to not have to do anything? Right? Or would you rather get paid $0 million? Right? Like obviously I'd rather have the three or $8, but if I can't get that and I can still get the dollar, I'm still going to get the dollar right. It's a dollar more than I had otherwise.

Speaker 2: 16:45 Um, so that's kind of a thing. Like there's no reason anybody should turn off Amazon associates. What I would do is supplement it, right? And so what I would take a look at, and if you're, if you're doing this intelligently, you can see inside of your Amazon associates reporting your top products, um, that you've been styling, right? The top things that have been recommended. And I would take a look at that report, see what's making up the majority of your revenue, cause chances are it's a handful of them, three or four things and then go out and see if other people have better affiliate programs for those. Like I think somebody in brand creators Academy mentioned that that target.com is still selling, you know, is still getting a percent commissions in most of those categories. Okay. Is anybody in the U S really going to object to buying something on target versus Amazon?

Speaker 2: 17:34 Probably not. I mean there might be because you're still going to get two day shipping or you can get pickup in store through target. So yes, you might see a little bit of a dip there, but 8% versus 1% I'm okay with, you know, a few less people buying through what I like to do that. But beyond the physical product stuff, we need to take a look at the other ways to monetize, right? We shouldn't be dependent just on the affiliate programs and we need to think about that stuff anyway. So I would take a look at the other affiliate programs. That makes sense. Right? Think of any major retailer that would sell sports and outdoor stuff. I don't know. And I'm going to look as soon as I stop talking here, maybe Academy sports and outdoors hasn't, maybe Dick's, I'm sure Dick's sporting goods hasn't filled.

Speaker 2: 18:19 Right? So if we're in the sports and outdoors category for selling the kayak, bass fishing stuff, there's a hundred other places that we can go. We can also go direct to the manufacturer and a lot of times they will have an affiliate program through something like sheriff Sandler commission junction or, or one of those larger platforms. Um, and so I would take a look at just diversifying where we're sending that traffic and if we can get a higher commission out of it, we get a higher commission out of it. If we can't, you just leave the link. Right? Cause I'd rather take the dollar than nothing. Does that make sense? Yeah it does. And I would say if you're not using like any type of plugin or anything like that, uh, because they do have some pretty nice plugins that you can, you can put on your site that will convert a link and make it, you know, basically look like an Amazon type, you know, link and page and all of that stuff.

Speaker 2: 19:06 But if you're not using something like that and you're just using hopefully a pretty link, then it's just a matter of you then just going in the back end of your pretty link and then changing that. And then all of your links that you've ever mentioned that bought that bass, kayak boat or whatever kayak, it wouldn't be a boat. It's a boat, but it's a kayak. Right. Whatever, whatever. I'm trying to say. You get what I'm trying to say. So basically you would just switch that out and it would go to that product now, but maybe where ever else, you know you're selling that could be target. Right. And then that would be something that I would set up from the beginning. Unless you're using some type of plugin that is specific to an Amazon associate's program. Um, the other thing is, is I would start looking at your market to see if you can create or use other people's and sell other people, promote other people's digital products.

Speaker 2: 20:00 Like, yes, you're, if you sell someone else's digital product, you're going to get a lot more commissioned. By the way, generally it's like 40 to 75%, somewhere in that range. Go to ClickBank, search your, search your market and see if there's anything there that people are selling, uh, to, uh, you know, to your market and then you can become an affiliate for that. The other thing is you can actually create your own digital product yourself, whether it's you or have someone else do it for you. Maybe it's a, maybe it's an ebook, maybe it's a video course, you know, so there's a lot of opportunity there that people don't consider. And then you would be in control of that entire product. You're not waiting for a supplier, you're not waiting to see if, you know, target changes their program now. Right. But would that be, and said you can you have a mix of [inaudible] you know, a different affiliate programs, I think you'll be okay as long as you're not dependent on that one.

Speaker 2: 20:56 One thing that we did actually, we were looking, I was actually doing a hot seat session and uh, we found just by looking at our competitor in that space that was also talking about this certain market, we seen that they were sending everyone over to this, this website that sold all of this stuff will just happens that they were an affiliate for this program and they paid 20% commission on all their hard goods, all their physical products. So I would rather go there and get 20% commission off of a company that is really specifically making products for my market. Like why wouldn't I do that and I'm going to make more. And it's just more aligned. So yes, your conversions might be less if it's not on Amazon, we all know that, but how much less, right? So I would start looking for those independent ones like you said, Chris or the manufacturer or even just for that, that location for that store like Dick's or target or uh, you know, best buy or whatever.

Speaker 2: 21:54 Right? Like so any of those, they may have their own program that you could send traffic to using their affiliate program. So it's just something to think about. Anything else Chris you want to add to that? No, I think, I think the biggest lesson here, Scott, it just comes back to, it's just, this is kind of just another reminder about diversification in business, right? And it's something that this whole situation, right? The whole virus thing, everything that's going on right now has been one kind of long reminder and everybody's been yelling about the sky falling for businesses. And this was kind of something that hit close to home for us and for our community because a lot of us are involved in the Amazon associates program. But it all comes back to that dependency thing that you and I have been talking about. Yup. What are the things that we can do to shore up our business?

Speaker 2: 22:39 We shouldn't be doing these things anytime, right? Like this is just good business. Anybody can run a business when the economy is booming, right? Everybody's buying stuff and it's super simple, right? And if we're doing this stuff at that point, we're a million light years ahead of everybody else, but this should serve as a reminder to us and to everybody that we need to be doing this stuff all along the way. And it's kind of like a cold, hard truth. Um, that got dropped on us, right? Like don't be dependent on a single channel for anything for any reason. And you know, it's not the end of the world for anybody. I do feel bad for anybody who's like in the middle of a website. So right now if they were, especially if they were monetized mostly with the Amazon associates program because their values just took a hit, but we can very quickly replace that revenue with other sources.

Speaker 2: 23:25 And that's kind of one of the nice things about controlling the traffic, right? If you're using the Amazon associates program, the nice thing is it's not like your product got kicked off of Amazon and they have all of your inventory sitting in the warehouse. You can just change where those links point and still make money. And that's the beauty of controlling the traffic. So that, that was kind of the big takeaway for me was controlling traffic like you and I have been talking about is the solution to all of these problems. And, and being able to point that firehose wherever is, is kind of the solution too.

Speaker 1: 23:56 Anything that happens in business quite honestly. Yeah. Yeah. No, I, I agree. I think it comes down to, like we had said before, having the traffic, controlling the traffic, um, but then also being smart with diversification. And that goes for either your own physical products that goes for affiliate products that goes for ad networks like AdThrive media, vine, IE, Zohak, whichever one you're using because you're going to, you're going to notice this and we've already noticed this, like some of our ad networks are, are paying less right now. Why? Because we're going through this crisis and there's advertisers pulling back. Luckily it's not all that bad. It's still pretty good. So because let's say that the product sales dropped a little bit on Amazon because you know, everything dropped because you couldn't ship stuff in, you couldn't ship stuff out. Right. But we still had a decent revenue coming in from the ad networks that are displaying on the website.

Speaker 1: 24:47 Right. We had some, uh, we had some eBooks that were still being sold, right, because we're able to still keep producing that. Yes, we had Amazon associates sales still coming in, even though they're less still coming in. So things, it's just well-rounded. It's not like one thing that is everything. If we were dependent on just the product side, yes, we would have been upset and it would've taken a harder hit. Did it still suck? Yes. Is at the end of the world. No. Um, but again, we're, we're learning from this just by going through it along with everyone else. Um, but what it is, it's really solidifying that what we're talking about and what we're teaching now moving forward is 100% right. And it to us anyway, like this is our thing. Like you could argue it and say, well, we just want to go after these one hit wonder products and just keep rolling them things out and just keep, you know, that's fine. If that's your business model, it's not ours. It's not something I wouldn't be able to lie awake at night or I'd be lying awake at night worrying about that. I wouldn't be able to sleep. I'm sorry Chris, any last, uh, little bits here before we wrap up this episode?

Speaker 2: 25:50 No, I think, I think that was it. Take a look if you, if you are a part of the Amazon associates program, take a look, make sure that you have, you know, the knowledge about what's going on. They do have a chart, uh, inside of the associates dashboard. If you log in and they'll show you what all the changes were and then take a look at that report, um, of your sales. And I would take, take it back maybe 90 days at, at a minimum, maybe over the last six months, see what those top sellers were and then see if there's alternatives, if your commissions dropped inside of those categories and then go from there.

Speaker 1: 26:22 Yeah, no, I, I, I like it. Um, it's, it's something that is, uh, unfortunate that it happened, but it happened and now we've got to deal with it, right? And then you got to ask yourself the question, what do I do about it? Like, and if this affected my business that much, what do I need to do about it moving forward? And, uh, and from there it will make you grow, I promise you that. All right, Chris, that's gonna wrap up this episode. Guys. If you want help figuring out really about your market and how to diversify traffic monetization, all of that stuff, I would recommend that you head over to brand creators.com. Grab our brand growth validation checklist there. It will open your eyes to the opportunities that you are maybe missing or ones that you should be doubling down on. So definitely make sure that you check out that@brandcreators.com all right guys, this was episode eight 22 so you can find the show notes by heading over to the amazing seller.com forward slash eight 22 and until next time, Chris is going to help me wrap this up. Chris, you ready with delay apps? Solutely okay, let's try this on the count of three guys. Remember I'm here for you. I believe in you and I am rooting for you, but you have to. You have to. Come on, say it with me. Say it loud. Say it proud. Chris is going to say on the count of three, one, two, three take, take action, action. And it was delayed. All right guys. Have an awesome, amazing day and I'll see you right back here on the next episode. Now go get them.