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Amazon Cuts Commission Rates for Advertising Affiliates

By Donna Fuscaldo - Apr 15, 2020 at 11:34AM

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Known as Amazon Associates, the program is a big source of revenue for partners including publishers.

Amazon (AMZN 3.53%) is reducing the commissions it pays affiliates who advertise and link to the eCommerce giant's products on their websites. 

The program, known as Amazon Associates, has been in place for years and is a meaningful source of revenue for affiliates, including publishers. 

Computer, tablet, and smartphone with ads on the screens.

IMAGE SOURCE: GETTY IMAGES.

In a memo obtained by CNBC, Amazon said it's reducing the commission rates starting April 21. A spokesperson for the tech giant wouldn't say if the move was driven by the COVID-19 pandemic. 

According to the memo, commission rates for several affiliate product categories are getting reduced significantly. For example rates for furniture and home improvement products have been cut to 3% from 8% while grocery product commission rates fell to 1% from 5%. The commission on ads for headphones, beauty products, musical instruments, and business and industrial supplies got reduced to 3% from 6%. 

The commission reductions are a significant blow to some Amazon affiliates who rely on commissions as a main portion of their income. Websites like BuzzFeed publish buy lists that drive readers to Amazon products in return for a cut of those sales. The cuts apply to U.S. affiliates, the Amazon spokesperson said, noting it regularly evaluates its programs and that changing commission rates is a standard industrywide practice. 

The move to reduce the percentage affiliates get for Amazon product sales comes just days after the eCommerce giant began accepting shipments of non-essential items from third-party sellers who make up more than 50% of its revenue. Amazon had been prioritizing essential orders needed amid the pandemic but will now accept products outside of that in its warehouses in the U.S.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Donna Fuscaldo has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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