Amazon is apathetic to affiliates and if it does not change its attitude there is every chance it will join the list of failed giants.
Amazon was built by affiliate marketing
Way back in 1995, Amazon was launched as an online sales channel offering cheap prices and great delivery. The initial concentration was the sale of books and up to 50 other products.
Jeff Bezos said at the time it was an easy model to follow however few believed it could ever make money. That remained correct through to 2001 when it finally went into the blue line.
The affiliate model allowed any marketer to promote Amazon products and be paid a commission on the sale. There were few restrictions to entry although you were dismissed if you were not making sales within three months.
Over the years conditions for affiliates slowly deteriorated with strict rules and lower commissions.
The commissions hit ahead in March 2020 when they were generally halved making it unlikely anyone can make a reasonable return on the investment.
Amazon and others
It would appear that Amazon’s attitude to affiliates extended to the opposition players as well.
They had lawsuits with Walmart, Barnes, and Noble, and Toys R Us among others as they rode over the top of anyone that got in the way.
Now turning over in excess of $258 billion a year you would think them an outstanding success, but are they?
Amazon has never paid a dividend on shares relying on share price growth to keep the buyers happy. On this fact, I was very surprised to see that Warren Buffet had purchased a small percentage of the company (537,300 shares in 2019). Warren usually wants a return.
First of all, let’s look at the main nemesis of Amazon. The hugely active Walmart.
They paid out $258 billion to shareholders last year but importantly was neglected by Buffet a shareholder since 2015 Buffet sold his holding in Walmart to buy Amazon instead. (Walmart’s share price grew after this)
Market competition to Amazon
Way back in 1995 online sales were a thing out of a space book. Amazon grabbed the market and grew it into a monolith that to this day dominates a storeless community. Yes, Walmart has a higher turnover with revenues last year of $524 billion out of retail stores, online, and affiliates.
Interestingly Walmart cut Affiliate commissions at around the same time as Amazon. A sour taste was left in the mouths of all affiliates trying to make a dollar
Market changes by others
Online sales have grown so fast over the past few years that it is now a product used by most retailers across the world.
The recent closure of a large Australian retail company saw 6000 employees put off only to return 2000 of them days later to handle the online sales that went up by 800%.
Over Easter, cosmetic sales increased by a massive 7000% in one day highlighting the consumer’s change to convenience. ( Myers Australia)
The figures for Amazon online are falling
It is reported that Amazon online sales may have come off and that a 47% prediction is now 37% and that resellers account for 58% of that figure.
According to reports in The Information, eMarketer has lowered its 2019 estimate for Amazon’s share of U.S. online sales to 37.7 percent from its previous estimate of 47 percent. That new figure, according to eMarketer, was derived from “new guidance” from data in Amazon CEO Jeff Bezos’ annual shareholder letter.
Now to be truthful this may be understated by Amazon because of antitrust fears among the mighty. However, reseller sales including affiliates still account for a whole bundle of business.
This is a business that may move.
Amazon is apathetic to affiliates who know your way out.
What can affiliates do about Amazon?
My first answer is to wait out the time until COVID-19 has passed and make a rational decision in the new year. Yes margins are so low it is not worthwhile but a sales increase may turn things around.
Next, if you are considering becoming an Amazon affiliate I would give it a miss and find something else to do.
Finally, I would vote with my feet and find a new world opportunity that really appreciates my effort. Tell Wall-Mart and Amazon you are moving on and to place their business somewhere else.
Will Amazon fail?
Many businesses that failed to read the market left the space.
- Borders books
- Pan Am
- Toys r us
International companies imploded while sitting on their hands and I see more in the future.
Amazon is diversified so I am not predicting, just commenting at this stage
Everyone is now online
The local grocery shop does home deliveries, the clothing shops are online, medication is sent by mail, and meals arrive at the door. The list is now so long that it must worry the big dogs.
Covid19 has made online a necessity not a luxury.
The pricing model has changed
In the early days, Amazon took a discount position. Above all, the competition was not too worried because the loss of sales was minimal.
This attitude gradually changed and now small retail often holds a price advantage.
Furthermore, people now shop the market for the best value, it might be on eBay or the local hardware store so sales are going away from the mighty.
“Amazon’s retail business competes in the worldwide market for retail sales,” the Amazon spokesperson said. “Our competitors include all the other online and brick-and-mortar stores that people shop at every day.”
And as quoted by Jeff Bezos
“Third-party sellers are kicking our first-party butt. Badly,” he wrote.
They make no money, pay no dividends, shaft the sales force, and fight with the competitors. tangle with the law and lose their market share every day. Not a great BIO.
Amazon is apathetic to affiliates so what are the alternatives
You will start looking elsewhere for new opportunities.
When you want to find a new supply outlet simply go to Google type in a product, leave a space then type in affiliate and you will have a whole range of sources.
Are there better ways to make money?
|Blogging||Income as an affiliate and |
|Email marketing||Do it for yourself and others|
|Social media||Sell your skills|
|Making videos||Learn the simple art|
|Training||Set up a training course|
|Websites, SEO||Do extra training to move up a level|
Just a few small ideas that you may consider along the way.
Have a look at Wealthy Affiliate the home of affiliate marketing and training.
Wealthy Affiliate is an affiliate opportunity from day one even on a free site. You have access to a bundle of training and a support forum that can assist you with any problems.
Recurring income is the best game in town and they will teach you how.
No credit card is required, no contracts and no upsell. Start a new career by clicking on the script.
You will believe that companies like Amazon will face many problems in the year to come.
Your benefit is that other opportunities will take over the space providing superior returns on the input provided by you.
This is a great time for affiliates, however, many will be challenged in the transition to a new market.
“Think it, believe it and watch it happen.”Napoleon Hill. Think and grow rich