A friend just sent me an email notification from one of the affiliate programs she promotes that said the retailer was temporarily dropping their affiliate commission rate to 1%.
Obviously concerned that this could be a growing trend that other retailers (like Amazon and Walmart) might follow she asked me for my thoughts.
I'm no fortune-teller so I could be seriously wrong in why I think this particular retailer made this decision and what it means to affiliate marketers but I'm going to throw it out there anyway in case you, too, have seen the same kinds of notifications and are similarly worried.
Retailers pay affiliates to help them make more sales. A retailer might reduce commissions when 1) they don't need help making sales or 2) can't afford to pay people to help them make sales.
A retailer only has to pay an affiliate a commission when a sale is made so it's not like they're paying people for nothing.
They get something in exchange and - they hope - it's a sale they wouldn't have made otherwise so most affiliate sales should be a plus to a retailer's bottom line. (Otherwise, why even run an affiliate program?)
That makes me think that the particular retailer who sent this notification is either seeing so many direct sales lately as a result of everyone being home and online that 1) they don't need help making sales OR 2) they don't need to pay affiliates as much as they were.
(I thought about the possibility that they're simply unable to fulfill orders or get product into their warehouse but you wouldn't cut your affiliate commissions because of that - each sale would still have delivered to your bottom line.)
Considering this retailer has lots of brick and mortar stores it means they have some fixed costs they have to cover while those stores are closed and they are now losing money.
They still have to pay rent/mortgage/utilities/insurance on those properties. Those are huge expenses when you're not able to make any money at all from those physical locations.
That makes me think this retailer is being forced to trim their expenses any way they can in order to pay their fixed costs.
A statement this retailer included in their email notification rather supports my theory. It said: You will be returned to your original commission rates once stores
reopen.
Which means, too, that Amazon probably wouldn't do the same thing for the same reason.
I do, though, think it could become a trend for those places that have a heavy reliance on brick and mortar stores and have had to shutter their stores during this pandemic.
Too, the type of product may play a big role in what happens with affiliate commission rates.
Obviously current conditions are going to drive a shift in what consumers are buying online. Retailers may change commission rates to reflect those changes.
Niches that are doing well right now include:
- Office equipment (as more people are working from home)
- Indoor fitness equipment (I read yoga mats are in high demand!)
- Online education related products (including text books)
- Entertainment (puzzles, games, movies, books)
- Hobby related materials (yarn, fabric, art supplies)
- Home security (will crime rates increase as a result of the shelter-in-place situation?)
- Home automation - particularly if it helps reduce expenses (like smart thermostats)
- Health (think water filtration)
Bloggers and affiliates must think like their target audience to be successful.
Right now, your target audience is thinking differently than they were two or three months ago.
Right now they're thinking things like:
- How do I pay my mortgage/rent while I'm out of work?
- How do I keep the kids entertained while they're stuck at home?
- How do I keep myself entertained while I'm stuck at home?
- What can I do with my time that would be more productive?
- How do I make my home office more organized and efficient?
- How do I keep my life as normal as possible with less money and without leaving the house?
- How do I reduce my outgoing expenses?
- How do I stay healthy when I'm stuck at home?
- How do I keep my house as germ-free as possible?
- How do I stay in touch with loved ones that I can't visit right now?
- How do I make staying home seem like the vacation trip I was supposed to take but now can't?
- What can I do to help the global crisis?
- What can I do to help my community?
- What can I do to help my family?
Think about what content you can create for YOUR NICHE that addresses the above questions and you could see an increase in sales.
Thanks!
Sincerely,
Erica Stone
erica@extremereviewer.com
