Amazon Commission Rate Change. The Impact on Project Go White Hat, Pt 7

This is how I found out about the change in the Amazon Commission Structure.

We didn’t know the exact change until the last week of February, but we knew it was going to be a negative thing.

In February 2017, Rob pinged me on Skype and told me that Amazon scheduled a phone meeting with him.

It was about the change in the commission structure and it would go live on March 1, 2017.

We didn’t know the exact change until the last week of February, but we knew it was going to be a negative thing.

I could have posted something about it then but it would have just been speculation and not helpful.

In fact, most all of the information that was available at the time was through Facebook groups – hardly a reliable source of information.

I wrote a post here about the changes and felt it was a powerful blog post. I thought that because a lot of the people I talk to make good money, like a lot of money, from Amazon Affiliate Niche Sites.

However, I quickly realized it was like complaining about the Self-Driving functionality on Tesla’s – no one wants to hear that noise – It sounds entitled. Just be happy you have a Tesla.

So, I got off my soapbox.

Personally, I wasn’t too upset about it since it’s a great business decision for Amazon, and it’s their decision to make. I’m at their disposal.

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The Impact

It’s bad.

Revenue is down by 36%.

Here is how we did the analysis:

  • Took all the sales data from the Amazon Associates reporting area.
  • Be sure to group the data by the Category.
  • There are a bunch of categories so we just looked at the ones with the majority of the sales to save a bit of time. To be really specific, we applied the 80/20 rule again and looked at about 10 categories.
  • We applied the new commission payments for the categories.
  • Then, we had the amount we would have made in 2016.
  • Last, compare the actual revenue from commissions to the new commission rates.

We also looked at the data for 2017 and got same result of a 35% reduction.

As an aside, I can tell you that most, but not all, people that I talked to experienced a 34% to 48% drop in revenue. However, it totally depends on the niche.

For example, my friend Will Blears (from One Man’s Brand) experienced just a 10% reduction, and actually refocused to increase the earnings by finding other affiliate programs. The takeaway is he’s in a niche that didn’t get reduced as much and apparently has several great affiliate programs.

What’s Next?

Well, at this point, things have changed. Project Go White Hat moved from hoping to increase the revenue by 50% as a long-term stretch goal to achieving a 300% increase within four months.

In December 2016, the site made $32,767 and reset our expectations, triggering a bigger goal:

Sell the site for over $500,000.

Some questions to ponder:

  • Is selling the site for $500,000 even possible anymore?
  • What would it take for us to sell the site for that much?
  • Can we increase the earnings to at least $16,500 per month to command the $500k price tag?
  • How long do we want to spend on the project?
  • Were we dumb to think we could sell the site for $500,000?

Rob and I set up time to talk about this massive hit to the revenue.

I’ll tell you all about it in the next update – Part 8.

What do YOU think??

Leave a comment and let me know what you think about:

  • The possibility of selling the site for $500,000.
  • If Rob and I are fools for trying this crazy project. (Feel like I’m opening up a can of worms here…)
  • What would you do?

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1 comment… add one
  • I still think it’s possible you guys are still almost there. And I would just keep at since you are so close to the goal.

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