The danger comes if you are not aware of the risks inherent in your own income. Sometimes it does make sense to let your income have some instability in it, and let someone else control it -- maybe it is a case like mine where it is small enough to not matter. Or maybe it is large enough that it is worth the risk. Just don't let yourself get in a situation where it is large enough that you are living on it, but not so large that the risks are acceptable. Because that is when changes like this will bite you.
I tried doing some FBA, but it felt super scammy. Research products that people are buying then just work the pay per click, give some products away for review, and try to "out manipulate" your competition. It is going to end badly for a lot of them. China is learning how to beat them at their own game. The guys that run seminars on this stuff... uggh... nuff said.
I'm surprised that you felt that selling things via FBA is scammy. I have a full-time job but I also own a business that (currently) grosses about $150K on Amazon. I can honestly say that I don't feel like we've out-manipulated anyone or have done anything but create a very competitive product that we're able to sell at a competitive price.
I agree that it quickly turns into a very painful race to the bottom when dozens of vendors are selling variations of the thing (e.g. silicone grill gloves or meat claws), but it's completely different when you're able to take the time to create a really great product. It's been a rewarding experience; I highly recommend it to anyone who doesn't mind answering the occasional support email and is completely committed to excellent customer service.
As for some being "scammy" - yeah sure, there's definitely a bit of people looking to make a quick buck on whatever they can at FBA. Every market has that. But the people I've seen have the most success on FBA do just what you mentioned
- listen to the customer via reviews
- improve value via product fixes, bundling, packaging, etc.
- provide good feedback & service
That said - I don't know how anyone selling commodity, off-brand stuff does it. I could see that being a huge race to the bottom as stated. The only people I know doing FBA stuff are going the private label route to avoid competing solely on price.
My brother actually makes a full-time living off of FBA now via private label goods. He really enjoys being his own boss and providing a BETTER product than what was available before.
I sold my first FBA product, not a huge success, but validated the business model is real if you work at it. FYI - I've started compiling info for small-scale eCommerce sellers at http://www.privatelabelweekly.com for any sellers interested.
People will tell you what they want in the reviews. The hard part is figuring out a way to fix it for a price they are willing to pay. Price wins on Amazon every time, unfortunately, so you have to be prepared to sell for less or equal to the competition while at the same time having a superior product. We sell a product for around $20 when the competitor is priced around $18. Our product is 4.9 out of 5 stars with ~400 reviews while the competitor has significantly more reviews but only around 4.5 stars. It's obvious to customers that they're paying a slight premium for a better product when they purchase from us, so we're able to compete. That being said, there's one direct competitor that sells a 3.8-star product for $12 that outsells us 4:1, showing once again that price wins on Amazon's platform.
If you have a superior product, the rest will take care of itself. The marketplace may change and the market may change, but if you have a great product and you offer amazing customer service you'll be fine.
Of course, I'm glossing over tons of details here, but that's the gist of it. You're welcome to ask questions here or follow up with a PM. I'll be glad to help in any way I can.
A logical solution would be to have their ranked search cherry pick the highest (number and score) reviewed results for focus within a given price category.
However I normally hate their ranked search since it's results normally don't seem relevant to my needs. Thus I tend to manually do that by sorting by price and then eye-ball filtering for quality/look in picture (yeah, I used that as a quick filter for poor quality).
It would be nice if I could instead directly assign weights to different type of metrics and have Amazon present the list according to my score based on perceived importance. They could use the data from that and actual buying outcomes to tune their default filter (that one might better balance high scores on multiple metrics being sorted to the top of the list).
That's almost certainly a hard business to make money on - if you're doing common off-the-shelf items of any value, Amazon can simply add those themselves, and they're probably getting a better price on them with bulk purchases than anyone doing FBA can get. If it's direct sales of items you produce yourself then there are drawbacks if your items don't sell (high charges to ship them back to you apparently mean a lot of them end up being destroyed) or if you get targeted by scammers (e.g. NPR's Planet Money #724 "Cat Scam", IIRC the "scam" part comes in with returns).
 http://www.npr.org/sections/money/2016/09/14/493810206/episo... and the Entrepreneur article it's based on https://www.entrepreneur.com/article/278622 in which people sell on eBay for 5-15% above the Amazon price, then simply order through Amazon and send as a gift. Returns go to Amazon and cost everyone except the drop shipper money.
>That's almost certainly a hard business to make money on - if you're doing common off-the-shelf items of any value, Amazon can simply add those themselves, and they're probably getting a better price on them with bulk purchases than anyone doing FBA can get.
But Amazon does not really want to get into all product categories. Much of what many of us buy from Amazon is FBA, where Amazon themselves are not selling it. People who do not know FBA often do not realize they are not buying it from Amazon.
Regarding the Cat Scam: I completely disagree that it is a scam. In fact, the Planet Money journalist himself implied he felt it was a legitimate business: The people were providing value, and were making the FBA person's sales go up. He hurt himself by pulling the product from Amazon.
There is a reason Amazon allows drop shipping. It brings everyone money. Amazon, the FBA seller, eBay and the eBay seller. People try to paint it as exploiting unwary consumers, but that's true any time you have a price difference between retailers.
Effectively, the drop shipper provided the FBA seller access to another market (eBay), with a higher return rate. It was a net profit, not a net loss.
It may just be that for this one person it was reducing his profits, but in general, this strategy increases revenue, not decreases it.
The thing that most people don't realize is that Amazon is moving away from selling everything itself. As stated by Ben Thompson in his excellent
"Stratechery" blog (paywall):
> "...I wrote about the ongoing transformation in Amazon’s e-commerce business: while Amazon was originally a traditional retailer that bought products from manufacturers and wholesalers and then sold them on to customers, the company has been shifting to a marketplace model, wherein 3rd-party retailers sell to users on Amazon’s site through a program called Fulfillment by Amazon."
For some direct proof, check out the highlights from the 2016 Q4 earnings report:
- Sellers on Amazon’s marketplace accounted for 49% (!!!) of units sold during the fourth quarter
- Fulfillment by Amazon delivered more than 2 billion items on behalf of sellers in 2016 and the number of active FBA sellers increased by 70 percent.
In short, Amazon is in a good spot by creating the marketplace. They own the audience. Sellers on FBA "borrow" that audience & Amazon logistics in return for storage and sales fees. No need for Amazon to sell everything. FBA sellers do that for them.
FYI for any online sellers out there: if interested, I curate an eCommerce newsletter for the small-scale seller covering Shopify, FBA etc. at http://www.privatelabelweekly.com
This is a 2 sided story. Yes Amazon is moving away from selling stuff itself - but they are building a platform that would make it easy and more affordable for manufacturers to sell directly to customers, and most of the jobs FBA entrepreneurs do today won't require expensive entrepreneurs to do.
Logistics:Amazon is working on an end-2-end logistic solution, from china to the US, fit for small and medium manufacturers.
Financing:Amazon, using their sales data etc, will offer credit to manufacturers, similar to a service done by alibaba today.
Marketing:Amazon has the customers, the software skills, and can build labor platforms that easily enable chinese manufacturers to hire more affordable marketers(cheaper than entrepreneurs), maybe similar to affiliates in skills and investment .
Product improvement:more than anything, it's a decision by manufacturers/entrepreneurs, the tools/data are already there. Also Amazon could build platforms for manufacturers to gauge demand and value of new features more easily, maybe similar to kickstarter
Returns and warranties: Fedex bought a company that does that(as a service) pretty well a few years ago, So Amazon will probably copy or outsource.
Sure, it will take some time, but i think FBA entrepreneurship is mostly a temporary thing.
Manufacturers really don't want to be sellers in most categories. As a manufacturer, you want to be paid just as soon as you produce the product because you want to reduce your working capital. So you sell to retailers and distributors on say 15 days or 30 days terms and get paid with certainity. In fact for a manufacturer, the "customer" is a distributor or retailer - end users aee called "consumer".
Retailers and distributors take on the risk of locking in their money into inventory until the product gets sold to final customers.
And if that all allows some manufacturers to offer cheaper prices, other manufacturers will have to do the same.
If you're a small manufacturer with an unknown brand, you may still be forced to go this route to sell your products.
If you're a hundred million dollar brand with consumer demand, you typically don't need to bother being a seller yourself as well and can easily pass on the risk to a distributor or retailer and turn around your cash faster.
Branding often trumps pricing. Most products in the world are not purchased with detailed price/features comparison analyses (soap, cola, food) because our minds would get exhausted making so many choices.
But branding - sure if you have $100M to advertise your product, you have branding power in the classic sense(cola/soap). But branding on the Amazon platform is of a much weaker form, more tied to reviews, and with a good product, it's not that hard to get those.
And the other case is of course of the $100M brand - he has the brand, not the reseller.
The thing is - sellers should be using this opportunity to build up a brand by borrowing Amazon's audience while they can. AND simultaneously building their own storefront. But I don't see many talking about that.
I do also agree with @sfifs below that many manufacturers don't want to be bothered with marketing and selling, no matter how easy Amazon makes it. They seem to want to stay in their core competency, which is understandable but probably short-sighted on their part.
Or am I missing something ?
- First, a lot of middlemen ALWAYS email the seller after placing an order, expecting the seller to omit any mention of the seller and how much the product cost on Amazon. Further, they request that the seller send a separate email with the tracking info for their orders. While this is probably find for random small sellers on Amazon, for larger ones like the one I was at, honoring all the middlemen's requests would cause HUGE shipping delays for all products, middleman or regular, just to deal with all the emails and special requests.
- Often they'll email again ("angrily", though it's just a canned response) if an item hasn't arrived 3 or so days after they placed the order. Even if the order was on a Friday night. And even if it's going from one side of the country to the other via the cheapest/slowest shipping method offered. So that's more needless emails to waste the seller's time.
- If there's an issue with the order, the middlemen often do not pass on details of the issue to the seller. Instead they just say (effectively) "There was an issue. I demand a full refund." Often issues can be resolved with exchanges or returns, but so many middlemen just demand full refund with no returns.
- Due to poor listings wherever the middlemen are relisting the Amazon products, the middlemen's customers often aren't aware of all the details of what they order. We'd regularly get things sent back and the complaint was "it's a used book" when that's exactly what was listed on Amazon.
- Some middlemen sellers are A-z Claim happy... Threatening to file a claim in their very first email to the seller, when they ask for no invoice or reference to the seller. We dealt with a few who would ask that you'd print out their own packing slip to send with the order and that you'd write their name on the return address of the package instead of your own.
- Often, middlemen include "(NO INVOICE)" somewhere in the shipping address, as a further instruction to seller to omit pricing info. Removing that part from a more automated shipping process (like larger stores use) adds processing time and increases possibility of mistakes. Plus Amazon requires that orders be shipped to the address provided, so I'm still not even sure if it breaks Amazon's policies or not to remove that from the address.
- We would frequently get confused or angry emails or phone calls from customers who bought something from a middleman seller who in turn bought it from us, because they'd see that our return address wasn't the middleman's name, or we'd include a packing slip (middlemen don't always ask for it to be omitted, and we wouldn't always comply if they did anyway) with our info and they'd see the price it really cost. That means more customer service time spent on that, and an upset end customer.
>First, a lot of middlemen ALWAYS email the seller after placing an order, expecting the seller to omit any mention of the seller and how much the product cost on Amazon
The order is fulfilled by Amazon, and the seller has no control over this. The middleman can email all he wants, but it's no use.
I don't think the middleman even has the ability to contact the seller easily. How exactly can they get the person's email address?
>Often they'll email again ("angrily", though it's just a canned response) if an item hasn't arrived 3 or so days after they placed the order.
Fulfilled by Amazon. The middleman is in entire control on the shipping. They want it faster? They should select faster shipping.
>If there's an issue with the order, the middlemen often do not pass on details of the issue to the seller. Instead they just say (effectively) "There was an issue. I demand a full refund." Often issues can be resolved with exchanges or returns, but so many middlemen just demand full refund with no returns.
This is Amazon policy for FBA. It is no different from you buying from Amazon or some other store and returning without an explanation. When you sell via FBA, you are required to accept this as a consequence. This has little to do with middlemen. I myself have had perfectly functioning items returned as defective, and I have no recourse.
>Due to poor listings wherever the middlemen are relisting the Amazon products, the middlemen's customers often aren't aware of all the details of what they order. We'd regularly get things sent back and the complaint was "it's a used book" when that's exactly what was listed on Amazon.
I too get pointless returns. As do almost all retailers out there. Why do you expect things to be different? As long as you sell via Amazon FBA, Amazon has a return policy you need to accept.
I could go on and on about your other bullets, but it is clear you are complaining about a different problem from the one in this thread. Most of these issues are non-issues with FBA. Customers will not get your contact info via FBA. Middlemen do not get it either. If a middlemen puts "No Invoice" on an FBA order, Amazon will deal with it (likely by literally shipping to that address).
Now getting to your case, where you are likely a business selling via Amazon, but not having them fulfill your orders, the larger thread is very relevant to you. If a big chunk of your business is dependent on Amazon's existence, you are vulnerable. It is hard for me to sympathize with you. At the end of the day, you list on Amazon because Amazon is creating value for you - despite all these annoyances. You are seeing all the annoyances of middlemen, but you likely do not know how much business they are generating for you.
1. For orders like (No Invoice), would it be beneficial for you to just cancel the order and not get the money (assuming Amazon gave you that option, with no repercussions to your Amazon rating)? If not, you are benefiting.
2. How can you tell which of your orders that go smoothly involve middlemen? If you cannot, you have no idea if it is benefiting you or not.
I'm well aware about the dangers of relying on Amazon sales. Sadly in the used book world it's almost impossible to break free of it. The store does list on many different online marketplaces, but no matter how diversified, the majority of the sales come from Amazon.
To answer your questions...
1. I'm not sure if it's be beneficial to cancel the order if it were repercussion-free (which it most certainly isn't and never will be). I haven't done an analysis of money made versus time wasted yet, since Amazon will never make it repercussion-free. I have a feeling that even if it's still _technically_ financially worth it to not cancel the middleman orders, it'd be very close to being not worth it.
2. Middlemen are usually _very_ easy to spot due to their ordering habits and addressing habits, at least if they've ordered from us more than once. It's possible that some of the only-ordered-once people are middlemen as well, but last I looked, only a small percentage of them were likely to be (based on shipping names not matching Amazon names).
I haven't really looked into middlemen sellers in FBA, since they never really bothered me much. Plus most of the stock that we send for FBA are things that don't move in store, and we've kind of given up on and are just trying to get a little bit of profit on. So we generally don't care about the FBA stock (beyond ensuring that any lingering stock is "disposed" before the 6/12 month fees hit if it's not selling).
Personally I'll be glad to see FBA and all the affiliate sites dry up as they negatively impacted the marketplace IMHO. Now that Amazon has the data they are going about cutting out the middlemen and leveraging their position to eat up the extra margin.
I don't think I'd sell through Amazon unless I had an exclusive product.
Other than cases of false advertising (likely unintentional here but still annoying) who goes to ebay before just buying the item from Amazon (maybe foreign buyers?). Nearly 100% of the time the shipping will be more expensive and the return policy worse, never mind the entire experience.
My mom and dad. This is not tongue in cheek, it is my personal experience. I see many older people that still buy from eBay. They are a bit uncomfortable with the web already, but they got into buying some things on eBay, now they are used to it and they don't want to "learn something new".
I think eBay is a declining platform, but that cow still has a lot of milk left in it.
I do, all the time. For one, the exact same products are often cheaper on eBay.
Second, it's much easier to discover the right items on eBay. Amazon search/sort/filter is absolutely terrible unless you're looking for a specific model or just want the best seller. It's a very fuzzy search, so you can't force an exact match on title.
eBay in contrast allows you to use booleans in the search terms, and makes it possible to filter by well structured category-specific data.
It's not so much people going to eBay then Amazon, it's people who go to eBay and never go anywhere else because it's obvious to everyone (in their mind) that eBay is of course going to be cheaper. They're buying through their preferred retailer, and their preferred retailer is eBay.
Amazon's competitive advantage is the marketplace which gets an unrivalled number of eyeballs and their warehousing amd logistics operations. They're perfectly happy to rent these out to other sellers rather than lock in money into inventory - unless profits are outrageously high.
I had a similar thought when I first heard about it, but then decided that I should give it a try as I am always dismissing things out of hands for believing that they are scams.
One year later I've quit my job (full stack developer), and sell full-time on Amazon and have never been happier. My current listings generate the majority of my income and require just a few hours a month to maintain.
For the rest of my time I do whatever I want.
It's not that things are inherently scammy, or unscammy. It's just things are or aren't easy based on your ability/work ethic, and the competition is or isn't steep based on how uninspired you are when competing.
The whole "cheap chinese knockoffs" thing is dismissive and frequently inaccurate. The great majority of things that people purchase from Walmart/Amazon/Target are manufactured in China, full stop. Some of it is cheap, yes, but no more or less than the ones by the "name brand" private labelers.
Enjoy your pink cloud while it lasts. And maybe keep your full stack skills current as a hobby. But be assured, there is a competitor somewhere willing to flip your product for $0.01 profit per unit.
The argument that people will always pay for the cheapest reasonable alternative would suggest that grocery stores would only sell the cheapest, generic brands. People will pay for quality and social proof, perceived or otherwise. Two identical products but one with (say) 500 genuinely earned reviews over time will always feel like a safer bet.
My expectation isn't that Amazon FBA will be my career for life. I expect it will be a viable income stream for a few years while I reinvest this time (and some of the earnings) into more stable industries (I have so much time to play with VR now) and develop an SaaS (including one in the Amazon space, go figure).
And should you complain, Amazon treats you like their bitch, this despite the fact that paying commission on every sale makes you a customer.
I'm not trying to dissuade you, or my mom, for that matter. Just sharing my experience as the HN ethic suggests I should. There's numerous strategies to deal with the Amazon cockroach problem, including staying one step ahead with better products. It's just it can get a little soul sucking...and best to know what to expect so you can prepare the best you can.
Awesome, I hope that works out.
I've been super concerned when I've seen friends buy products off Amazon for 2-4x the cost I find the same product on AliExpress for. It's ridiculously common to find identical hardware with a huge markup and a random logo stamped on it on Amazon.
Some of the stuff is total junk, other things are actually quite good - but you may as well just buy it from the source and not pay a middleman several times the cost.
What is really interesting is that a lot of things that appear identical on AliExpress are actually fairly different when you open them up. It's weird, because there is innovation going on, but they go out of their way to hide it.
What really bothers me is that Amazon allows people to sell things that are shipped from China without making it blatantly obvious it is coming from China. I'm not saying it's hidden, but I use Amazon because I want stuff in a few days. If I wanted to wait six weeks I'd order from Aliexpress.
I ordered 2x the batch of an item (which was low enough cost that even though I only needed a few it was worth paying for several more) from eBay once in order to try and decrease the risk of loss in transit and also because I figured that even if both batches turn up eventually, one would arrive before the other. Even though it was two separate sellers, it turned out that the originating address was the same and they did combined shipping of the order so I got all of them together and at the same time. Now I had ordered these items well in advance of the latest date at which I would require them but still, having them combined, I felt a bit... cheated. What has been your experience in this on Ali? Do you frequently get the items shipped together?
Occasionally I'll place an order that has a guaranteed delivery date in a timeframe I'm okay with, and the seller will extend the purchase protection outside of that timeframe. The other issues I've faced are that sellers will either substitute items for dissimilar items or not ship items at all if they are out of stock. I've never had a seller contest a package not received or package not as described though. I think they just figure they'll make a few dollars here or there on people who have forgotten to contest the order.
The other is the product is being sold through Amazon (often shipping from the US) and either unbranded or "re-branded" by a more... reputable entity.
In the second scenario, it is absolutely worth it to me to purchase from Amazon. I get my product faster (since it's shipping from the US) and I'm not stuck holding the bag if it turns out to be a dud.
A good friend of mine jumped into the "amazing opportunity" he was presented with. He paid them $5,000 for an FBA course. Long story short, he ends-up importing a bunch of kitchen crap from China, dropping tens of thousands of dollars.
As things progressed, many of the people on the same course did exactly the same. Very soon you had page after page on Amazon with poor bastards selling the same products from China under different brand names and packaging. I mean, exactly the same damn product.
Here's an example:
Funny as hell if it weren't so tragic because of how these folks are suffering. People are losing their asses on this stuff. They are killing each other paying incredible amounts for Amazon PPC advertising. Amazon is laughing all the way to the bank and these vendors are bleeding right and left selling the same products, from the same suppliers in China at minimal, if any, profit.
And then you have the Chinese suppliers who got wind of this and are doing two things:
First, they raise their prices. How stupid do you have to be as a supplier not to recognize something is going on when you get call after call from would-be entrepreneurs using exactly the same script to negotiate with you. These suppliers are nailing people for all they are worth.
Second, they are listing their own products on Amazon at the best possible prices because, well, they are the manufacturer!
And then, to make things even more interesting, people following these amazing formulas start importing stuff that runs right smack into intellectual property issues. So, the patent or trademark owner files with Amazon and the listings are suspended. The inventory now can't be sold and, to make matters worst, the vendor has to pay through their teeth to have it shipped out of Amazon. Ship it where? None of these people are real businesses with real warehouses and employees! So now they have a a few pallets full of crap they can't sell almost anywhere in their garage and living room. In some cases IP owners have gone as far as issuing C&D orders to these vendors.
The whole thing is absolutely surreal. Carnage is the first word that comes to mind when I think of the results. Sure, as always there are examples of folks who are just killing it because they got lucky, chose the right product or whatever. I'd say 95% of the folks who enter into these FBA "get rich quick, work from home, travel the world" schemes would have made more money if they took $5,000 and burned it.
As for my friend, some $35,000 later he quit and licked his wounds.
Not mentioned is the damage to consumers. These desperate, low capital, no-experience vendors are importing absolute crap from China. There are stores of phone chargers that go "poof" and other crap product issues right and left. And, if you dig deep enough, it will almost always land on some poor fucker who thought he or she was starting a business that would set them up for life.
Could be the scam of the century. The only people getting rich with consistency are those peddling the courses.
I pretty much consider any money-making pitch I get to be a scam by default, which saves me the trouble of looking it up.
Just having access to a lot of information does not produce an informed population, especially when there aren't really any controls on that information.
FBA is just a delivery/fulfillment mechanism. Nothing more, nothing less. You have inventory in an Amazon warehouse, they ship it out for you and take a cut. Nothing inherently scummy about that, they're providing a service maybe you don't want to deal with.
The seminars are different, where they're pitching a whole supply chain/way of business which has a last step of fulfilled by Amazon.
I think FBA is a pretty amazing thing that gives huge market access to small retailers, and it's a shame it's gotten caught up with these ponzi scheme seminar sellers.
Yeah, the seminars and what they teach are the problem. I know a guy who dropped well over $100K on seminars during a period of a couple of years. Horrible personal outcome.
It's a massive loss (~50%) for affiliates like Wirecutter that do mostly tech/electronics, and a huge boost for the luxury beauty category.
Current fees: https://web.archive.org/web/20170106214444im_/https://images...
For starters, your description of "a 94% loss in profit in the last year" seems to be a pretty clear mischaracterization: That number in the link you provided says the loss is in "net profit attributable to the newspaper publisher" in the third quarter alone. In addition, it seems like most of that is because of increased expenses, not horrifyingly reduced revenue -- the third paragraph points out overall revenue dropped by just over 1 percent. (Incidentally, if you exclude "restructuring-related costs," per-share earnings dropped about 33 percent, NOT 96 percent.)
Now that the Q4 numbers are out, we also have a pretty good picture of what their 2016 actually looked like:
* Total revenue down 2 percent.
* Overall operating profit down 34 percent. This is the one I think you were referencing, and yes, it's lower, but "94 percent" is off by a significant amount.
* Digital ad revenue up 6 percent.
* Digital subscribers up 47 percent, more than half of whom came in the fourth quarter.
* Digital subscription revenue up 17 percent.
So yes, at one point someone did write an article that mentioned a precipitous drop in one specific metric for a particular quarter -- but if you're interested in anything other than scoring cheap political points, the picture is way more complicated than that, and far less bleak.
For what it's worth, after the Times released the numbers you referenced, here's what their stock price has looked like: It was up 10 cents by the end of the week, and has gone up 38 percent since then. If the New York Times is failing, investors haven't noticed. If anything, they're actively disagreeing.
0 - http://www.dailymail.co.uk/news/article-3897406/New-York-Tim...
1 - https://www.wsj.com/articles/new-york-times-profit-slumps-pr...
2 - https://www.nytimes.com/2017/02/02/business/media/new-york-t...
3 - https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...
They're there now. They have critical mass. They're the first place organic search for new stuff.
There's no sense in throwing money after sales they'd already get. They're better off using it as discount to get sales they wouldn't.
Ultimately Amazon does what every company does in some form or another as it scales--cut incentives, trim margins, increase on-site advertising, etc. It's one long life cycle game that plays out again and again.
I hope they have other retailers' affiliate links too, like Newegg.
and not seeing what is cut in half.
(Also I notice that the new chart says musical instruments are 6%. For electronic musical instruments -- digital keyboards, for instance -- does this mean the fee has gone up from 4%?)
Now it's a flat rate 4.5% in that category. Which amounts to about a 33% cut, because almost everyone was earning 6.5-7%.
This is likely to have a massive affect on the blog/article review ecosystem. Most of the review sites that exist today only do so because of amazon's fairly generous programs. I expect in aggregate there will be a shift in what lines of business people decide to get into, based on this.
Of course, there's not really a good, easy replacement for amazon affiliates, so people will still use it. But I expect people will deprecate affiliate marketing as an activity to some extent: this is a major change in the niche.
I don't think it's half in most categories.
(To be clear, I didn't write the headline. Had just been attempting to explain it)
If they are going from a volume based approach to a margin based approach that is rational, and good for everyone.
(i.e. why payout more for 1000 rubber bands that makes them uncompetitive to sell, and you should pay out more for that high end tv).
The "gutting" in this I'm sure is referring to the change from "electronics get 4-8.5% commission" to "electronics get 2.5% commission and never more than that." Having a huge range of other items also all capped at below 6% is also a huge blow to people who've been doing a lot of Amazon Affiliates work.
I've never really made much from it - probably less than $100 in any given year with one outlier when someone bought ten copies of Dragon Medical ($1800 each) after using one of my links. Still, this does give a good indication of whether it's worth putting together a focused product comparison site I've been contemplating. 6% or more on products with prices in the $100-1000 price range could make it worthwhile to build and maintain (content curation). 2.5% capped makes it a much less appealing proposition unless the site can have affiliate links to vendors other than Amazon, and I'm not sure if that's against their TOS.
But... if I'm being honest with myself, it also seems kind of reasonable. I think their original plan was pretty generous. I was kind of expecting this to happen at some point.
For consumers, it's more likely heartbreaking, as we'll all likely have a tougher time getting high-quality review content like what The Wirecutter pushes out.
If you read a lot of their reviews you'll find many times they act as a meta review, basing the majority of their opinions on other reviews they read online. That's not high quality.
Almost all of their reviews give too much weight to price. When you say something mid range is the best without a price qualifier it's bordering on dishonest. Many of the things they call best are not the best, they're what they consider the best in the low to medium price range.
This seems a lot better than older traditional advertising models, where you have people writing reviews for TVs while the publication is getting paid advertising dollars directly from companies like Sony or LG. A classic example of this happened back in 2007, when a video game publisher was running ads for Kane and Lynch on Gamespot, which is a video games review site. Jeff Gerstmann wrote a negative review of the game which ran on the site, and he ended up getting fired as a result (as Gamespot's ownership didn't want to bite the hand that was feeding them).
1. People build websites and have fiverr people write reviews then link to Amazon to reap that sweet, sweet affiliate cash.
2. People build websites and write reviews for products based on the most return using Amazon Affiliate software that ranks products.
3. People honestly link to their affiliate via a blog for a personal hobby.
Most of the affiliates are trying to make money and they don't give a shit how they do it.
Read this shit... https://www.blackhatworld.com/forums/making-money.12/
For a lot of categories, you might end up with an adequate product and miss out on an amazing one.
I find reviews very quickly let me find the best product for my needs in that category.
Also, returns are costly. For each one, I have to:
1. Assess the product
2. Go to the amazon order page. Click return.
3. Print the return form
4. Repackage the item. Tape the return form to it.
5. Go to the post office, wait in line, send it.
6. Order a new item, open it, and test it.
5-10 minutes of review reading can save all of that effort.
It's also less wasteful for the economy: needlessly upping your return volume causes negative externalities for everyone else.
Believe me, you have it easy compared to the manual process that most smaller ecommerce players labour under. Only if things like returns are automated can you actually scale the business. I have been struggling on Stack Overflow with getting the returns process, it seems to me that not many people get that far, the answers are a bit thin! So a stellare customer service with the returns labels is quite a thing.
Why so hard? Well, if the customer can be from anywhere on the planet and their original order could have been fulfilled by one or more warehouses around the globe, where do you check their return back in to? Once that is decided there is again a choice of couriers, all with different 'API' access to the labels. The end result is probably the same label with different numbers on in 90% of cases, nonetheless some API calls around the globe have to happen to get to the 'obvious' label that you just print out and stick onto the box.
The label also has to be something that can be checked in at the warehouse with some means of updating stock levels if it goes back into stock. Then there is the small matter of issuing a refund - full or partial. Then checking that refund has gone through the following morning, just in case. Then emailing you all is good. Including some custom coupon just for you to tempt you to buy something else.
Then the thing has to be tested. How do you test an order to Namibia gets returned properly? Or Ottowa? Or just normal Germany, where all those labels have to be translated? Or Japan where there are some issues with addresses and non-latin characters. Or Korea? Or plain Ireland, where there are no post codes.
Getting an order to Namibia (for example) is one thing, returning it and getting the original payment returned, all automagically, 'hassle free', well, that is a fine art. From my readings of Stack Overflow few make it to that depth of the ecommerce sales process.
Obviously my code will do the returns label at 'web speed' (instantly, customer in control) whereas the humans had to take up to 150 hours to get back to the customer with a returns label. Invariably they would mess up the credit memo and the stock would go out of the realms of accuracy fairly quickly. Total overhead for a returns is something like 30 mins for the various people needing to faff about with this 'easily' automated stuff.
Now I know what I know I can see how the retailers are on customer service, only if you are doing it 'the Amazon way' are you really able to profit online, selling through them or not.
I'm just saying that even then, a return is still enough work that investing 15 minutes in reviews pays off, once you consider all the othet factors as well.
Good luck! Sounds very complex indeed.
Returning on Amazon is one of the easiest things to do on the planet.
What amazing products are you going to miss out on? Most of the stuff on Amazon is just re-branded FBA shit. Most of each category of consumer products come from the same factories in China. Go to Alibaba and source some stuff... It's what all the FBA'ers do.
Literally the entire value proposition of Wirecutter is that the reviewers are really good and unbiased because they spend a lot of time and effort analyzing products.
> What amazing products are you going to miss out on? Most of the stuff on Amazon is just re-branded FBA shit.
1. Wirecutter / Sweethome don't constrain their recommendations / reviews to things you can buy at Amazon.
2. You can buy an overwhelming number of electronics / products off of Amazon. To insinuate that it's all white-label rebrands is disingenuous.
No one has time to do all their research from scratch themselves. (And I have zero interest in doing so.)
There is works and does not work. In the end, 98% of all consumer electronics are going to end up in a dump... generally right after the warranty is up. Live with that or live minimally AKA do without.
For instance: "Not compliant with industry standard; may damage your hardware before failing." is one review that might make me steer clear of a product rated 4.5 stars.
"Product is counterfeit. If you examine the thingummy on the wowjammer, you can see a plastic tab that is not present on the genuine product, but clearly visible on this unbranded AliExpress listing..." is another that would scare me off.
Also, many of the crap-sellers will bend over backwards to get you to remove or update a negative review. Don't do it. You would be complicit in tricking your fellow customers.
Definitely had this happen a couple of times but with seller feedback. Not necessarily because the product sucked (bought some books for my mum) but because the seller was garbage.
In one circumstance, it was a difficult to find book (no new stock, out of print), so I purchased one that had the highest quality listing for used stock ("excellent condition," "like new" etc). When she got it, it was torn, slightly loose binding, but readable (no more than fair condition, IMO); so I left a review stating such, indicating that the condition description didn't match the item, and I wouldn't buy from that seller again.
The seller, of course, wasn't happy about that and demanded that I remove it. I suppose I could've filed a claim with Amazon if they pushed the issue, but they didn't. It certainly wouldn't have been worth the hassle.
I don't buy things very often. Especially not in the > $100 category. I don't want to waste time on things that are subpar, but I also don't want to get hobby-grade knowledge of every item I buy. So if I can rely on folks like The Wirecutter to review things for me then I can check them out before I make a purchase and gain some confidence in my purchase for only a few minutes of my time.
Sure, I may get a fluke. I may have an issue with a product from time to time. In the fields they review that overlap with my own hobby interests I may disagree with them over nitpicky details. But those are exceptions, and I can trust myself to catch them. For 90+% of the use case, reviewers are a great use of a few minutes of time.
What about a monitor, for example? You might be fine with what you have, but it might have been more optimal (price or performance) to buy that other one that you had no idea about.
It's also around 15 days, and a bit of effort to repackage and send via UPS, etc, for each attempt.
I was trying to explain why this part of your comment was wrong.
Their win was realizing that I don't give a shit about reading about the latest tech news on new product X. I just need an in-depth review for each product category that is done by an expert, exposes the best products I can get for each part of the tradeoff spectrum, and is kept up to date as time passes by. That's all I need. So many times I've done my own research for days and came up with the same 2-3 results that they have, so I don't even bother anymore. I'll be very sad if The Wirecutter dies.
The pleasure of the wirecutter is that the decisions are made. I look for their top choice of wifi routers, then I read about why. In the off chance I disagree, I read the other entries. It explains by what aspects each other product is better or worse than their pick. Perhaps I want a cheaper one? A specific brand? More range? Done in under ten minutes.
I realize everyone is different, but what I love about the Wirecutter is that I don't want to waste my free time reading expert product reviews and comparing specs, and CR encourages exactly that. Any minor benefit from having that information exposed really gets drowned out by my frustration.
Only if the item is sold by Amazon (or a competitor with commission), otherwise the item won't be reviewed or discussed at all.
Then 6 months from now after I've reviewed dozens of different laptops for the same amount of bullshit time, do it again with the old reviews... rinse, repeat. No day to day needed... just go over it once for a few hours, make some bullshit recommendation, then call it a day. Bullshit.
I have seen products which are not superior quality but are ranked as #1. Generally best are third or below ranked products.
Edit: Then again, I don't see any difference between the current version of the page  and what it looked like in a previous version archived 2016-08-26 .
Edit 2: Never mind the above two links. The apparent lack of change is due to some problem with Archive.org. Link  is using an image from today  for some reason, and it's not even the same archived version  on link ?! The one used on link  is from 2017-02-24 19:03:14 according to the timestamp in the URL, whereas the one for today is from 2017-02-24 18:59:28 according to the timestamp for that image. (Both of these timestamps are probably UTC I'd venture to guess.) Maybe Archive.org was missing the image for some reason and it was refetched when I loaded the old snapshot?
By the way, are the rest of you seeing this as well?
Spell it out, basically. What are we looking at and why do we care?
- Lower prices on electronics for consumers.
- Loss of profits for people relying on income from affiliate program on electronics.
And furthermore I think both of these kinds of people are found in large quantities among the HN crowd relative to the population at large.
But I might be mistaken in my understanding so in that sense I think you are right that an article that explained what was meant would make sense.
Perhaps OP felt that doing so would only get them labeled as submitting blogspam? Or perhaps OP is not comfortable with writing? Or perhaps OP wanted to share this quickly without having to put a lot of effort into it. Only OP knows the reason probably.
I think perhaps it'd been better if OP submitted a text-post with an explanation, or at least wrote a comment about the change ITT.
I have been running onlineshops before (not electronics though) and we happily spent all of the profit margins of an order on trackable advertising. Because a) the lifetime value of the customer b) the word of mouth value of a customer and c) the untracked sales generated by the advertising.
2.5% of revenue sounds unbelievably cheap to generate an actual trackable order.
I stopped by the local Microcenter (which is, incidentally, has a nice assortment of hobby-oriented electronics items for sale) and they beat Amazon's price on a Samsung EVO SSD by over $20. Since they price match, I got a $3 discount on one of the other pieces of hardware I bought that day.
All in all, the time I spent driving there likely make the savings irrelevant, but I was surprised that they were so much more aggressive on the SSD pricing.
I hadn't thought it possible that Amazon could sustain that large a price premium on a relatively hot item. I suppose this bias is why Amazon could get away with it.
On the other hand, Microcenter might be selling it at cost to provoke exactly the reaction that I had (telling others about it).
I could see a site like the WireCutter getting lots of clicks to Amazon and then the person not buying that product buy remembering later "hey, I forgot that I need dog food." Well dog food happens to be a 10% commission now, so maybe it isn't as bad as it would seem.
Also, the WireCutter's sister site is the Sweet Home, and I think home goods are now up to a flat 8% rate, so they may not be any worse off.
Affiliate programs are a good way to get market quotas. If they're #1 in sales, then there's no need to spend marketing bucks on it.
My strategy is this: At these commissions in the Health niche, Amazon will no be in our "preferred" tier of stores. On March 1, their products will no longer show up on our blog (unless they are the only store with it in stock) -- and the blog gets the vast majority of our traffic.
They will still show up in our main site (where I need to decide whether or not to keep their exclusive buttons), and they'll still be involved in our hot deals and price drop alerts.
Stores need to earn our best visitors, and Amazon is no longer deserving. Surprisingly, they're most often not the best deal on our site anyway, so I don't think anyone will be too upset.
I may try to negotiate my own rates, but I don't think we're big enough for that (not yet, at least). Everything is negotiable when you have legit traffic and other options.
Meanwhile, we've been diversifying our revenue with various industry SAAS services that can be scaled globally. This has been a big focus of mine, knowing that these kinds of things can happen at the drop of a hat.
But at the end of the day, this is still a paycut, and it still hurts. Amazon will ultimately lose more of our traffic for it, and I really don't think they'll even notice this on their bottom line compared to the explosive profits they get from AWS.
Seems like bad PR more than anything.
It totally makes sense that you would be unhappy with the change, but your comment comes off as sour grapes. Amazon cut your fees and now they're "not deserving" even though you say they're not your top-trafficked store and usually not the best deal anyway? Were they deserving of your visitors traffic before when they were still not offering the best deal but they paid you more?
> Seems like bad PR more than anything.
Bad PR for who? Most of the people shopping on Amazon don't care about affiliate earnings at all. They don't care if Amazon pays affiliates less or stops paying them entirely. There is no PR hit to Amazon for changing the affiliate payouts.
At the time I made it, there were only a few other comments. A few of which reflected on the likes of e.g. the impact upon Wirecutter.
I actually like Wirecutter; I've found their articles useful, and I've used their affiliate links a few times. As I have also done with e.g. camelcamelcamel. They add value, for me, and I try to reciprocate.
Unfortunately, they and others are at the mercy of Amazon. And, I think many here will agree, Amazon basically has no mercy. You're fine and good, until they see a way to expand their own profit at your expense. You are only "tolerated" as a business partner -- never embraced. Nor, perhaps, even respected.
Per some other replies to my parent comment, sure, go ahead and make some side money off of affiliate links. But I would never rely on them for my well-being. Even if they represented the bulk of my income for a while, I'd want to have an immediately actionable exit-plan at hand.
And... somewhat akin to Amazon Prime, which I've renewed with increasing reluctance: I am coming to resent Amazon's all-embracing tentacles more and more because they choke off competition that might actually offer better value-added. Such as Wirecutter and the like.
And, Wednesday, another Amazon Prime package did not get to me on its emailed delivery date. I increasingly don't trust Amazon with the monopoly they already have; once "locked in", it seems they feel they can let their side of the deliverables slip.
How anyone can get such incredibly simple math wrong boggles my mind.
Now I'll have a link to demonstrate the issue when needed!
The GP post made it super explicit: "Don't be a sharecropper". Well, why not? This news doesn't mean it wasn't their best choice.
The real maxim is something like "be very careful when your business model is (some better word than sharecropping) - because it can be disabled at any point"
At the start of the year I moved over to take advantage of their bounty program. $3-$5 per free trial signup. Movies for example included Amazon Video, HBO, and stars. So if someone tried out all 3 I got $9.
I sell books on amazon as well. My website for one series has an audible affiliate link. An audible signup = $5. If they first check out my audio book I get a percentage of the book cost and if they stay subbed for 61 days I get a $50 bonus. If they sign up for Kindle Unlimited to read it I get $3 + page reads from the book.
The straight affiliate product sites are going to take a hit. One was for an electronics niche.
Luckily this change shouldn't impact me too significantly since my primary niche will be in the 7% bracket and I was making 7-8% previously.
I think all that bad behavior of us early pioneers resulted in the program being severely limited and audited.
Then me and some associates applied the plugin to a massive network of content scraped wordpress sites which basically reposted stuff from RSS feeds. There was an art to making a site that has good SEO, would perform well in Google SERP, be just attractive enough that people wouldn't immediately hit the back button, but not completely satisfying so that they would be looking for more and click a link which would take them to the Amazon store.
Once they had our affiliate attribution set we didn't care what happened, if they made a purchase within the next 30 days we made money. And electronics was very profitable at the time.
A few times I got banned because my affiliate link was all over the place, like literally hundreds of sites, and Amazon wanted to control where the affiliate links were placed, not have them on sketchy semi spam websites.
Another time I got banned because I was using the product API in a way they didn't intend.
I'm really surprised nobody offers a standalone API for automatic album art lookup; or an automatic metadata lookup (like CDDB) that includes an album art URL in the result.
Example Screenshot: https://d.pr/e2zG
Reading the Associates discussion forum is the definition of depression. People running sites for many years talking about earning $200 in a month. please, enlighten us as to your thoughts on the new rate structure!
And related question, is there an affiliate scheme for Amazon India? I had checked a few times earlier for the US-based Amazon affiliate scheme, and IIRC, each time it said that it was only for the US, or not for India.
Look at the listings on Empire Flippers and how many of the sites are affiliate based: