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Amazon Introduces New Model Referral Program

Amazon is introducing a new program to attract additional advertising from manufacturers who market products across competing platforms. The “model referral program” is designed to encourage brands to direct consumers to Amazon when advertising on sites other than the leading ecommerce retailer. When ads that run on competing platforms like Google and Facebook and other social media sites include hyperlinks to purchase on Amazon, the vendor will earn a bonus of 10 percent on the gross amount of sales volume. Qualifying campaigns must begin and end within fourteen days to qualify. “The bonuses accrue and may later be used to off-set different gross sales prices like “referral charges,” that are the proportion that Amazon takes from sellers on its website.”

“With greater than 300 million clients worldwide, Amazon is likely one of the greatest locations for manufacturers to launch new merchandise,” says Mike Miller, worldwide director of Amazon model program and promoting associate improvement. “We’re launching the Model Referral Bonus to assist manufacturers make their advertising and marketing spend go additional. When manufacturers direct their non-Amazon advertising and marketing site visitors to our retailer, we’ll present them with a bonus averaging 10% of the relevant gross sales.”

The introduction of the Bonus Referral Program comes at a time when Amazon.com Inc’s advertising rates are on a steep upward trajectory. Rates have risen more than 50 percent over last year. The higher rates are requiring the company’s ecommerce partners to increase prices to offset the higher cost of promotions. Shoppers spend an estimated $578 billion globally according to EMarketer Inc. Cost per click (CPC) of Amazon ads have risen to $1.16 this year, bringing the average cost of an Amazon sale to 30 percent of a product’s sale price. “Prices will continue to rise over time,” said Juozas Kaziukenas, founder and chief executive officer of Marketplace Pulse. “Smaller brands trying to enter the market, it will be increasingly expensive to do it when they are up against established brands who are willing to pay to protect market share.”

Smaller businesses are finding that they risk being shut out of the platform’s advertising game; having to rethink ad-channel spend or find themselves in the unenviable position to raise prices on the products they sell. “We’re just more-picky with our key words and we can’t be as aggressive,” said Chuck Gregorich, a Wisconsin merchant who sells fire pits and outdoor furniture on Amazon. Jason Boyce, a former Amazon merchant, says it’s becoming very expensive to sell products on Amazon. “The long-term risk is merchants bring their inventory to Walmart and Target where they can sell for lower prices.”

If Amazon’s pricing policy continues to disadvantage smaller retailers and producers, it will likely draw the attention of both political parties who continue to favor regulatory actions to level the playing field and generate additional sales and corporate tax rates from giant digital tech companies. In addition, consumers who are conditioned to favorable pricing from online retailers may pause keyboards and smartphones and return to brick-and-mortar retailers, both large and small.