What is the Brand Referral Bonus Program?
On July 15, 2021, Amazon announced the Brand Referral Bonus program. According to Amazon, the program allows participating sellers to “earn a bonus averaging 10% of product sales driven by your non-Amazon marketing efforts.” The bonus is credited to Amazon sellers through their referral fees.
Why Should Sellers Join the Brand Referral Bonus Program?
Amazon lists three reasons why sellers might consider joining the Brand Referral Bonus program:
- Amazon claims joining the program will “improve the efficiency of your non-Amazon marketing and advertising campaigns” that drive off-site traffic to Amazon.
- The credit to referral fees saves sellers money.
- Shoppers who buy additional products within 14 days of clicking the non-Amazon ad also contribute to the bonus/referral credit.
Why is Amazon Launching this Program?
According to Amazon, this program is simply a continuation in their “effort to help brands succeed.” That may be true, but there’s also something in this for Amazon: market share. Katie Capka, Inbound Marketing Manager at Kaspien, commented on the announcement:
We’ve seen a trend of Amazon introducing services for sellers, like the Brand Referral Bonus Program, that reward sellers for sending off-Amazon traffic back to Amazon. This directly aligns with Amazon’s strategy to capture as much of the ecommerce market share as possible. If Amazon is a key piece of your brand’s strategy, you should keep services that provide you more insights and compensation – in this case, from external traffic – on your radar.
Let’s unpack that a bit more.
Ecommerce Competition is Rising
More companies are breaking into the digital space to vie for consumers’ dollars. Shopify exploded in 2020. Target, Walmart, and eBay each grew their online sales in double or even triple digits. Google has announced integrations with Shopify and BigCommerce. Facebook has announced intentions to grow its ecommerce services.
Amazon normally charges sellers a 15% referral fee for sales made on its platform. Shopify, in contrast, charges 2.9% + $0.30 processing fee. The Amazon Referral Bonus program brings Amazon into closer competition with Shopify. However, as Marketplace Pulse notes, “the Brand Referral Bonus program is mostly going to benefit Amazon. If not for the simple reason that the second time the shopper orders the brand’s product on Amazon, the brand will be back to paying the full 15% fee.”
Consumers Go to Amazon to Buy
All of these companies’ U.S. ecommerce market share are but a small fraction of Amazon’s. But, they’re growing, and growing aggressively. Furthermore, Amazon has long-held a reputation for being a place where consumers go to buy products, but not necessarily where shoppers go to engage with brands.
A Branded Experience on Amazon
Amazon seems to be trying to revise that narrative. The addition of A+ Content, Amazon Brand Stores (which are now much easier to discover organically than they once were, thank goodness), Amazon Attribution, Amazon Affiliates, Amazon Associates, Amazon Live, Amazon Posts, the Manage Your Customer Engagement tool for direct D2C emails, and now the Brand Referral Bonus program – all of these are aimed at creating a branded experience within the Amazon marketplace.
By making Amazon a place where shoppers can engage with brands in a relational as well as transactional manner, Amazon increases its value proposition and directly combats D2C competitors like Shopify and BigCommerce.
Which Brings Us Back to Market Share
By increasing its value proposition, Amazon positions itself to retain and expand its market share. While promoting Amazon product detail pages via social media advertising and influencer marketing is a proven tactic for growing Amazon sales (we’ve been offering these services since 2017), the benefit was simply more brand awareness and more sales.
This program is the most explicit way that Amazon has ever incentivized sellers to direct off-Amazon consumers to Amazon listings.
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