This update is going to be different. I am still going to share with you how my new niche sites are progressing, but I’m going to discuss the new Amazon changes rather than the next step in building your own niche sites.
If you haven’t heard yet, Amazon US has just announced big changes to their fee structure. Instead of a sliding scale based on how many items you sell, all items have a set commission rate depending on what category they are. The rates range from 0-10% with most between 4-8%. This starts from March 1.
You can view all the new commission rates here.
My thoughts on the changes
When I woke up to this news this morning, I wanted to vomit! I sell a lot of items on Amazon so I currently hit the top commission rate of 8.5%. There is no doubt that I am going to lose money.
When I sat down to work out the loss, it was not as bad as I feared. I downloaded a report of all of my earnings for the last month and worked out what the earnings would be for those items in the new structure.
I lose about 28% of my earnings.
This is not great but I feared it would be much closer to half so I am feeling relieved! Half of my loss is because I make a lot of money from baby products which are changing from 8.5% (for me) to 4.5%.
I will be investigating other affiliate programs for these products.
I also would have thought twice about the products for our new niche sites had I known this would happen (we have built 3 more in addition to the 2 in this case study).
What do these changes mean?
First of all, if you are not targeting your niche site to a US audience then don’t worry. These changes won’t affect you.
Otherwise, it really depends what products you are selling and how many you are selling. There is no reason to panic. It takes a ton of products and sites to hit the 8.5% commission level so it’s unlikely your losses will be anywhere near as big as mine.
In fact, if you are currently starting out with niche sites then you may find that you earn more money as you might get a higher rate.
I definitely do not think this should turn you off niche sites – not at all. The good news about this change is that it probably will turn off the people who are quick to make excuses about why not to start which leaves a bigger share of the pie for the rest of us.
I recommend putting more thought into which niche you choose.
I would personally suggest picking niches where the category earns 6% or higher. I also think it’s more important than ever to pick a product which sells for a good price. There is no bonus anymore to selling a lot of items.
So what should you do if you have recently built a site for a low commission niche?
My recommendation depends where in the process you are. If you have already started link building then I would persist with it unless it’s less than 4%. Otherwise, it could be worth changing especially if you have not finished building the site yet.
Of course, no doubt it will become easier to rank for categories with lower commission rates so it could be worth sticking with one. Conversely, the higher commission rate categories will probably become more compeitive.
It’s really up to you.
Our niche sites
It’s been 4.5 months since our niche sites were published. How are they progressing?
The stats below are for the last month except the current ranking which is right now. The number in the bracket is where the site was ranking in my last update two weeks ago.
Ranking for: 999 keywords (999) – it doesn’t show higher than 999
Main keyword is ranking: 9.7 on average (9.6), currently 8 (9)
Sessions from organic search: 1343 (813)
Money made: US$172 ($63)
Category commission rate of main keyword: 4.5%
Ranking for: 305 keywords (306 )
Main keyword is ranking: 95.5 on average (106), currently 83 (56)
Sessions from organic search: 28 (43)
Money made: 0
Category commission rate of main keyword: 8%
I continue to love the progress of site 1 and be disappointed by site 2!
The traffic to Site 1 shows a beautiful upward curve and I expect it to keep growing fast. We are also ranking in the first page for a second guide on the site to a related product. We are averaging a ranking of 5.7 for that main keyword. We are getting sales most days in Amazon.
Site 2 is going backwards. The main keyword has become more competitive since we chose it but I can’t entirely blame that. It is interesting as the sites were built the same with very similar links. I am letting it sit for the time being to see what happens.
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Want to build your own niche site? Join our FREE newsletter with access to exclusive subscriber resourcesI would love to hear your thoughts below about Amazon. Do the changes affect your decision to build a niche site?