With Affiliate Pitfalls
by Joe Tracy
On March 15, 2000, eToys sent a letter to
its affiliates stating that changes were being made to the
eToys affiliate program. EToys was increasing the new customer
finders fee from $5 to $10. Then came the bombshell — eToys
was eliminating the commissions on all affiliate-generated
EToys has long been recognized as the leading online toy
store just as Amazon.com has been recognized as the leading
online bookstore. One of the main reasons eToys made it to
the top was because of its strong affiliate program. When
the program first opened, some affiliates were offered a
25% commission on affiliate-generated purchases. After several
months, eToys changed the affiliate program commissions to "between
5-12%" depending on various factors. To "compensate" for
the lower commissions, eToys offered a $5 reward for every
new customer affiliates brought to eToys. Now, two years
after its affiliate program started, eToys decides to dump
On March 21, 2000, CNET published a news report titled, "E-commerce
firms step back from early strategies." The second paragraph
of the story stated, "Analysts say eToys' move represents
the next step for many big sites: dropping contracts they
once depended on to get off the ground because they became
big enough to draw their own repeat customers."
The message that statement sends is that Websites can use
affiliates to build a huge market base then dump affiliates
without consequence. Imagine if tomorrow Amazon.com announced
that it was canceling commissions from its affiliate program.
430,000 members of the Amazon.com affiliate program would
be directly affected.
E-commerce businesses that build an empire based on an affiliate
program should never forget those who helped make them successful
- the affiliates. When you turn your back on those who help
make you successful, then success will often visit another.
Just look at what happened to Apple when Steve Jobs was forced
So what can be done to prevent large e-commerce sites from
following in eToys steps?
1) Sign up for a competing affiliate program.
2) Send eToys an email (email@example.com) to express
your regret over its decision to kill affiliate commissions.
You can also call eToys at 1-800-463-8697.
3) Give your business to another online toy store
that doesn't alter its affiliate program every few months.
One of the lesser-known toy stores on the Web is KB Toys
at www.kbkids.com. With
eToys out of the big affiliate picture, KB Toys now has the
best toys-related affiliate program. You get $7.50 for each
new customer you bring to them and 5-12% commissions of affiliate-generated
Another competing toy store with an affiliate program is
Toys R Us at www.toysrus.com .
They give you 5-12.5% on all affiliate-generated sales.
By switching to another toy store affiliate program, you
will help send a message that affiliates are customers too
and should be treated with respect and consistency, while
being rewarded for loyalty.
This whole eToys fiasco is one that could have vast repercussions
on the biggest affiliate programs on the Web. Many large
companies could be watching eToys to see if this breakaway
from commission giving is successful. If it is deemed successful
then many major Websites may start dropping commissions,
causing sites depending on affiliate programs to lose a lot
of money. As an affiliate, you are a customer. As a customer
you have rights. One of your rights is to take your business
elsewhere when a company doesn't treat you fairly. By doing
so you send a strong message to companies that if they don't
treat you right, perhaps a competitor will treat you right.
Some eToys affiliates didn't waste time in leaving eToys.
One of their bigger affiliates, eflorida.net , was bringing
in several thousands of dollars in business for eToys a month.
The Webmaster, Bob Miller, wasted no time in quiting the
eToys affiliate program. He also drafted and sent a letter
"Repeat customers are the essence of long-term stability
in retailing," says one portion of his letter. "We at eFlorida.net
work hard to develop customer loyalty and good service. If
all eToys wants is new customers from it's affiliates, then
you've rendered our customer loyalty valueless."
"I hope this isn't a trend in associate programs," Miller
tells Webmaster Techniques Magazine.
Jeff Jameson, CEO of Inter-akt.com, has also deserted the
eToys program after the affiliate change. His site, www.ramonamall.com
was bringing in thousands of dollars a month for eToys. Here's
what he said in his departure letter to eToys:
"Thanks for noticing the sales I've been bringing in to
eToys. Unfortunately I've received notification from your
company that they are changing the affiliate program in April
and this has caused me and many other affiliate marketing
professionals to look at other competing toy merchants. I
know $10 per new customer would give me slightly more income
in the short term, but we all anticipate it will be harder
to make significant income on just new customer bonus in
the future. I have decided that kbtoys.com with their compensation
plan at $7.50 per new customer and 5% of sales to be the
best place to continue my efforts in driving toy related
Perhaps when more big-name eToys affiliates switch to a
competing site then eToys and other large e-commerce companies
will get the message that "if you depend on affiliates for
your initial success then you should continue to reward affiliates
after you've become successful."
Note: Just a year after this feature was written,
eToys went out of business, filing for Chapter 11 bankruptcy.
We're not surprised.
Joe Tracy is editor of Webmaster
Techniques Magazine and author of "55
Vital Web Marketing Strategies for Marketing Your Website."
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