How Do I Respond To This? - Poor Merchant Practices

**xaine05** · 30-12-10

Recently I received an email from a merchant I have been working with for more than 3 years. When I first started with them they were offering a commission rate of 20%, which for the mens underwear sector is extremely high. I knew one day that they would drop this as I couldn't see it being sustainable and it would truly be cutting into their profit margins.

They run their own affiliate program and as of July this year dropped all affiliates to 15% (fair play), then at the end of November I receive another email to say they have dropped the rate again now down to 10% - so in the course of 6 months I have lost half of my income from them. The most recent email was a sketchy one and seems quite unfair in how it has been structured, in fact it seems to penalise all Australian affiliates. I made this company over $120k this year alone and feel I deserve a little better treatment, especially when they need to realise my high rankings (almost position 1 or 2 for every brand and page in the SERPs) could be directed to another merchant. I have put a great deal of effort into this company and my content rich website, even so far as having created my own product feed and hosting the images myself because they just don't have the ability it seems.

Here is the email from said merchant, I just wanted some people's opinion's on this and whether I am just expecting too much or whether this is usual practice.

Hello,

Firstly we have to thank all affiliates for all that they have done for us we have over 200 that are active and have been so for more than 3 years.

We have come to a point where we find the current cost of having affiliates more prohibitive than advantageous. Our decision has not come without
a great deal of thought on how we can continue and all parties benefit. This is the only way we feel we can continue without dropping the program
altogether.

For all Australian affiliates we are moving this coming month the 1/12/10 to 10% commission.

For all websites that do not compete, advertise or list in Australia such as US and UK we will stay at 15%. This means you must have a different domain
than ending in .au and not actively campaign in Australia. In some cases you may apply for a greater rate of commission if you target the US and UK market.

Thank you all for your understanding.

**JohnnyCash** · 05-01-11

I think this would have been better placed in the lounge, its not really an IAB issue.

If it was me, I'd speak to them on the phone and tell them you are leaving their program immediately, and changing all the links to a competitor, unless they reinstate your 15% commission band.

The profit margin is obviously there if they can offer it to other people. They might not want to compete with .au sites in the search results, but the simple fact is you are already ranking and whoever controls the traffic makes the rules.

I'd leave it up to them, they can give you back the 15% or they can lose the traffic to a competitor.

Why not speak to competitors too, even if they don't pay 15% they might be willing to for the double hit of making the sales themselves, and costing someone else them.

**Elaine** · 05-01-11

Are they UK based? If so then their cost of shipping to Australia will be very high - I know, as we deliver worldwide and it amazes me that some folk are willing to pay this much - which would explain their decision.

And my, first, thoughts, on the commission rate - their margins are way too high if they can afford to pay 15% commission, or they really value their affiliates and are happy to give them the lion's share.

Either way I think 10% is a dammed good rate and I'd just count the 20% time as a nice bonus.

added: - or just phone them and ask why.

**JohnnyCash** · 05-01-11

Originally Posted by Elaine

Are they UK based? If so then their cost of shipping to Australia will be very high - I know, as we deliver worldwide and it amazes me that some folk are willing to pay this much - which would explain their decision.

And my, first, thoughts, on the commission rate - their margins are way too high if they can afford to pay 15% commission, or they really value their affiliates and are happy to give them the lion's share.

Either way I think 10% is a dammed good rate and I'd just count the 20% time as a nice bonus.

If they'd cut everyone to 10% then fair enough, but they can obviously afford to pay 15% so I'd just hold the gun to their head with the traffic, tell them you're giving it to a competitor unless they give you 15% (or more)...

If commission isn't paid on the postage then that shouldn't be an issue either. Now I've thought about it a bit more I'd tell them you want 20%.

**Mogga** · 05-01-11

Find a merchant that pays better.

**KimCullum** · 05-01-11

I'd establish what is behind the decision first before being too hasty. Do they pay afifliates in their local currency?? Find out why Australian affiliates are being singled out as, from this you may find an opportunity to suggest an alternative.

Have you asked them if they have considered running commission tiers? Rather than a flat rate? This could make the program a little more sustainable for them, while ensuring their key affiliates have scope to continue earning the higher rate?

Or could they work out a system where they will pay the higher amount on new customers only? and say the lesser 10% on returning customers?

Depending what is behind their logic there may be an alternative solution they haven't considered.