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  1. #1
    ABW Ambassador Nature Boy's Avatar
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    Thumbs down Zappos New Terms
    Thank you for your participation in the Zappos.com affiliate program. We are contacting you to inform you of an upcoming change in the commission rate within the Zappos Associate program. Please note that new program terms with a payout of 12% will be pushed out 3/19/07. Affiliates will have two weeks to accept the new terms before they automatically become effective 4/1/07. All current performance incentives tiers will remain in place.

    As a customer service focused company, we invest a great deal of money into improving the customer experience. The recent introduction of free overnight shipping and the growing product offering are part of that effort. As a result of some of these things, Zappos.com has already seen a 30% increase in affiliate sales over last year. This is great news for everyone. Affiliates will continue to benefit from our growing inventory of quality products and our belief in providing customers the best service possible.
    So as a reward for increasing affiliate sales versus last year... please accept this commission cut
    Scott
    If you can't dazzle them with brilliance, then baffle them with bulls#!t
    Don't tell me that you'll do it... SHOW ME.
    Just because everyone else is drinking it is no reason for me to drink the KOOL-AID.

  2. #2
    Newbie Rocketfuel's Avatar
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    Yeah i agree it's total BS, alot of us promoted them because the comish rate was reasonable but if they cut our margins then it will make it to close to the wire to bother any more.

    Pissed! lol

  3. #3
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    If they promise to cut my BS reversals by 20% then I'll accept the new terms.

  4. #4
    Full Member kea12345678's Avatar
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    Zappos might increase their margin with this move, but they are going to lose volume. Big time. This was Amazon's big mistake a few years ago before their program turned into complete garbage. I liked Zappos, but they are going way, way down for me. Cutting payouts by 20% is a heck of a lot and I am not seeing the supposed year over year volume increase that would somehow make up for it. I anticpate that I will cut my volume to Zappos by 50%.

  5. #5
    ABW Ambassador Joey's Avatar
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    As a customer service focused company, we invest a great deal of money into improving the customer experience. The recent introduction of free overnight shipping...
    I read this as: "We want to keep giving our customers things like free overnight shipping, but it costs too much, so we're going to make up for it by paying our affiliates less."

    The good news is there are plenty of shoe merchants still paying 15% - 20% that will be happy to fill this void on my sites.

  6. #6
    ABW Ambassador Joshua's Avatar
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    I hope someone did a quick competitive analysis before this move... There's not much difference to the consumer between online shoe stores, so they're sure to lose business.

  7. #7
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    Sales have grown by a lot more than 30% over the last year by pushing harder, spending more, and going all out but at 12%, it ain't gonna work. Zappos has such an awesome program at 15% but not at 12% with the high reversal rates. Sure hope they re-think this. At least they gave advanced warning.

  8. #8
    Member Kimberly's Avatar
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    "This is great news for everyone" my ass...
    Free shipping both ways only means more reversals (no risk try/return). More reversals means less commissions. Now decrease what's left by 20%.
    ZAPPOS! This 5-bar affiliate will be switching to promoting your competitors before these terms take place. Watch your sales plunge.

  9. #9
    Full Member kea12345678's Avatar
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    "This 5 Star Affiliate..."

    And, Zappos, actually might drop down to a 4 bar merchant. I think this is going to bite them in the butt.

  10. #10
    Moderator Nabz's Avatar
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    I just looked over their competitors who are performing good for me, and I saw ShoeBuy with same Free Shipping & Free Return Shipping & having 17% commission rate.

  11. #11
    Full Member kea12345678's Avatar
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    Right on. I used to like Zappos because with the combination of conversaion rate and commission, they were easily the best shoe merchant. But with commissions going down, reversal rates going up, that is not really the case any longer. They single handedly created a much more competitive market in the shoe affiliate space. The AM's at Shoes.com, ShoeBuy.com and all the rest are dancing in their cubicles right now.

  12. #12
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    They've still got time to re-think it, here's hoping! That 20% is often the profit margin after expenses and returns, Amazon is ramping up shoes and will probably give the most competition aside from ShoeBuy & some of the others ones that have been around for a while. Amazon wins on price as does ShoeBuy. Gap's Piperlime is a joke.

    So Zappos payout is now effectively 8% of orders when you factor in 33% returns and a 12% payout.

  13. #13
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    Shoebuy even offers coupons...which Zappos doesn't.

  14. #14
    Outsourced Program Manager Angel Djambazov's Avatar
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    Quote Originally Posted by Sideburn
    Shoebuy even offers coupons...which Zappos doesn't.
    Shoebuy also uses 180Solutions/Zango extensively...Zappos doesn't. Shoes.com, Nordstrom, Zappos and maybe even Endless when it gets going are all good merchants. All of them are playing fairly in the space as far as I can tell. Shoebuy isn't, they are stealing from you.
    Angel Djambazov
    Managing Edtior ReveNews
    OPM for Keen Shoes and Graphicly.com

  15. #15
    Moderator Nabz's Avatar
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    And OnlineShoes have even worse commission rate

  16. #16
    ABW Ambassador CDC's Avatar
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    It's time for me to revamp my shoe sites. In fact it has been for quite some time. This is just the push I need.
    Bye Bye Zappos!

    CDC
    I can't complain but sometimes I still do...

  17. #17
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    I am not a Zappos affiliate (or an affiliate of any of their competitors).

    I am shocked at some of the comments here. 12% commission and a 90 day cookie in my view is extremely generous compensation for a fairly major Internet retailer. That's at least three times the average in the niche I cover. If you removed every merchant whose compensation was less than that, how many merchants would you have left?

  18. #18
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    Well, shoes are pretty competitive and can be expensive to promote. Zappos has massive sales because they have an excellent site, great service but very high returns. The net payout on all placed orders will be about 8% after this. If you've built your promotions around spending big bucks to drive a lot of traffic to your Zappos pages and are planning on 15% (about 10% after returns) and scaled it and then you lose 20% of the payout, ya just can't push as hard and maybe not at all and still be profitable.

    When you run advertising on the engines, the difference between being able to afford to spend X per click and X-20% can mean a massive drop in rankings, CTR and traffic so if you need to drop the CPC for traffic to a site by 20%, you may end up on the second page, see your CTR drop tremendously and your traffic drop by 80%.

    That 15% to 12% drop is right on the tipping point between going all out and not going out at all because it is no longer profitable.

    Quote Originally Posted by Snowman
    If you removed every merchant whose compensation was less than that, how many merchants would you have left?
    In Shoes? Almost all of them.

  19. #19
    Member Kimberly's Avatar
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    I collect roughly $2000/month (AFTER 30-35% reversals) from Zappos alone. Been pushing them hard since October. 20% cut would mean $400/month less in my pocket - a serious blow to my earnings and a good enough reason to ditch them in favor of their competitors.
    This is a bad sign for Zappos and I think this is what's bound to happen eventually:

    Zappos will collapse under the pressure of competition and will be forced to sell to either Shoes.com or Shoebuy.com. I'm sure these guys are licking their lips already - like the vulchers circling the prey in a desert.

  20. #20
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    ? We just ventured out of the realm of reality. They're the #1 shoe merchant on the internet. They're not going to collapse because they knocked 3% off their commission rate. Online Shoes does just fine paying 10%. Now I would rather have 15% than 12% but I need to look at the final agreement and in the end how profitable a merchant actually is.

  21. #21
    Moderator MichaelColey's Avatar
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    I think the predictions of the death of Zappos are wrong, but this certainly does illustrated why merchants should never lower their commissions. They look bad to their affiliates and no doubt they'll lose many (to their competitors). Their PPC affiliates will be far less effective. It'll be harder for them to recruit new affiliates.
    Michael Coley
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    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  22. #22
    What's the word? Rhia7's Avatar
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    Quote Originally Posted by MichaelColey
    It'll be harder for them to recruit new affiliates.
    I'd like to affiliate with Zappos but they turn me down without giving me a reason or a chance to prove myself

    Perhaps an opportunity would be created if other affiliates drop out.
    ~Rhia7 -- Remember the 7
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  23. #23
    Member Kimberly's Avatar
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    Quote Originally Posted by Trust
    They're not going to collapse because they knocked 3% off their commission rate.
    Trust, think about it. The shoe niche is one of the most fiercely competitive. One of these monsters will eventually collapse. It's not a question of IF, it's a question of WHEN and WHO. No company will cut the commission rate by 20% out of the blue. I see this as a desperate attempt to stay afloat.

  24. #24
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    Posted a few months ago:

    Zappos has become the No. 1 footwear retailer on the Web by making customer service a competitive weapon.

    http://money.cnn.com/magazines/busin...ion=2007011508

    Like I said, other shoe companies pay less. And it just their affiliate program. That's just one way they get traffic. I know people would rather them pay 15% but this isn't going to sink them or anything like that, they're doing just fine.

    Now as a customer, I love Zappos. Let's not forget about them, I think they have the biggest say in how a company does.

  25. #25
    Moderator MichaelColey's Avatar
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    I agree with Trust. If a company is going to go out of business, it's much more likely to be for customer service issues rather than a cut in affiliate commissions. While cutting their commissions will hurt their affiliate program, it's not going to put them out of business.
    Michael Coley
    Amazing-Bargains.com
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    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

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