Lowering Amazon Associates commissions: incrementality, publisher churn and profit
Company: Amazon
Role: Product Manager
Category: Product / Decision Making
Difficulty: medium
Interview Round: Other
Amazon's affiliate program, Amazon Associates, pays outside publishers such as bloggers, review sites, video creators and social media influencers a commission when shoppers they send to Amazon make a purchase. The commission is a percentage of the sale, and the rate depends on the product category. Would you recommend that Amazon reduce these commission rates? Make a recommendation and walk through how you would reach it.
```hint Which sales does the money buy
A lower rate saves money on a referred sale only if that sale still happens. Which referred purchases would disappear if publishers earned less, and which would happen anyway?
```
### Clarifying Questions
- What is prompting the review: a cost-reduction target, a belief that some categories are overpaid, or concern about the quality of affiliate traffic?
- Must one change apply to every category, or can rates vary by category, by type of publisher or by kind of purchase?
- Is ending the program an option, or only changing the rates?
- What do we know about how many affiliate-referred purchases would have happened without the referral?
### What a Strong Answer Covers
- How the program creates value for Amazon, publishers and shoppers, and the objective the rate decision serves.
- Incrementality: separating referred sales the program truly causes from sales that would have happened anyway, by category and by publisher type.
- The second-order effects of a cut: publishers leaving or steering readers to other retailers, weaker review content, and Amazon losing its place as the default link in product research.
- Alternatives to a uniform cut, such as category-specific rates, tiers, rewards for new customers or tighter attribution, compared on savings and risk.
- A recommendation backed by a test plan, a profit metric for the channel and guardrails on referred sales and publisher retention.
### Follow-up Questions
- After a cut in one category, referred sales there fall. How would you work out whether the cut still paid off?
- Rival retailers start offering publishers higher commissions. How would you keep the best publishers linking to Amazon?
- Publishers compare notes with one another. How would you test a rate change without that contaminating the results?
Overview: A pricing and strategy question on whether Amazon should lower the commissions it pays affiliate publishers for referred purchases. It tests understanding the program's economics, separating incremental sales from ones that would happen anyway, weighing savings against publisher churn and lost sales, and building a targeted, testable recommendation.
