Where Should Your eCommerce Brand Send Your External Social Media Traffic?

For e-commerce brands investing in social media marketing, one crucial decision can significantly impact their bottom line: should they direct traffic to Amazon or their own website? This choice has become increasingly complex with Amazon’s introduction of the Brand Referral Bonus program.

The Amazon Advantage

Amazon offers compelling benefits for brands directing external traffic to their marketplace:

• Higher Conversion Rates: With over 200 million Prime members globally, Amazon customers can complete purchases with a single click, leveraging stored payment and shipping information.
• Trust Factor: Amazon’s established reputation, extensive review system, and reliable customer service reduce buyer hesitation.
• Operational Efficiency: Brands can leverage Amazon’s sophisticated fulfillment network, offering fast shipping and hassle-free returns.

However, this convenience comes at a cost – namely Amazon’s 15% referral fee on each sale.

The Own Website Strategy

Operating your own e-commerce platform through Shopify, WooCommerce, or similar platforms offers distinct advantages:

• Complete Data Control: Direct access to customer information enables better targeting and relationship building.
• Brand Experience: Full control over site design, messaging, and customer journey.
• Higher Margins: Avoiding Amazon’s referral fees can significantly improve profitability.

The main drawback? Typically lower conversion rates due to increased friction in the checkout process.

The Game-Changer: Amazon’s Brand Referral Bonus

The introduction of Amazon’s Brand Referral Bonus program has dramatically shifted this equation. The program offers approximately 10% cashback on sales generated from external traffic, effectively reducing the standard 15% referral fee to about 5%.

Financial Analysis

Let’s break down a $100 sale…

Amazon With Brand Referral Bonus:

• Sale Price: $100
• Conversion Rate: 5%
• Clicks needed per sale: 20
• Ad Cost per sale (Customer Acquisition Cost – CAC): $20 (20 clicks × $1)
• Amazon Fee (15%): -$15
• Referral Bonus (~10%): +$10
• Net Revenue per Sale: $75

Own Website:

• Sale Price: $100
• Conversion Rate: 2%
• Clicks needed per sale: 50
• Ad Cost per sale (Customer Acquisition Cost – CAC): $50 (50 clicks × $1)
• Payment Processing (~3%): -$3
• Net Revenue per Sale: $47

The financial advantage clearly favors Amazon in this scenario, primarily due to the higher conversion rate and the Brand Referral Bonus program. The 2.5x difference in conversion rate, combined with the relatively low effective fee rate after the bonus, makes Amazon the more profitable choice for external traffic.

External Traffic Calculator

You can use the below calculator to verify those numbers. The calculator allows you to adjust the AOV, CPC, and conversion rates on Amazon and your website.

How PinWheel Can Help Drive External Traffic To Amazon For You

The great thing about PinWheel Performance Marketing is that you don’t need to worry about Pinterest. We can handle that for you. We work on a performance marketing basis that allows you to let us optimize those ads. You don’t need to learn a whole new platform. You don’t need to take on the risk of spending the dollars. We do all of that. If you are ready to get started, request your Pinterest Opportunity Report today and we will tell you what the potential for your brand is on Pinterest.