Another Reason Why Designers Need to Know Who Third Parties Are

[Jadendreamer13]

When Zazzle is the third party, they are taking up to three chunks out of designer’s royalties:

• A 5% third-party royalty fee
• An excess royalty fee
• A 30-50% marketing fee

When Zazzle is the third party, then either the marketing fee or the third-party cut out of designers’ royalties needs to be eliminated on that sale.

This is why Zazzle needs to be fully transparent when they are one of the ambiguous third-parties listed on designers’ royalty reports. I don’t care if other third parties remain anonymous, I want to know if/when Zazzle is the third party, and if they are receiving three fees from one sale. Designers need to know the total amount of money that Zazzle is taking out of their royalties.

If I’m incorrect that Zazzle can also be a third party, please correct me. 

[Van]

Exactly.  I may be confused, but I thought a Z affiliate got 15%, though?  IF that's the case I think I'd rather pay the 15% than the 35%-50% and I don't think they should get both.....

[Jadendreamer13]

You might be right about the third-party fee. Hopefully some folks who are better with numbers and analytics than me will chime in and clear that up.

[tiffjamaica]

This is one of the problems - the math is really hard to understand.  As I understand it there are two fees: 

1. an excessive royalty fee of 5% if your rate goes over 10%. (In the old system this fee was 5% if your rate was 15% or over).  Honestly, this fee is not excessive and I'm fine with it. 

2. the Marketing Fee of 35% - 50%. This one is complicated and where the source of all the confusion lies. Prior to the changes, there was a 20% fee for third party sales. This "carve out" offset the cost of the referral payment (15%) to the third party affiliate.  The Marketing Fee is doing the same thing - it's just called a "Marketing Fee" now and is much more in our faces because of the fee hike. Affiliates/Ambassadors still only ever get 15% percent. They are not earning more now. 

Maybe showing the math will help: (I'm going to use a recent sale of my own so I can easily check my math with the new earnings report breakdown)... 
Customer paid 115.20 - this is the Net Royalty. 
My royalty rate was 18.2%, so MY earnings should've been 20.97. [18.2% x 115.20 = 20.97]
But now the fees kick in, so let's take away 5% for the excessive royalty. [5% x 20.97 = 1.05] and 50% for the Marketing Fee [50% x 20.97 = 10.48].  
This leaves my royalty at 9.43.  [20.97 - (1.05 + 10.48) = 9.43]
The third party who referred my product earned 15% of the sale. [15% x 115.20 = 17.28] which Z has to pay them and is offset by the Marketing fee of 10.48. You can see in this example why you don't want to just pay the referral to the third party because then you'd lose 17.28 instead of 10.48.  The Marketing fee is an offset. Z wants to bring in more traffic without paying more in referrals, so more of it is coming from our earnings now (It was always offset slightly at 20%, now it's 35-50%).  

Does that help? 
And you are correct that Zazzle can be the third party. Lucky them.

[SORS]

Thank you for explaining this so clearly. You’re right, the math is really hard to follow now and that’s part of what makes this so frustrating. I appreciate you walking through a real example. Seeing how a $20.97 royalty turns into $9.43 really puts things into perspective.

I agree with you. The 5 percent excessive royalty fee isn’t the problem. It’s the marketing fee that’s taking the biggest toll. It used to be more hidden in the background as a 20 percent carve out for third party referrals. Now it’s right there in the earnings breakdown and it hits a lot harder. Even though affiliates are still only getting 15 percent, we’re the ones paying more of that cost.

And yes, the fact that Zazzle can be the third party referrer makes it feel even more complicated. It’s hard not to feel like designers are being asked to carry more of the load while getting less in return.

To the Zazzle team, please reconsider the structure of this marketing fee. So many of us care deeply about our work and the platform, but it’s getting harder to make sense of these earnings. We want to keep creating here, but it needs to be fair. Please hear us.

[Mariholly]

They also consider third-party sales and apply the marketing commission to sales from returning customers who come back again and again to buy their business cards. How can that be considered a third-party sale? That customer comes back because they run out of cards and need more for their business and want those specific cards. It can't be a third party with the 45% rate for office and school supplies.

[Connie]

Wow, that certainly puts it into perspective! So Zazzle still has to spend some of their own profits to the affiliates, even though they are taking so much from us for that.

[Blooming]

They even take 50% from sales when we send a direct link to a client.

[NigelSutherland]

When I started on Zazzle most of my sales were “none”. This has changed now and it is clear that since the changes at the start of April, Zazzle has engineered the system to limit sales that are direct, and turn them into 3rd Party. To me it is so obvious. We know from reading the news online that Zazzle had a class action against them that they had to satisfy, at cost. I wonder if the actions against us is to help them cover the costs of their inaptitude. 

[LMGildersleeve]

The 3rd party 14.9% AND the marketing fees are virtually the same thing. We are being charged twice for marketing. 

[Blooming]

99% of my sales are third-party. I’ve honestly forgotten what it’s like to earn more than $3 per sale. This is unfair

[Windy]

What if this mysterious third party is not Zazzle, but rather, a partner company set up by Zazzle?

[Van]

---

@Windy wrote:

"What if this mysterious third party is not Zazzle, but rather, a partner company set up by Zazzle?"
That has crossed my mind as well.

Speaking for myself, the trust I once held for Z has really been damaged by all of this and I hate feeling that way. Just my opinion but I'm feeling that we are competing with Z instead of designers and Z working together and many designers are on the losing team at this point. 😞

---

[SORS]

I understand what you’re saying, Van, and I’ve had similar thoughts. It’s hard not to wonder about the nature of some of these third parties when we don’t have any visibility into who they are. I think a lot of us are just looking for a little more clarity, especially now that fees and earnings are changing so much.

I really value the opportunity to create here, and I know Zazzle has provided a platform for so many of us to grow our work. I just hope there’s a way forward where designers can feel more informed and supported…like we’re working with the platform, not trying to keep up with it. Open communication would go a long way in restoring that sense of trust and partnership.

Thank you to everyone who continues to ask questions and speak up respectfully. These conversations matter.

[Sea-Change]

I've been wondering that as well, or at least whether or not affiliates are seeing any gain from this "opportunity" for promotors. I haven't seen any affiliates suggesting positive results from this program, but I have seen anecdotal reports of affiliates seeing fewer referrals.

I've been pouring tons of effort into Pinterest, and I've quadrupled my daily impressions and other statistics in the past 5 months. I haven't received a single referral since April, however, although I used to receive one or two every couple of months or so. It might just be my particular circumstances, but having more details about the source of the referral would help provide clarity.

[whimsywhim]

How do you know when you get a referral from Pinterest?

[Sea-Change]

I can't be 100% sure of the source, since Z doesn't provide that, unless I'm missing some way to tell other than tracking codes. I have, however, seen a correlation between frequently saved and high-performing pins and past product referrals. Often, before receiving referral commision, I'd have a notification on Pinterest of someone saving that pin. No guarantees this was the source, but this happened often enough to infer a potential relationship. I used to use Google analytics, which might yield some insight on the source, but I haven't since they made several changes.

I don't do a lot of promotion elsewhere these days --  no longer active on X -- so my referrals likely didn't come from other sources. I have a work-in-progres website, but the products I earned commission on, including my own, weren't posted there at the time of the referrals.

[Jadendreamer13]

Anything is possible, I guess. Why do third-party sales have to be so ambiguous?

[whimsywhim]

Plus the origin of self-referrals.  I wish Zazzle would tell us where the customer found the product.  That way, we can see what is working.

[Cat]

You can attach a tracking code to the url (I can't remember the details - I think it's a TC parameter, but I'm not sure.) But Zazzle has given us conflicting information about whether that is OK or not. In one place they said you could attach the parameter with no problem, but in other places they've said not to attach any parameters to the link or it might mess up your chances of getting a referral. It would be nice if they could provide some clarity there. 

[NigelSutherland]

I imagine that Zazzle is paying Google for AdWords advertising, which can be expensive. However you would hope that for very niche products, such items would be found organically. If you produced a hat for a man who has a three-legged horse called Stanley, you'd expect that item to naturally show up if a guy who owned such a horse did a search.

[Jadendreamer13]

Designers shouldn’t have to ponder, imagine, or guess who or what is chipping away at their royalties. They should know precisely who and what are doing it.

[Barbara]

Looking at my own statistics prior to April 1 as having a lot of "None" sales and now having almost 100% third party sales, this sudden surge in the number of people affiliating and specifically using my products to promote is patently unlikely. There's only one entity that could have upped their game in the third-party arena. What I keep wondering is why they touted the new scheme as being such a benefit to us. Saying something is so doesn't make it so.

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[Van]

There are a couple things that don't make a lot of sense to me.

1. They 'suggested' designers lower their royalty rate to 10%. The result was that some of us raised it instead to try to get a few pennies back from their new fees. Where once excess royalty was charged above 14.9%, they dropped that figure to 10%. I hate to say this but I've pondered over whether it was suspected designers may do that, which means they collect more $ from the excess fee as well as from their 35%-50% clawback from our royalty earned. Add to this, designers lowering their royalty rate certainly doesn't benefit the designer to begin with and wouldn't even without these new fees.

2. Correct me if I'm wrong, but I'm seeing some items selling for less than I've ever noticed them sell for before. That makes less $ for everyone.....

Of course some designers wonder about the increase in 3rd party sales which is why, speaking for myself, I'd like to see sales that Z is the referrer for be designated as Zazzle referred. It's not a lot to ask, we are just trying to understand, to figure out how/if we can adjust to this warped playing field.

I don't make a lot of sales but I haven't had a 'none' sale since April 1st. (April Fool's Day, how appropriate I suppose)

Barbara said: "Saying something is so doesn't make it so." Exactly, and right now I'm feeling kind of like the nasty medicine had the nasty taste covered up with a spoonful of honey or sugar.

[Jadendreamer13]

I, too, would like to see sales where Zazzle is the referrer be marked as such on designer’s Earnings Reports. Then it will be clear when, or if, they are charging three fees for one sale.

[OakAndPine]

Hi Zazzle, 

You are taking more than 50 % from my invitation royalties. It seems that you are trying to make all your profit from my royalties only. That's not fair !! For the first time in 18 years I am making less than $50 in monthly sales inspite of my volume, quality of work and advertisement becoming better over the years. Some of us have spent years designing for you. We deserve better....