Marketplace Briefing: Amazon’s seller count falls as revenue concentrates among top sellers
It’s getting harder to make the math work for some Amazon sellers.
Online merchants are still dealing with the effects of the Trump administration’s tariffs, which have forced many small- and mid-sized businesses to raise prices and rethink their supply chains. The war with Iran has also driven oil prices. Amazon recently said it will begin charging sellers a 3.5% fuel surcharge in response to rising costs, prompting sellers to weigh whether to hike prices or take a hit to their margins. On top of that, Amazon has changed how it pays out seller earnings and collects advertising fees, which some sellers say will strain their finances.
The effects are beginning to show up in the data.
The number of active sellers on Amazon.com has fallen from 584,000 in January 2025 to 500,000 as of March 2026, according to a report from the research market firm Marketplace Pulse. The research firm calculated the total number of active sellers by tallying all Amazon seller accounts that received at least one piece of feedback over the past year.
That decline comes as fewer new sellers are entering the marketplace. Amazon.com registered 165,000 new sellers in 2025, the lowest annual total since Marketplace Pulse began tracking the metric in 2015 and down 44% from the year prior, according to a January report from the firm. Additionally, fewer sellers are driving a larger share of sales on Amazon. Fewer than 8,000 sellers now account for roughly half of Amazon’s U.S. third-party gross merchandise volume, down from about 15,000 sellers just a few years ago, according to Marketplace Pulse estimates.
Put together, the data underscores how the growing cost of selling on Amazon, including rising fees, intensifying competition and thinner margins, has made it harder for some smaller sellers to stay in business.
“It’s become a much harder environment,” said Ben Donovan, insights lead at Marketplace Pulse. “Selling on Amazon is far less of a ‘side project, stay‑at‑home mom lists some products’ kind of business, and is a lot more of a sophisticated e‑commerce platform. That brings more volume and more opportunity, but it also raises the execution threshold.”
“We are committed to supporting the success of selling partners in our store and continue to help them achieve record sales year after year,” Ashley Vanicek, an Amazon spokesperson, said in an email statement. “We invest heavily in powerful tools, services, and programs to enable their business growth at a cost that is typically lower than alternatives. More than 60% of sales in Amazon’s store are from independent sellers — most of which are small and medium-sized businesses — providing a vast selection of amazing products, competitive prices and convenience for consumers.”
The company also said some of the findings in Marketplace Pulse’s analysis are inaccurate, though it did not elaborate further. Amazon pointed Modern Retail to a company blog post highlighting that independent sellers have generated more than $2.5 trillion in sales since the company’s third-party marketplace launched in 2000. Amazon said its platform remains one of the most profitable channels for merchants and continues to focus on helping brands launch and grow.
According to Marketplace Pulse’s 2026 Seller Index, which surveyed 181 merchants between February 25 and March 6, nearly half of sellers said marketplace fees were their biggest margin concern, while 46% pointed to advertising costs.
Fees are a major revenue source for Amazon. Third-party seller services — including commissions, as well as fees for fulfillment, shipping and advertising — generated $172 billion in 2025, an 11% increase from the year before, and accounted for about 24% of Amazon’s total net sales. Those costs can consume roughly half of a seller’s revenue on a typical transaction. Amazon’s logistics and advertising services are optional, but most sellers say they’re necessary to succeed on the platform.
Still, most sellers aren’t pulling back. Among those who cited fees as a top concern, only about a quarter said they were trying to reduce their reliance on Amazon. A larger share said they were actually growing their Amazon business. Amazon controls more than a third of U.S. e-commerce and an even larger share of marketplace sales, according to Marketplace Pulse, making it difficult for sellers to find comparable sales volume elsewhere.
“Amazon just has such a massive market share, it’s very difficult for sellers to be able to generate anywhere near the same revenue on any other platform,” Donovan said. “You’re locked into that because of the sheer volume that it creates.”
The Federal Trade Commission has accused Amazon of using its dominance to impose unfair terms on sellers and maintain its grip on e-commerce, in an antitrust lawsuit set to go to trial in 2027. Amazon has denied the claims, saying its practices support competition.
Some sellers have tried to push back. On April 15, hundreds of merchants participated in a one-day boycott of Amazon’s advertising platform after the company announced it would begin automatically deducting advertising costs from some sellers’ earnings, rather than allowing them to pay with credit cards, which sellers told Modern Retail could limit their cash flow. The boycott, which was organized by Million Dollar Sellers, a private community of about 800 e-commerce entrepreneurs, was more about optics than revenue.
“It was ultimately to prove a point that seller frustration is at an all-time high, and [sellers] are willing to forgo short-term benefits to be properly seen here,” said Eugene Khayman, the co-founder of Million Dollar Sellers. He added that he counted a “couple hundred” sellers who participated in last week’s boycott.
Even if 1,000 large sellers each generating $10 million in annual revenue paused their ad spending for a full day — and typically spend about 10% of revenue on ads — the total impact would be around $3 million, Marketplace Pulse’s Donovan estimated. That’s a fraction of Amazon’s advertising business, which surpassed $68 billion in revenue last year.
The day before the boycott, Amazon announced it would delay the ads payment change until August 1 based on feedback the company received about the policy. An Amazon spokesperson previously told Modern Retail that the changes to advertising payment methods and seller payouts “align a small subset of sellers with standard practices already used by an overwhelming majority of our selling partners.”
One seller, who has operated a six-figure Amazon business for over a decade, said it’s getting harder to remain profitable on Amazon. One of their top-selling items retails for about $150, but roughly $80 goes back to Amazon through a mix of commissions, fulfillment, storage and advertising costs. That leaves about $70 to cover manufacturing, shipping from overseas and other business expenses. The seller, who asked to speak anonymously to preserve their relationship with Amazon, said their costs are expected to go up because of Amazon’s fuel and logistics surcharge, and the changes to seller payments and ads payment processing will also pressure their finances.
“Amazon [is] well within their rights to increase their profit margins, but sellers are well within their rights to feel the pressure of that and push back,” Donovan said. “The end of it is not Amazon winning or sellers winning. It’s this constant tension of give and take.”
Donovan said it’s important for Amazon to maintain good relationships with sellers during the ongoing FTC antitrust case, particularly as the number of active sellers declines and Amazon becomes more dependent on a smaller group of merchants to keep its marketplace running.
“Amazon does value the seller base because sellers provide a lot of the selection for their customers,” Donovan said. “The marketplace now drives about two‑thirds of sales, so Amazon is dependent on it.”
What I’m reading
- Amazon allegedly coerced major brands, including Levi’s and Hanes, to raise prices on competing online marketplaces as part of a broader price-fixing scheme. (Bloomberg)
- A number of big companies like Apple and Amazon have not yet sought tariff refunds. (CNBC)
- An AI bot is running a retail store. (The New York Times)