Marketplace Briefing: Amazon sellers face cash crunch as fees, policy changes spur order delays, price hikes and supplier renegotiations
This is the latest installment of the Marketplace Briefing, a weekly Modern Retail+ column about the ever-changing e-commerce marketplace landscape. More from the series →
Amazon merchants are bracing for more cash flow troubles and margin pressure this year, thanks to a bevy of new fees and policy changes.
For years, Chuck Gregorich, a Wisconsin businessman who sells fire pits and outdoor furniture through his company Net Health Shop, has relied on credit cards to help manage the gap between when he pays for Amazon ads and when his sales revenue arrives. Now, that option is going away, as Amazon plans to deduct ad costs directly from seller earnings instead, beginning April 15, according to a message sent to sellers reviewed by Modern Retail. Credit cards mays still be used as a secondary option if the retail proceeds are insufficient to cover advertising costs. Gregorich says the change could tie up as much as $800,000 in working capital during an already tight period.
“This time of the year is the worst time of the year for me for cash flow,” Gregorich said, citing inventory purchases, tariffs and freight costs that all come due ahead of his peak selling season.
It’s just one of several policy changes this year that sellers say could strain their finances.
Amazon is also changing when sellers get paid. Previously, Gregorich said his sales proceeds typically became available shortly after an order shipped, with payouts issued on a rolling two-week cycle. Under the new process, called Deliver Date + 7 days, Amazon will instead hold payment for seven days after the order is delivered to the customer, according to a message reviewed by Modern Retail. Depending on when an order is delivered relative to the payout schedule, that could delay access to funds by roughly 10 to 15 days, if not more, Gregorich said. He estimates the change could temporarily tie up about $1 million of revenue in the near term.
Amazon said the payout timing change reflects a longstanding policy. The company standardized its reserve system in 2016 to hold funds until seven days after delivery, a practice it says already applies to the vast majority of sellers. Beginning in March, Amazon started moving the small share of sellers still on older payment terms to the newer system. Sellers have the option to request daily disbursement through an on-demand feature. The company said the delay is intended to give customers time to receive orders, initiate returns or file claims.
The policy changes come at a time when higher fees are already squeezing sellers’ margins. Amazon announced last week that it will impose a 3.5% fuel and logistics surcharge on merchants’ fulfillment fees, effective April 17, as rising fuel costs tied to conflict in the Middle East pressure supply chains. Amazon also hiked merchant fulfillment fees earlier this year.
To cope, Gregorich said he is preparing to ask freight carriers and factory partners for extended payment terms. That may be easier said than done. After moving much of his manufacturing out of China in response to tariffs imposed by the Trump administration last year, he said he is now working with newer factory partners in other parts of Asia rather than the decades-long relationships he once relied on to negotiate flexibility during difficult periods. As a result, he said he is considering flying to Asia in the coming weeks to meet suppliers face-to-face and explain the situation in hopes of securing more favorable payment terms.
Gregorich is also delaying some inventory replenishment orders that would normally require large upfront deposits of $100,000. If the cash crunch worsens, he may also apply for financing through Amazon’s lending program, a service he’s tapped only occasionally in the past.
“I’ve learned over the last few years that I’ve got to plan week to week because I don’t know what Trump’s going to do. I don’t know what Amazon’s going to do,” Gregorich said. “It’s just so difficult that you just can’t sit here and have a really good plan.”
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, according to Marketplace Pulse. Third-party sellers account for over 60% of the total goods sold on Amazon.
Amazon’s push to extract more revenue from sellers comes as the company faces growing pressure from investors to justify massive spending on artificial intelligence. The company said it expects to spend as much as $200 billion on capital expenditures this year, much of it tied to AI infrastructure. The announcement triggered a stock selloff that wiped out more than $450 billion in market value.
At the same time, some of Amazon’s fastest-growing businesses are maturing. Its advertising unit grew 22% in 2025 — still strong, but below the 32% growth the segment posted in 2021. In turn, Amazon is faced with a delicate balancing act, as higher seller fees could ultimately reduce how much merchants can afford to spend on advertising and other services.
“We are committed to supporting the success of selling partners in our store and continue to help them achieve record sales year after year in our store,” Amazon spokesperson Ashley Vanicek told Modern Retail in a statement. “We invest heavily in powerful tools, services and programs to enable their business growth at a cost that is typically lower than alternative.”
“Sellers independently make decisions regarding their inventory, selection and pricing, and we provide the insights and tools to help them price their products competitively,” Vanicek continued. “The recent changes to advertising payment methods and reserve settings align a small subset of sellers with standard practices already used by an overwhelming majority of our selling partners.”
Costs force changes
Joe Stefani, founder of Desert Cactus, a Chicago-based manufacturer that sells licensed sports and collegiate merchandise on Amazon, said the payout timing change has already had a noticeable impact on his business’s cash flow.
After the change took effect, one recent disbursement came in at about $36,000 — far below the roughly $550,000 he had expected under the prior payment structure. Even for a business that earns more than $25 million in annual revenue, that kind of swing can upend carefully planned budgets for inventory and other expenses.
Stefani said the advertising payment change will eliminate a financial cushion his business had come to rely on. His company previously used credit card rewards earned from Amazon ad spending to help cover travel costs for trade shows and supplier visits. Some of those expenses will now have to be paid directly out of the company’s cash flow. Stefani estimates the change could cost his business roughly $30,000 in lost credit card rewards.
“We have no outside investors at all. We’re always bootstrapping,” Stefani said. “We’re always concerned with cash flow.”
To preserve liquidity, Stefani said he plans to scale back some product launches this year. For example, instead of launching a new line of school-themed napkins with about 150 designs, his company may start with only 125.
The mounting costs described by sellers are reflected in broader industry data. A recent Marketplace Pulse survey of 181 sellers found that 46% reported declining profit margins over the past year, compared with 31% who saw improvement. Nearly half of sellers cited marketplace fees as a top cost pressure, followed closely by advertising spend.
New York-based consultant Chad Davis, who works with about 15 mid-size brands, said some of his clients are cutting back on their Amazon ad spend as they lose the ability to float those costs on credit cards. Some brands that previously spent around the mid-teens percentage of revenue on ads are now targeting the low-teens. Sellers are also concentrating marketing dollars on top-performing products while pulling back spend for lower-margin items.
Some brands are changing how they package goods to improve profitability. One tactic, Davis said, involves bundling items that customers frequently buy together into multi-packs to reduce fulfillment costs per unit. Others are trying out “shrinkflation,” he said, by slightly reducing product sizes while keeping the price the same. One snack brand he works with, for example, has reduced the size of a product from one pound to about 13 ounces while keeping the price the same.
Phil Masiello, founder of the Baltimore, Maryland-based Amazon consultancy CrunchGrowth, said many brands are investing more heavily in their own websites and alternative marketplaces to reduce their reliance on Amazon as fees rise. That trend has been underway for years but is gaining urgency as costs rise and policies change more frequently, he added.
Sellers say price increases are unavoidable.
Craig Leslie, founder of Oceanside, California-based The Bean Coffee Company, said he’s planning to raise prices by about 5% across his entire product catalog to offset Amazon’s new fuel and logistics surcharge, as well as higher platform fees. Monil Kothari, who runs the fine jewelry brand Haus of Brilliance, also said he is raising prices by as much as 25% across the board; on top of higher Amazon fees, the company is contending with tariffs, higher materials costs and general inflation.
Brandon Fishman, founder and CEO of Prime Time Agency, a consultancy that works with about 90 brands, said rising costs associated with selling on Amazon are likely to shave several percentage points off sellers’ profit margins on average. Many brands are raising prices modestly — often by a dollar or two per product — but have limited room to push prices higher after multiple tariff-induced increases last year. Sellers are also scaling back discounts because they no longer have the margins to absorb the added costs. Brands that previously offered discounts of 30-40% are now offering promotions closer to 20%.
As Fishman put it, “The only thing they can do is continue to raise prices.”
What I’m reading
- Some wholesale suppliers are pulling products from Amazon as the e-commerce giant holds firm on prices. (The Information)
- Amazon reached a new deal with the U.S. Postal Service. (Bloomberg)
- TikTok has begun casting actors for its own mini-drama series. (Business Insider)