Why 2024 was the year sellers became less loyal to Amazon
For eight years, Arizona-based Kate Ames has made her living selling on Amazon, mostly through her packing supplies company Package Mint. Year after year, her sales have remained relatively steady, even as Amazon has hiked the fees it charges sellers. But as Amazon’s cut has grown bigger, Package Mint’s profits have shrunk. This year, especially, it’s become harder than ever to make money on Amazon, Ames said.
Earlier this year, Amazon imposed a slew of new fees that sparked widespread seller outrage and even a Federal Trade Commission probe. Not only is selling on Amazon more expensive now, but the new fees, such as an inbound placement fee, which charges sellers if they don’t split up their inventory to be shipped around the country, have become more complex.
“Frankly, Amazon has become an increasingly complicated and difficult platform to work with, especially as a small business owner,” Ames said.
That’s why Ames is betting on TikTok Shop to turbocharge her business. She joined the platform 14 months ago and began ramping up activity even more after Amazon announced its new fee structure last December. For Ames, TikTok Shop was a natural pivot because she used to be a content creator on the platform. Although the lion’s share of Package Mint’s sales still come from Amazon – around 90% – Ames said her sales on TikTok Shop have been growing 20% every month.
“TikTok Shop is much simpler,” Ames said.
Ames isn’t alone.
Modern Retail spoke to half a dozen sellers for this story, who said that they’re branching out beyond Amazon. Many cited rising costs and dwindling profits on Amazon as one of the main reasons. At the same time, legitimate competitors — from Walmart Marketplace and Shopify to TikTok Shop and Temu — have emerged to challenge Amazon’s dominance. Many boast comparatively lower seller fees to lure more merchants to their platforms.
Put together, Amazon sellers are becoming a lot less loyal to the e-commerce behemoth, and it’s a theme that’s expected to continue in 2025 and beyond.
“I don’t know a single Amazon native seller who is not expanding away from Amazon,” said Jon Elder, CEO and founder at Black Label Advisor, which manages hundreds of brands. “Historically, it was common to see sellers doing 95% of their revenue on Amazon, but going forward, sellers will average 75%.”
In a survey of 2,000 Amazon sellers conducted by Jungle Scout at the end of 2023, third-party merchants identified “expanding to other e-commerce platforms or online channels” as one of their top priorities in 2024. Eva Hart, a senior manager at Jungle Scout, who also sells coffee on Amazon, expects this trend to continue into 2025.
Amazon has tried to maintain its appeal to third-party merchants, who make up 60% of the sales on Amazon’s online marketplace, by announcing that it won’t raise or introduce new fees this year. In a blog post, Amazon acknowledged that the new fees have added complexity to merchants’ businesses, forcing many to change how they operate. But sellers have told Modern Retail that they plan to branch out beyond Amazon anyway.
Amazon fees are 15% or less in most product categories, which helps pay for a variety of services and tools, including fulfillment services that are fast and cost an average of 70% less than other two-day shipping options. “Sellers who choose to use these optional services do so because they provide more value than they can get elsewhere, and Amazon’s selling partners are engaging with our store more than ever before and are achieving even greater success,” Amazon spokesperson Mira Dix said in a statement.
In 2023, more than 10,000 independent sellers surpassed $1 million in sales for the first time, and brand owners grew their sales more than 22% year over year, according to the company.
‘They have control over your whole business’
Like Ames, Texas-based Hart grew tired of rising fees on Amazon. But her frustration reached a fever pitch when her brand, Couple’s Coffee, had its account suddenly shut down — right before Amazon’s Prime Day sale in October. Even though Hart had not violated Amazon’s terms of service, it took five weeks to get the account up and running again. During that time, Couple’s Coffee lost between $15,000 and $17,000 in sales. According to Hart, 100% of Couple’s Coffee’s revenues come from Amazon.
Hart and her husband originally purchased the Couple’s Coffee brand through a brokerage firm for online businesses. When Amazon added a new field in Seller Central that auto-populated with information from the previous business owner, who was tied to another account that broke Amazon’s terms of service, it created a domino effect that erroneously shut down Hart’s account.
For Hart, her brand’s account suspension was a wake-up call.
“That just kind of opened my eyes to the control that Amazon has over your product, and if that’s your only sales channel, they have control over your whole business,” Hart said. “I always knew that it was a good strategy to diversify the channels you offer your products, but it’s kind of easier said than done, and we just had a super honed-in focus on Amazon.”
That’s why after Couples Coffee’s Amazon account was live again in November, Hart focused on opening a Shopify storefront. The bulk of sales still come from Amazon, but Hart said her brand’s margins on Shopify are double what they are on Amazon.
Of Elder’s client base, sellers are most heavily investing in TikTok Shop and Walmart Marketplace. The reasons vary. The viral nature of TikTok Shop’s platforms means it can drive traffic numbers that are too powerful to ignore. Meanwhile, Walmart Marketplace has proven to be a natural alternative to Amazon “because their system mirrors Amazon’s FBA network with their own version,” according to Elder. “It’s easier to adapt to compared to TikTok.”
Jason Boyce, a veteran Amazon merchant who now runs Avenue7Media, a consulting business for sellers, said there’s been growing interest from sellers in Walmart as a sales channel. He’s in the process of onboarding his entire client base, around 80 sellers, to Walmart Marketplace.
To be sure, most brands aren’t outright leaving Amazon so much as they’re expanding their reach to other platforms. Despite its high costs, Amazon comes with benefits. “There’s the obvious added benefits to having your product on Amazon because of that pool of consumers that you wouldn’t have access to,” Hart said.
Other platforms also come with unique challenges of their own. For instance, TikTok could be shut down in the U.S. as early as Jan. 19. Though the platform’s future is uncertain, sellers told Modern Retail they’re choosing to stay.
New Jersey-based Judah Bergman, the founder and CEO of baby products brand Jool Baby, which has been relying on TikTok Shop more in recent months, said he’s not convinced that the app will go away under the Trump administration because the president-elect has said he does not support the TikTok ban. In the meantime, Bergman said he’s all in on TikTok Shop, where his brand’s sales have grown about 25% since mid-November, and the lower seller fees are too attractive to ignore. Bergman, who has been selling on Amazon for a decade, said small- to mid-sized businesses on Amazon will have to shutter eventually.
“I don’t see the long-term picture for third-party selling on Amazon the way it is,” Bergman said. “The numbers don’t work.”
Meanwhile, the federal government has accused Chinese-owned Temu of undercutting domestic merchants by exploiting a trade loophole to bypass tariffs. But that isn’t stopping some American sellers like California-based Craig Leslie, who sells coffee on Amazon, from testing out the platform, which has touted its low fees to bring on more merchants. George Hatch, director of marketplaces at Pattern, an e-commerce accelerator that works with hundreds of global brands, said Pattern is looking to add Temu as a marketplace option for its brands in 2025.
“Brands are absolutely looking at the fees and seeing if they can save money and be more profitable on other channels,” Hatch said.
To become less reliant on Amazon, Hart plans to sell new versions of her coffee products so she can offer lower prices on Shopify than Amazon. That’s because Amazon is known to penalize merchants who sell their products for less on competing platforms. Looking ahead, Hart said she’ll pull resources away from Amazon to invest more in driving trafficking to her Shopify storefront. That will include devoting a bigger budget to social media advertising.
“Amazon advertising is very turnkey, so coming up with a strategy to drive traffic to an outside platform is more difficult,” she said.
Indeed, even as sellers like Ames are working to shift their businesses away from Amazon, it’s hard for her to envision a future in which she would ever leave the platform entirely.
“It’s really hard to imagine completely leaving Amazon,” she said. “As a seller, there’s only so many options that we have.”