Amazon Marketplace Trends 2026: What Agency Leaders Are Watching

Amazon registered 165,000 new sellers in 2025. That's the lowest number since Marketplace Pulse started tracking this data in 2015. Down 44% from 2024. Down 73% from the 2021 peak.

At the same time, the number of sellers generating over $1 million annually nearly doubled to 100,000. The number hitting $100 million jumped from around 50 four years ago to 235 now. Active sellers dropped from 2.4 million in 2021 to 1.65 million by the end of 2025, but traffic per active seller improved 31%.

This is the competition paradox. Fewer people are selling on Amazon, but the people who remain are doing more volume, capturing more traffic, and building bigger businesses. The marketplace didn't get easier to enter. It got professionalized.

If you run an Amazon brand or manage a portfolio, you already know this. The bar keeps rising. The fees keep stacking. The Chinese seller share keeps climbing. And the margin discipline required to survive gets tighter every quarter.

Here's what agency operators are actually watching in 2026.

The Competition Paradox: Fewer Sellers, Higher Stakes

The data is clear. Amazon's marketplace is consolidating.

Active sellers: down from 2.4 million to 1.65 million. New registrations: 165,000 in 2025, the decade low. But third-party sellers now account for 62% of units sold on Amazon, an all-time high. More than 60% of the top 10,000 sellers registered before 2019. Veterans control the top slots.

Meanwhile, sellers at $1 million or more in annual revenue doubled. Sellers at $100 million tripled in four years. The top 2% of sellers generate over 50% of total third-party revenue in the U.S. Revenue is concentrating at the top while the long tail shrinks.

What this means for brands: if you can operate at scale, there's less competition per unit of traffic. Traffic per active seller improved 31% since 2021, from 2,162 to 2,837 visits per month. That's real. But the cost to operate at scale is also higher. You need capital, operational expertise, and the ability to absorb fee increases, tariff swings, and margin compression without folding.

This dynamic makes agency partnerships more valuable, not less. New entrants who DIY their way to $1 million hit the wall fast. The ones who survive either have deep pockets or professional operators managing the complexity.

Advertising Is Infrastructure, Not Optional

Amazon's advertising business crossed $60 billion in 2025. In Q3 alone, it generated $17.7 billion, growing 22% year-over-year. Ad revenue now represents nearly 10% of total Amazon revenue. For context, Amazon is now 60% services and 40% retail. Services include advertising, seller fees, AWS, and subscriptions. Advertising alone is closing in on a tenth of the entire company's revenue.

For sellers, this means advertising is no longer a growth lever you turn on when you want to scale. It's a cost of existence. Organic search results are increasingly buried. Few of the first 20 results on most product searches are organic. If you're not bidding, you're invisible.

Total Amazon fees now exceed 50% of seller revenue for typical private-label sellers. That's 15% referral fee, 20-35% FBA fulfillment, and up to 15% advertising. Some sellers are paying 60-70% of revenue to Amazon. The math only works if your product margin is strong and your advertising efficiency is high.

Full-funnel advertising is the operating reality for any brand doing meaningful volume. Sponsored Products alone won't cut it. You need Sponsored Brands for top-of-funnel awareness, Sponsored Display for retargeting, Sponsored TV for streaming viewers, and DSP for off-Amazon remarketing. Amazon's ad-supported reach is over 300 million in the U.S. across Prime Video, Twitch, Fire TV, live sports, and third-party sites. New partnerships with Roku and Disney expand that further.

The question isn't whether to advertise. It's how to extract maximum efficiency across the full stack.

CPC benchmarks agencies are seeing in 2026: $1.20 to $1.80 for Sponsored Products in competitive categories. ACoS targets vary by brand, but anything above 30% long-term means your unit economics are broken. DSP is more efficient for awareness and retargeting if you have the budget and attribution infrastructure to measure it.

AI Operations Are Table Stakes, Not a Competitive Edge

Amazon's Seller Assistant (formerly Project Amelia) evolved from reactive support chatbot to autonomous business co-pilot. It proactively flags slow-moving inventory before storage fees hit. It auto-executes approved pricing strategies. It handles end-to-end execution: booking shipments, monitoring compliance, building campaigns.

Creator Studio makes professional image and video creation accessible at scale. AI translation, optimization, and cultural adaptation tools level the playing field for international sellers. A Chinese seller with strong English fluency used to have an edge. Now AI handles translation better than most humans.

But here's the thing: every seller has access to the same Amazon AI tools. This is table stakes, not competitive edge.

The differentiation is what you layer on top. Agencies with proprietary market intelligence, category-specific knowledge, and deep advertising expertise use AI to execute faster, but the strategy still requires human judgment. AI can adjust bids, but it can't decide whether to launch a new product line or exit a category. It can generate listing copy, but it can't position a brand against a Chinese competitor flooding the market with $8 knockoffs.

The sellers winning in 2026 are using AI for speed and scale but doubling down on the things AI can't replicate: brand story, customer relationships, and strategic positioning.

The Chinese Seller Dynamic and What It Means for U.S. Brands

Chinese sellers crossed 50% of Amazon's global active seller base for the first time in 2025. 50.03%, to be exact. They represent 59.9% of new registrations. And 57% of sellers doing $1 million or more on Amazon.com are Chinese.

But Chinese sellers capture only 39% of global third-party revenue. The average U.S. seller generates $884,958 annually. The average Chinese seller generates $393,557. U.S. sellers still win on revenue per seller by more than double.

The advantage is brand story, customer relationships, and premium positioning. U.S. brands that compete on price alone lose. Chinese manufacturers can undercut any price point because they control production and have shorter supply chains. The tariff enforcement gap (more on that below) makes the pricing gap even wider.

But quality, storytelling, and customer experience still matter. Buyers will pay more for a brand they trust, especially in categories where safety, durability, or performance matter. The challenge is that AI is narrowing the execution gap. Chinese sellers who couldn't write fluent English copy five years ago now use AI tools that produce native-quality listings. Cultural adaptation used to be a barrier. Now it's automated.

What this means for U.S. brands: you can't win on logistics or production cost. You have to win on brand. And brand requires more than good copy. It requires consistent customer experience, real product differentiation, and a story buyers believe.

Agencies that understand how to build and defend premium positioning in a price-competitive environment are more valuable than ever. The brands that survive are the ones that know what they stand for and can communicate it clearly.

Tariff Chaos and the Enforcement Gap

U.S. customs revenue surged to $215.24 billion in fiscal year 2025, up roughly $120 billion from 2024. Nike projected $1.5 billion in tariff costs. Apple estimated $1.1 billion per quarter. The de minimis exemption (the $800 threshold that allowed small shipments to enter duty-free) was suspended in May 2025 for Chinese imports. The EU is ending its €150 duty exemption by 2028.

But enforcement is inconsistent. Foreign sellers can import with no domestic legal entity. Customs fraud is "massive," according to Flexport's CEO. Sellers who understate customs declarations face minimal consequences. Domestic brands paying full tariffs compete against international sellers who don't.

Tariffs are almost completely passed through into U.S. domestic prices, according to economic research. Brands can't absorb the cost without killing margin. But raising prices makes you less competitive against sellers who aren't paying the tariff. The administration threatened an additional 100% tariff on Chinese goods, then walked it back. The volatility is the new normal.

What this means for brands: you need supply chain flexibility. Scenario planning for duty changes. Operational partners who can adapt procurement and pricing strategy quickly. If you're locked into a single supplier in a single country, you're exposed.

Agencies managing multi-country sourcing, domestic production partnerships, or hybrid models are helping brands de-risk. This isn't a trend that resolves cleanly. It's a permanent condition that requires ongoing strategic adaptation.

Amazon Haul and Bazaar: The Two-Tier Marketplace

Amazon launched Haul in November 2024. Items under $20, shipped direct from China, delivered in 11 days on average. Now over 3,000 sellers and an estimated $2 billion in annual GMV. 97.5% of sub-$10 Haul sellers are China-registered. Items fluctuate between 5-15% of bestseller lists on Amazon.com.

Haul expanded globally via the Bazaar app, now live in 25+ markets. It's Amazon's answer to Temu ($30 billion U.S. GMV) and Shein ($18 billion). Haul is still small by comparison, but it's growing.

This is the two-tier marketplace. Prime for speed and trust. Haul/Bazaar for ultra-low price. The middle is getting squeezed.

What this means for branded products: you have to justify your price premium even more clearly. If a buyer can get a similar-looking product for $8 on Haul, your $30 product needs to communicate why it's worth the difference. Quality, durability, brand trust, customer service, and return policy all matter more in a two-tier marketplace.

Brands that compete on "good enough" lose. Brands that stand for something specific and deliver on it win.

Multi-Channel Reality and Amazon as Infrastructure Provider

Amazon is now 60% services, 40% retail. Services generated $107 billion in Q3 2025. Third-party marketplace seller services alone hit $42.5 billion. Amazon Business (B2B) is estimated at a $50 billion annual run rate. Multi-Channel Fulfillment grew 70% year-over-year and now ships for TikTok, Shopify, Shein, Walmart, and others.

Supply Chain by Amazon (global logistics, warehousing, FBA, MCF) creates end-to-end lock-in. Amazon wants to be the infrastructure layer for all commerce, not just its own marketplace.

For brands, this creates a decision point: lean into the Amazon ecosystem or diversify. Most choose both, but the operational complexity requires professional management.

Amazon and Shopify combined represent 50% of U.S. ecommerce. Amazon at 35.7% ($440 billion), Shopify at 14%. If you're selling online in the U.S., you're likely operating on one or both platforms. TikTok Shop, Walmart, and Temu are all growing. Multi-channel is the reality.

Agencies managing inventory, fulfillment, and advertising across multiple platforms provide real operational value. Brands trying to DIY multi-channel often end up with fragmented data, inconsistent messaging, and inventory problems.

The Margin Discipline Shift: Profitability Over Volume

Total fees to Amazon now exceed 50% of revenue for typical sellers. Some pay 60-70%. Add in COGS, tariffs, and overhead, and many sellers operate on single-digit net margins.

The low-margin, high-volume playbook still works if you have scale and operational efficiency. But it's fragile. A tariff increase, a fee hike, or a CPC spike can turn a profitable SKU into a money pit overnight.

Smart operators are shifting to profitability over volume. That means SKU rationalization (cutting low-margin products), pricing discipline (walking away from unprofitable sales), and margin protection (raising prices when costs increase instead of absorbing the hit).

Amazon's fee structure changes in 2025 included inbound placement fees and low-inventory fees. More fee categories are likely coming. Brands need to model the impact of fee changes before they hit, not after.

Agencies that help brands model unit economics, run scenario planning, and make data-backed decisions about which products to grow vs. which to exit provide real strategic value.

ChatGPT Checkout and New Discovery Channels

OpenAI launched ChatGPT checkout in 2025. It charges a 4% transaction fee on Shopify merchant sales (vs. Amazon's 15% referral fee plus advertising). Over 1 million Shopify merchants are accessible through ChatGPT. An estimated 3.9 billion product queries happen annually on ChatGPT.

AI search contribution to website visits grew 15x in 2025, from 0.01% to 0.15%. It's still small, but it's growing. Conservative estimates put potential GMV through ChatGPT at around $5.5 billion.

OpenAI says "ads do not influence answers," which is fundamentally different from Amazon's ad-heavy search. This represents the first organic discovery channel at meaningful scale since Amazon advertising eliminated unpaid visibility.

Smart agencies are testing early. It's not a replacement for Amazon, but it's worth monitoring. For brands with strong Shopify presences, it's a new traffic source that doesn't require paying for every click.

What This Means for Brands Evaluating Agency Partners

Amazon in 2026 rewards operational sophistication. The brands winning are the ones with capital, expertise, and the ability to adapt quickly to fee changes, tariff swings, and competitive shifts.

If you're evaluating an agency partner, here are the questions that matter:

Do they manage full-funnel advertising or just Sponsored Products? If they're only running SP campaigns, they're missing half the opportunity. Full-funnel (SP, SB, SD, STV, DSP) is table stakes for brands doing meaningful volume.

Can they model unit economics and scenario-plan for fee or tariff changes? If they can't show you a profitability model that accounts for all fees, COGS, and advertising costs, they're not operating strategically.

Do they have multi-channel experience? If you're only selling on Amazon, you're exposed. Agencies that manage Shopify, Walmart, TikTok Shop, and other channels provide real diversification value.

Do they understand supply chain and sourcing? Tariff volatility and margin compression require supply chain flexibility. Agencies with procurement and logistics expertise can help brands de-risk.

Can they help with SKU rationalization and margin protection? Growing revenue is easy. Growing profitable revenue is hard. Agencies that help brands cut low-margin SKUs and protect pricing discipline provide long-term value.

Do they have category-specific knowledge? The tactics that work in beauty don't work in home goods. Agencies with deep category expertise bring strategic value beyond execution.

The operator skills that matter most in 2026: advertising efficiency, margin discipline, supply chain flexibility, multi-channel coordination, and strategic positioning against Chinese competition.