2025 at a Glance for Amazon Sellers
The period from January 2025 to the present has marked a pivotal phase for Amazon sellers, characterized by a strategic emphasis on fee stability alongside significant policy overhauls and notable advancements in AI-driven tools and advertising capabilities. This dynamic environment reflects Amazon’s ongoing pursuit of operational efficiency, an enhanced customer experience, and increased control across its vast marketplace. For sellers, this necessitates proactive adaptation and strategic diversification to ensure sustained profitability and competitive advantage. The shifts observed underscore a marketplace that is maturing, where success increasingly hinges on precise operational management and sophisticated engagement strategies rather than simply listing products.
I. Amazon’s Evolving Fee Structure: Stability, Reductions, and New Incentives
A. FBA Fulfillment Fees: A Period of Stability
In a notable departure from previous years, Amazon announced a period of stability for US Fulfillment by Amazon (FBA) and referral fees in 2025. Effective January 15, 2025, the holiday peak fulfillment fees concluded, and rates reverted to the 2024 non-peak period rates, which largely remain unchanged for most standard and oversize product tiers. This provides sellers with a more predictable cost environment, allowing for more consistent financial planning.
A key initiative within this fee structure is the continued emphasis on Low-Price FBA Rates. Products priced under $10 are automatically eligible for reduced FBA rates, which are $0.77 less than standard FBA rates. This move is designed to support sellers of high-volume, low-margin items, fostering competitiveness, particularly against emerging ultra-low-cost marketplaces. It creates a clearer path to profitability for sellers operating within this price segment, though it also signals an intensification of competition in these categories.
Furthermore, Amazon has introduced Reduced Inbound Placement Service Fees for large, bulky products. Effective January 15, 2025, these fees have been reduced by an average of $0.58 per unit, especially for shipments with minimal splits. This adjustment aims to incentivize sellers to route larger inventory items through Amazon’s fulfillment network, contributing to optimized logistics across the platform.
The decision to freeze core FBA and referral fees after a period of complex changes in 2024 suggests a strategic pivot by Amazon. While this appears beneficial for sellers, it aligns with Amazon’s broader objective of increasing its own margins. If core fees are stable, Amazon is likely extracting value through other avenues, such as advertising or stricter operational policies. This indicates a mature marketplace where growth is driven by optimizing existing operations and value-added services, rather than solely through base fee increases. Sellers should therefore not perceive fee stability as a reduction in overall cost pressure but rather as a redirection of where costs might be incurred. This necessitates a closer examination of other operational expenditures, particularly advertising spend and supply chain efficiency.
The emphasis on Low-Price FBA rates also represents a direct response to the rise of competitors like Temu and Shein. By lowering fulfillment costs for items under $10, Amazon aims to retain and attract sellers in these price-sensitive categories, ensuring its competitive stance across all price points. This move serves both defensive and offensive purposes, aiming to capture market share in the budget segment. Sellers in the sub-$10 price point should leverage these reduced fees but also prepare for potentially aggressive pricing strategies from competitors and Amazon itself.
To provide a clear overview of the fee structure, the following table summarizes the FBA fulfillment fees:
Table 1: Amazon FBA Fulfillment Fees: 2024 Peak vs. 2025 Non-Peak Comparison (Starting Jan 15, 2025)
| Size Tier | Shipping Weight Ranges | 2024 Peak Fees (Oct 15, 2024 – Jan 14, 2025) | 2025 Non-Peak Fees (Starting Jan 15, 2025) | Change |
| Small Standard | 4 oz or less | $2.73 | $2.50 | No change |
| Small Standard | 4+ to 8 oz | $2.90 | $2.65 | No change |
| Small Standard | 8+ to 12 oz | $3.25 | $2.95 | No change |
| Small Standard | 12+ to 14 oz | $3.82 | $3.60 | No change |
| Small Standard | 14+ to 16 oz | $3.10 | $2.88 | No change |
| Large Standard | 4 oz or less | $3.15 | $2.91 | No change |
| Large Standard | 4+ to 8 oz | $3.39 | $3.13 | No change |
| Large Standard | 8+ to 12 oz | $3.66 | $3.38 | No change |
| Large Standard | 12+ to 16 oz | $4.07 | $3.78 | No change |
| Large Standard | 1+ to 1.25 lb | $4.52 | $4.22 | No change |
| Large Standard | 1.25+ to 1.5 lb | $4.91 | $4.60 | No change |
| Large Standard | 1.5+ to 1.75 lb | $5.08 | $4.76 | No change |
| Large Standard | 1.75+ to 2 lb | $5.24 | $4.91 | No change |
| Large Standard | 2+ to 2.25 lb | $5.33 | $4.99 | No change |
| Large Standard | 2.25+ to 2.5 lb | $5.53 | $5.17 | No change |
| Large Standard | 2.5+ to 2.75 lb | $5.70 | $5.33 | No change |
| Large Standard | 2.75+ to 3 lb | $5.87 | $5.49 | No change |
| Large Standard | 3+ lb to 20 lb | $6.82 + $0.16/half-lb interval above first 3 lb | $6.15 + $0.16/half-lb interval above first 3 lb | No change |
| Large Bulky | 0 to 50 lb | $9.88 + $0.38/lb interval above first lb | $8.84 + $0.38/lb interval above first lb | No change |
| Extra-Large | 0 to 50 lb | $28.29 + $0.38/lb interval above first lb | $25.56 + $0.38/lb interval above first lb | No change |
| Extra-Large | 50+ to 70 lb | $42.16 + $0.75/lb interval above 51 lb | $39.35 + $0.75/lb interval above 51 lb | No change |
| Extra-Large | 70+ to 150 lb | $58.46 + $0.75/lb interval above 71 lb | $54.04 + $0.75/lb interval above 71 lb | No change |
| Extra-Large | 150+ lb | $202.69 + $0.19/lb interval above 151 lb | $194.18 + $0.19/lb interval above 151 lb | No change |
Note: Data derived from. “No change” indicates 2025 non-peak rates are the same as 2024 non-peak rates, which are typically lower than 2024 peak rates.
B. Inventory Management Costs: Navigating Storage and Surcharges
While FBA fulfillment fees have stabilized, sellers continue to navigate various inventory management costs. Monthly storage fees remain in effect, calculated per cubic foot of inventory stored in Amazon fulfillment centers, with significantly higher rates during the Q4 peak season (October-December). For instance, standard-size products incur a monthly fee of $0.78 per cubic foot from January to September, which jumps to $2.40 per cubic foot during the peak months. Additionally, aged inventory surcharges apply to items stored beyond specific timeframes, such as 181 days or longer in the US, and a storage utilization overage surcharge can be levied on sellers with an excessive stock-to-sales ratio.
To encourage a fresh and diverse catalog, Amazon has continued to offer Enhanced FBA New Selection Programs. This includes a waiver of inbound placement fees for up to 100 units of new parent ASINs for products enrolled between December 1, 2024, and March 31, 2025. This incentive aims to reduce initial costs for sellers introducing new products to the platform.
The continued application of aged inventory surcharges and storage utilization overage fees, coupled with incentives for new selection, clearly indicates Amazon’s push for efficient inventory turnover and a dynamic product catalog. Amazon seeks to avoid its fulfillment centers becoming long-term warehouses for slow-moving items, as this impacts its operational efficiency and capacity. Sellers must therefore prioritize sophisticated inventory forecasting and management. This involves leveraging tools like the upgraded FBA Inventory Dashboard, which now includes a demand prediction tool utilizing historical data to forecast future sales and provide optimistic and average weekly demand projections. This tool is not merely helpful; it represents Amazon providing data-driven guidance to align seller behavior with its own operational goals.
By offering these projections, Amazon subtly steers sellers toward optimal inventory levels, reducing its own warehousing burden and improving overall supply chain fluidity. Sellers should actively integrate Amazon’s provided data and tools into their inventory planning. Ignoring these signals could lead to higher storage costs and missed opportunities for incentives, further highlighting Amazon’s increasing reliance on artificial intelligence (AI) to manage and guide its vast seller network. Diversifying fulfillment strategies, potentially using third-party logistics (3PL) providers for slower-moving or oversized inventory, becomes even more critical to mitigate these costs.
II. Critical Policy Shifts Impacting Seller Operations and Compliance
A. Reimbursement Policy Overhaul (Effective March 2025)
A significant policy change impacting seller profitability is Amazon’s new reimbursement policy, effective March 2025. This updated policy dictates that Amazon will only refund sellers for the manufacturing cost of lost or damaged products, rather than their full retail value. This represents a stark contrast to the historical policy, which often reimbursed sellers for the cost of goods sold (COGS) plus their profit margin. Sellers now have two options: allow Amazon to estimate the manufacturing cost based on similar products, or provide their own detailed manufacturing data, such as invoices and receipts, to potentially receive a more accurate payout.
This policy fundamentally shifts financial risk from Amazon to the seller. Previously, a lost item could sometimes be more profitable than a sale due to the absence of customer returns; now, sellers absorb a substantial portion of the potential revenue loss. This change compels sellers to maintain meticulous manufacturing cost records and to proactively appeal any low reimbursements. It also incentivizes a re-evaluation of fulfillment strategies, potentially encouraging diversification away from complete reliance on FBA. Sellers must update their financial modeling to account for this reduced reimbursement. Investing in robust record-keeping for manufacturing costs is crucial, and considering the cost-benefit of self-fulfillment or 3PL for higher-value items or those prone to damage or loss could mitigate this risk. This adjustment is a clear move by Amazon to enhance its own profitability by reducing payouts for internal operational issues.
B. New Product Title Requirements (Effective January 21, 2025)
Starting January 21, 2025, Amazon implemented a new policy prohibiting the use of the same word more than twice in product titles. The objective of this change is to enhance the shopping experience by promoting more straightforward and less keyword-stuffed titles. Sellers are advised to audit their existing titles, replacing repetitive words with relevant synonyms, and to monitor Amazon’s title suggestions for compliance and optimization.
Amazon’s continuous refinement of listing requirements, such as this product title policy, underscores its unwavering focus on the customer experience. Keyword stuffing, while historically a search engine optimization (SEO) tactic, can degrade readability and overall product perception. By enforcing clearer titles, Amazon aims to make product discovery more intuitive and trustworthy for buyers, which should ultimately lead to higher conversion rates. This policy is a direct reflection of evolving e-commerce consumer expectations for clarity and convenience. For sellers, this means a necessary shift from a purely keyword-density approach to a more semantic and user-centric optimization strategy. This requires a deeper understanding of target audience search intent and the use of natural language. It also emphasizes the increasing importance of other listing elements, such as bullet points, A+ Content, and high-quality images, to effectively convey product information and benefits.
C. Stolen Goods Policy Reinforcement (Effective June 30, 2025)
Effective June 30, 2025, Amazon is implementing a new, dedicated stolen goods policy, prompted by new government regulations. This policy reinforces Amazon’s long-standing prohibition against the sale of stolen goods and underscores the critical need for sellers to ensure the legitimacy of their supply chain. This often requires documentation, such as invoices or receipts, that can trace products back to the original manufacturer. Non-compliance with this policy can result in severe penalties, including listing removal, immediate loss of selling privileges, and ineligibility for fund disbursement.
The explicit mention of “new government regulations” as the driving force behind this standalone policy indicates increased external pressure on online marketplaces to combat illicit trade. Amazon is responding by formalizing and strengthening its existing stance. The emphasis on tracing products to the original manufacturer directly challenges business models like retail and online arbitrage, where such comprehensive documentation is frequently unavailable. For sellers, particularly those engaged in arbitrage, this means heightened scrutiny and potential risk. A robust, verifiable supply chain is no longer merely good practice but a regulatory and platform imperative. This could lead to a cleaner marketplace but also presents significant challenges for sellers who rely on less formal sourcing methods. It reinforces the necessity of direct relationships with manufacturers or authorized distributors.
D. Seller Fulfilled Prime (SFP) & Premium Shipping Updates (Effective June 29, 2025)
Starting June 29, 2025, Amazon is updating its Seller Fulfilled Prime (SFP) and Premium Shipping policies. While the on-time delivery rate (OTDR) requirement for Premium Shipping has been slightly reduced to 93.5% (from 97%), performance will now be reviewed weekly instead of monthly, with two warnings issued before removal from the program. For SFP participants, a new minimum shipping requirement of 100 Prime orders per month has been introduced; failure to meet this threshold will result in daily order limits. Amazon also offers OTDR protection for sellers who utilize Shipping Settings Automation (SSA) and purchase shipping labels through Amazon Buy Shipping or Veeqo.
The tightening of SFP and Premium Shipping requirements, particularly the weekly performance reviews and volume minimums, reflects Amazon’s strong desire for consistent, high-quality fulfillment, which is paramount for maintaining the Prime customer experience. However, the introduction of OTDR protection and exemption periods for performance issues demonstrates Amazon’s intent to support reliable, high-volume sellers who leverage its preferred tools. This creates a clear delineation: smaller or inconsistent sellers may find it more challenging to maintain Prime eligibility, potentially nudging them towards FBA or off-Amazon channels, while larger, compliant sellers are incentivized to remain within Amazon’s ecosystem and utilize its tools. Sellers must critically assess their fulfillment capabilities. For those aiming for SFP or Premium Shipping, consistent, high-volume performance is no longer optional. This may necessitate investment in more robust internal logistics, integration with Amazon’s shipping tools, or partnering with a 3PL specializing in Amazon compliance. These changes reinforce Amazon’s control over the delivery experience, even for seller-fulfilled orders.
Table 2: Amazon Premium Shipping & SFP Policy Updates (Effective June 29, 2025)
| Policy Area | Old Requirement | New Requirement | Key Implication for Sellers |
| Premium Shipping | |||
| On-Time Delivery Rate (OTDR) | 97% | 93.5% | Slight reduction in threshold, but more frequent review. |
| Performance Review Frequency | Monthly (30-day basis) | Weekly (7-day basis) | Requires more consistent, week-to-week performance; one bad week can trigger warnings. |
| Warnings Before Removal | Not specified (implied less frequent) | Two warnings per requirement before removal on third infraction | Increased scrutiny; requires immediate action on performance issues. |
| OTDR Protection | Limited/None | Available if using Shipping Settings Automation (SSA) & Amazon Buy Shipping/Veeqo | Incentivizes use of Amazon’s tools for delivery date accuracy and label purchase. |
| Seller Fulfilled Prime (SFP) | |||
| Minimum Shipping Volume | No explicit monthly minimum | Ship at least 100 Prime orders per month | Disqualifies smaller or seasonal sellers; pushes towards scaling or 3PL. |
| Order Limits for Low Volume | None | Daily Prime order limits if monthly threshold not met | Restricts growth for inconsistent or low-volume SFP sellers. |
| Performance Exemption Period | Limited | Exemption period for performance issues after second notice | Provides a window to resolve issues, but Prime status is disabled. |
III. Advancements in Amazon Advertising and Seller Tools
A. The Growing Role of AI Across the Ecosystem
Amazon is making substantial investments in artificial intelligence (AI) across its platform, integrating it into various functionalities to enhance efficiency and provide sellers with more sophisticated tools.
The FBA Inventory Dashboard has been significantly upgraded with a demand prediction tool. This new feature leverages historical data to forecast future sales, offering sellers optimistic and average weekly demand projections. This AI-driven forecasting is not just a helpful utility; it represents Amazon’s strategic effort to guide seller behavior towards optimal inventory levels, thereby reducing its own warehousing burden and improving overall supply chain fluidity. Sellers who actively integrate these AI-driven insights into their inventory planning will likely gain a competitive advantage by minimizing storage costs and maximizing product velocity.
The Amazon Seller API has also seen advancements, with new Search Query Performance and Catalog Performance Reports becoming available via API effective February 26, 2025. This eliminates the need for manual uploads and imports, significantly enhancing scalability for sellers. Providing these reports via API democratizes deeper analytics, allowing larger sellers and agencies to build custom dashboards and automation, moving beyond the limitations of the Seller Central interface. This empowers data-driven sellers to optimize their advertising and catalog performance with unprecedented granularity and automation, indicating that sellers who do not leverage such data will fall behind.
Furthermore, AI is playing an increasingly vital role in listing content optimization. The AI readability of content and images in listings is gaining importance, with recommendations for sellers to process their images through AI to ensure they are comprehensible for tools like Alexa. This is crucial as consumers increasingly interact with Amazon through voice commands. The emphasis on creativity in listings is also paramount, given the decreased attention spans of shoppers, influenced by platforms like TikTok. Amazon’s A+ generative AI tool can assist sellers in refreshing their creatives without incurring significant design costs. Amazon’s pervasive integration of AI across inventory management, reporting, and listing optimization signals a future where AI is a foundational layer for successful selling. This means moving beyond manual processes, leveraging data for smarter decisions, and ensuring listing content is optimized not just for human eyes but also for AI readability and generation. Early adopters of these AI capabilities will likely lead the market, while those who lag will face the challenge of catching up.
B. Targeted Advertising Innovations for Strategic Growth
Amazon Ads continues its rapid evolution, introducing precision-focused tools designed to enable more strategic growth for sellers.
On May 5, 2025, Amazon rolled out Amazon Business Exclusive Sponsored Product Campaigns. This innovation allows advertisers to specifically target placements within the Amazon Business store, enabling them to set B2B-specific budgets and keywords. This is particularly significant because business shoppers demonstrate a higher purchase likelihood, lower return rates, and tend to place larger orders compared to B2C consumers. This tool provides a dedicated lane for reaching high-intent business buyers, optimizing ad spend for a distinct and valuable customer segment.
Following this, on May 6, 2025, Sponsored Brands introduced Bid Boosting for New-to-Brand (NTB) Shoppers. Advertisers can now strategically increase their bids for shoppers who have not purchased from their brand in the past 12 months. This feature has demonstrated proven effectiveness in driving new customer acquisition, with advertisers who significantly increased their bids seeing a substantial rise in NTB orders. This empowers brands to prioritize and scale customer acquisition campaigns more effectively within Sponsored Brands.
A major enhancement to data analytics arrived on May 23, 2025, with Amazon Marketing Cloud (AMC) adding 5-Year Retail Purchase Data. AMC now provides access to five full years of detailed retail purchase history, a significant expansion from the previous 13-month limit. This extended dataset enables deeper insights into customer behavior, facilitates comprehensive lifetime value modeling, and allows for the definition of “upgrade-ready” audiences. This is a game-changer for understanding customer lifetime value and long-term brand growth, especially for products with longer purchase cycles.
Further enhancing performance measurement, Multi-touch Attribution (MTA) in-console was introduced in closed beta in Q2 2025. This powerful feature allocates conversion credit across various Amazon Ads touchpoints proportionally to their value, moving beyond a singular “last-touch” attribution model. It provides a holistic view of campaign effectiveness across the entire marketing funnel, helping to justify the return on investment for mid- and upper-funnel campaigns. Concurrently,
Long-term Sales (LTS) Metrics entered open beta in Q2 2025. These metrics estimate the impact of upper-funnel campaigns on a brand before a customer makes a purchase, which is crucial for understanding long-term brand health and optimizing the overall sales pipeline.
The suite of new advertising features indicates that Amazon’s advertising platform is maturing rapidly, moving beyond simple keyword bidding to enable highly sophisticated, audience-segmented, and full-funnel marketing strategies. Generic PPC strategies will likely yield diminishing returns. Success will increasingly depend on leveraging these advanced tools to target specific customer segments (e.g., B2B, new customers), understand the full customer journey, and optimize for long-term value, not just immediate conversions. This will likely necessitate dedicated advertising specialists or agency partnerships. As Amazon stabilizes core selling fees and potentially faces scrutiny over marketplace fees, a significant portion of its revenue growth is shifting towards advertising and marketplace fees.
By providing more granular and effective advertising tools, Amazon incentivizes sellers to increase their ad spend, knowing they can achieve better return on investment. This creates a symbiotic, yet competitive, relationship where sellers need to advertise more effectively to stand out in a crowded marketplace, directly contributing to Amazon’s bottom line. Advertising is becoming an even more non-negotiable component of Amazon success, requiring sellers to allocate sufficient budget and continuously optimize campaigns to maintain visibility and drive sales, especially as PPC costs are likely to rise due to increased competition.
IV. Broader E-commerce Trends and Strategic Imperatives for Sellers
A. Evolving Consumer Expectations and the Convenience Imperative (FedEx Report, February 2025)
A FedEx report published in February 2025 underscores that convenience and digital trends are fundamentally redefining the e-commerce landscape. The report highlights that over 80% of shoppers prioritize convenience, with expectations for home delivery (81%), free shipping (76%), and real-time tracking (68%) now considered “table stakes”. Seamless returns are also identified as critical, with a significant 97% of shoppers abandoning purchases due to inconvenient return experiences. These consumer expectations directly mirror the experience Amazon has meticulously cultivated through its Prime offering. The “Amazon Effect” has effectively set the benchmark for e-commerce convenience, meaning other platforms and sellers, even those operating on Amazon, must meet these elevated expectations to remain competitive. This reinforces the value of FBA for meeting Prime standards, but also highlights the challenges for SFP sellers to match this level of service.
The report further details how generational preferences are reshaping digital marketing strategies. Gen Z consumers, for instance, exhibit a strong preference for digital-first brand interactions, with nearly 70% of their engagement occurring online, and discover new brands predominantly through TikTok (51%) and Instagram (40%). Millennials are highly brand-conscious, often considering a brand’s treatment of employees, and 27% prefer to buy directly from a brand’s website or app, underscoring the importance of direct-to-consumer (DTC) strategies. In contrast, Boomers still value in-person connections, with 53% shopping in-store more than any other generation. This dynamic marketing landscape emphasizes that a one-size-fits-all approach is no longer effective. Gen Z’s reliance on social media and Millennials’ preference for DTC channels mean sellers cannot solely rely on Amazon’s internal advertising.
Additionally, the FedEx report notes a significant shift in holiday shopping behavior, with it becoming a year-round activity. Approximately 22% of shoppers surveyed begin holiday shopping as early as August to manage expenses and avoid price surges, and by 2026, 30% plan to shop for winter gifts throughout the year. This trend demands continuous engagement and promotional strategies outside traditional peak seasons. Sellers need to diversify their marketing channels beyond Amazon Ads, exploring social commerce, DTC strategies, and year-round promotional calendars to capture evolving consumer behavior and maintain engagement.
B. The Rise of Low-Cost Retail: Amazon Haul’s Global Debut (April 30, 2025)
Amazon has made a significant move into the low-cost retail segment with the launch of “Amazon Haul,” which was previously known as the Low-Cost Store. Initially introduced in the US in November 2024, Amazon has plans for its global debut in 2025, including an expansion of its policy effective April 30, 2025. This platform is designed to directly compete with ultra-affordable marketplaces like Temu and Shein. Amazon Haul offers products priced at $20 or less, with many items available for under $10. While offering competitive pricing, delivery times are typically one to two weeks, and free returns are available for purchases over $3. The model primarily focuses on direct shipping from manufacturers, often based in China, aiming to cut out intermediaries and offer “no-frills” products.
Amazon Haul represents a defensive and offensive play by Amazon in the budget segment. By creating a separate platform with slower shipping and lower prices, Amazon acknowledges a segment of consumers who prioritize cost over speed. This strategy allows Amazon to capture budget-conscious shoppers without diluting the “fast, free shipping” expectation associated with its core Prime offering. The planned global expansion indicates a serious, long-term commitment to this strategy. Sellers of low-cost items must be acutely aware of Amazon Haul as a new competitive landscape. While it might offer an additional channel for certain products, it also signals increased price pressure and a potential shift in consumer expectations for very cheap goods on Amazon. Sellers should evaluate whether their products fit the Haul model or if they need to differentiate on quality, speed, or overall brand value.
C. The Imperative of a Multichannel Strategy
Experts increasingly emphasize that relying solely on Amazon is becoming a significant business risk, and a robust multichannel strategy is crucial for maintaining competitive advantage and achieving sustainable growth in 2025. This involves diversifying sales channels beyond Amazon and actively driving external traffic to both Amazon listings and other platforms. The benefits of such diversification include increased brand awareness, a lower risk profile by reducing dependence on a single platform’s policy changes or supply chain issues, and expanded access to impulse buyers across various marketplaces and social media platforms. Additionally, affiliate content is gaining importance, influencing AI research and consumer purchasing decisions.
The increasing complexity of Amazon’s fee structure , ongoing policy changes , and rising Pay-Per-Click (PPC) costs make over-reliance on Amazon a substantial business vulnerability. Diversifying sales channels allows sellers to mitigate this risk, build direct relationships with customers, and reduce dependence on the whims of a single platform’s policies. Driving external traffic not only boosts Amazon sales but also strengthens overall brand visibility and reduces reliance on Amazon’s internal advertising algorithms. A multichannel strategy is no longer optional but a necessity for long-term resilience and growth. Sellers should invest in building their own direct-to-consumer (DTC) websites, exploring other e-commerce marketplaces (e.g., Walmart, TikTok Shop), and developing robust external marketing campaigns (e.g., Google Ads, social media, affiliate marketing). In this evolving landscape, Amazon can serve as a powerful component of a broader strategy rather than the sole focus.
D. Vendor Central Contraction and the Hybrid Model
The trend of Vendor Central (1P) contraction is projected to continue in 2025, with Amazon increasingly encouraging or even compelling smaller or less profitable vendors to transition to Seller Central (3P). This shift is giving rise to a hybrid selling model, where brands strategically utilize Vendor Central for high-volume, core SKUs that Amazon prefers to source directly, while reserving Seller Central for premium, high-margin, or new product launches. Amazon is also prioritizing its private label brands and exclusive partnerships, which intensifies competition for generic or widely available products. Concurrently, increased automation and AI are expected to play a larger role in operations across both Vendor and Seller Central.
The shrinking of Vendor Central represents Amazon’s strategic move to consolidate its direct relationships to only the largest, most strategic brands. By shifting other vendors to Seller Central, Amazon effectively offloads operational burdens such as pricing, inventory management, and customer service to sellers, while continuing to collect marketplace fees and advertising revenue. This approach allows Amazon to maintain control over its core supply chain for high-volume goods while leveraging the 3P model for broader product variety and scalability. For brands currently operating under Vendor Central, this necessitates a proactive approach to develop a robust Seller Central strategy, including mastering Amazon Ads, to maintain profitability and brand control. For all sellers, this trend underscores the increasing importance of product differentiation and potentially exploring exclusive partnerships to remain competitive against Amazon’s expanding private label efforts.
V. Actionable Recommendations for Amazon Sellers in 2025
To thrive in Amazon’s dynamic ecosystem in 2025, sellers must adopt a proactive and adaptive approach, focusing on strategic optimization and diversification.
Optimize Fulfillment and Inventory Management for Cost Efficiency
Sellers should strategically leverage Amazon’s stable FBA fees and the reduced Low-Price FBA rates for suitable products. A critical analysis and optimization of inventory levels are paramount, utilizing the upgraded FBA Inventory Dashboard’s demand forecasting tools to minimize storage fees and avoid aged inventory surcharges. It is essential to implement a system for meticulously tracking manufacturing costs to prepare for Amazon’s new reimbursement policy, which now only covers manufacturing costs for lost or damaged products. Furthermore, considering a hybrid fulfillment model, which might involve utilizing 3PLs for certain product categories or as a backup, can help mitigate risks associated with Amazon’s evolving policies and operational challenges.
Refine Listing Content and Advertising Strategies with AI and New Tools
A thorough audit and update of all product titles are necessary to comply with the new keyword repetition rules, focusing on natural language and relevant synonyms to enhance discoverability and user experience. Sellers should embrace AI-driven tools for listing optimization, including ensuring image readability for voice search platforms like Alexa and leveraging generative AI for creative asset development. Experimentation with new advertising features such as Amazon Business Exclusive Campaigns, Sponsored Brands Bid Boosting for New-to-Brand shoppers, and the expanded data in Amazon Marketing Cloud is crucial for more sophisticated audience targeting and lifetime value analysis. Utilizing Multi-touch Attribution (MTA) and Long-term Sales (LTS) metrics will provide a comprehensive understanding of full-funnel performance and inform strategic advertising investments.
Explore Multichannel Expansion and Diversify Traffic Sources
To mitigate the inherent risks of over-reliance on a single platform, sellers should actively develop a robust multichannel strategy. This involves investing in building a strong direct-to-consumer (DTC) presence and exploring other e-commerce marketplaces beyond Amazon. Concurrently, actively driving external traffic (e.g., Google Ads, social media marketing, affiliate marketing) to both Amazon listings and external sales channels will enhance overall brand visibility and reduce dependence on Amazon’s internal advertising ecosystem.
Proactively Monitor Policy Changes and Adapt Business Models
Continuous vigilance regarding Amazon’s evolving policy updates, particularly those related to fulfillment, compliance, and product sourcing, is critical. For Seller Fulfilled Prime (SFP) and Premium Shipping sellers, ensuring operational consistency to meet stricter weekly performance reviews and volume requirements is non-negotiable. A thorough review of supply chain legitimacy is also imperative in light of the new stolen goods policy. Sellers must be prepared to adapt pricing and operational strategies in response to Amazon’s competitive moves, such as the expansion of Amazon Haul. The overarching objective should be to focus on profitable growth rather than merely top-line revenue.
Thriving in Amazon’s Dynamic Ecosystem
The first half of 2025 has unequivocally underscored Amazon’s continued evolution as a dominant force in e-commerce. This evolution is driven by a relentless focus on enhancing the customer experience, optimizing operational efficiency, and diversifying revenue streams. While sellers benefit from a period of fee stability for core FBA and referral services and gain access to powerful new AI-driven tools, they also face increased scrutiny, more stringent performance metrics, and a strategic shift in financial risk.
Success in this increasingly complex environment hinges on a proactive and adaptive approach. Sellers must master Amazon’s advanced advertising capabilities, optimize inventory and fulfillment processes with data-driven insights, and strategically diversify their sales channels beyond the Amazon platform. By embracing these imperatives, Amazon sellers can not only navigate the complexities of 2025 but also position their businesses for sustained growth and resilience in the dynamic and ever-changing landscape of e-commerce.