Executive Summary: Amazon’s GMV continues to grow, but new seller registrations are declining. Revenue is consolidating among large brands and direct-to-platform manufacturers, while advertising costs and fees rise. Small sellers face tighter margins, higher compliance risks, and stronger competition. Success now requires systems, brand strategy, and proactive legal protection.
Something strange is happening on Amazon.
For years, Amazon added roughly half a million new sellers annually. Now, new seller registrations are declining in 2023, 2024, and into 2025. Yet Amazon’s business is bigger than ever. In 2024, global GMV reached nearly $740 billion, with projections approaching $800 billion in 2025, an 8% increase year over year (Marketplace Pulse estimates). By comparison, TikTok Shop generated around $31 billion in revenue. Amazon added nearly two TikTok Shops’ worth of revenue in a single year.
So if sales are climbing, why are fewer new sellers joining and why are small sellers struggling more than ever? The opportunity didn’t disappear. The marketplace changed.
The Big Are Getting Bigger
The first shift is professionalization.
Large multinational brands and sophisticated marketplace operators now dominate growth. Sellers generating $10 million, $50 million, and even $100 million annually are increasing at faster rates than small sellers. Marketplace data shows:
- 350% more $100M sellers over recent years
- 112% more $10M sellers
- Only 49% growth among $100K sellers
Revenue is consolidating upward.
Major brands that once ignored Amazon now treat it as a primary sales channel. Companies like Procter & Gamble and Johnson & Johnson invest heavily in Amazon teams, advertising, and brand control. They move TV budgets to Amazon ads. They gate their brands and cut out smaller wholesale resellers.
For small sellers who built businesses reselling big brands, those doors have closed.
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Chinese Manufacturers Went Direct
The second shift is structural.
Around 2017, manufacturers in China stopped relying on U.S. middlemen and began selling directly on Amazon. Entire regions, like Shenzhen, are filled with Amazon-native manufacturers launching products at scale.
These sellers often operate multiple accounts and price aggressively, often 10% lower on average than U.S.-based sellers in similar categories.
Fast-growing brands that many U.S. consumers have never heard of are pulling in millions of dollars annually while scaling at triple-digit growth rates. The middle layer of small import-and-resell businesses has been squeezed between multinational brands above and direct-from-factory sellers below.
This doesn’t mean opportunity is gone. It means margins are thinner and competition is industrial.
Advertising Is No Longer Optional
In 2019, Amazon’s advertising revenue was $12.6 billion. By 2024, it exceeded $56 billion, a 400% increase (Amazon earnings reports).
Advertising is now one of Amazon’s largest profit engines. Average cost-per-click hovers around $1.00 in many categories. Average cost of sale often approaches 30%. Many sellers spend 10–20% of revenue on ads just to maintain visibility.
Ten years ago, a strong listing and reviews could win organically. Today, paid traffic is often mandatory.
Launching a product used to cost a few thousand dollars. Many sellers now estimate needing $20,000–$25,000 to launch competitively in established niches. For small sellers, that changes the risk profile.
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Fees Keep Climbing
Amazon’s fulfillment and storage fees have steadily increased.
From 2006 to the present, FBA fees for common product sizes have risen over 90%, while inflation over the same period was roughly 51%. Storage and removal fees have also increased substantially.
Amazon adjusts fees for operational reasons, but the impact on small sellers is real. Margins that once supported small-scale operators now demand higher volume and tighter systems.
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Compliance and Suspension Risk
With more sellers and more automation, enforcement is stricter. Small sellers face:
- Automated account suspensions
- Intellectual property complaints
- Listing suppression
- Inventory holds
Large sellers absorb compliance costs across teams. Small sellers often learn through painful trial and error. One suspension can wipe out months of progress.
So Is the Dream Dead?
No. But it’s different.
The “side hustle” myth that anyone can list a product and scale to seven figures quickly is outdated. The marketplace now rewards:
- Strong systems
- Operational discipline
- Compliance readiness
- Brand building beyond Amazon
Winning today means either building a defensible brand or operating with process precision. Amazon is not shrinking. It is consolidating and professionalizing. The sellers who adapt can still win, but the bar is higher.
What Small Sellers Must Do Now
- Think Brand, Not Arbitrage – Generic listings without differentiation struggle.
- Control Documentation – Invoices, supply chain records, and IP rights must be airtight.
- Budget for Ads Realistically – Paid traffic is built into the model.
- Diversify Revenue Channels – DTC and retail expansion reduce platform risk.
- Prepare for Enforcement – Prevention is cheaper than reinstatement.
Amazon is not a get-rich-quick platform. It is a high-competition, system-driven marketplace.
The Reality
Small sellers are not failing because demand disappeared. Demand is at record levels. They are struggling because competition has scaled faster than most new entrants expected.
The opportunity still exists. But it now requires capital, structure, and legal awareness that many new sellers underestimate.
If you are facing suspension, IP issues, or account instability while trying to compete in today’s Amazon marketplace, ESQgo can help you protect your account, defend your brand, and move forward with clarity.
Contact ESQgo to protect your Amazon business before small setbacks become permanent losses.
FAQs
- Is Amazon still profitable for small sellers?
Yes, but margins are tighter, and competition is more professionalized than a decade ago.
- Why are fewer new sellers joining Amazon?
Higher ad costs, increased fees, stronger competition, and stricter enforcement raise the barrier to entry.
- Are Chinese sellers dominating Amazon?
Direct-to-platform manufacturers have increased significantly and often compete on price.
- Has Amazon advertising become mandatory?
In most categories, paid advertising is required to gain visibility.
- Are fees increasing faster than inflation?
Over long periods, many FBA fees have risen at rates exceeding general inflation.
- Can small sellers still succeed?
Yes, but success now requires brand strategy, capital planning, and operational discipline.
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