The Amazon marketplace is shrinking - and that is good news. Of 2.4 million active sellers in 2021, only 1.65 million remain. New registrations have reached a decade low. But the remaining sellers generate more revenue than ever before.
The Great Compression
That is what Marketplace Pulse calls the current upheaval: rising costs, tougher competitors and higher requirements are filtering out casual sellers. Those who remain benefit.
1. The figures: what is happening on the marketplace?
The figures tell two stories at once: yes, the marketplace is losing sellers. But no, it is not getting smaller. The third-party marketplace grew by 15% in 2025 to $575 billion. The money is simply spread across fewer shoulders.
165,000 new sellers in 2025 - a decade low
For comparison: in 2024 there were still 295,000 new registrations. Amazon is increasingly becoming a marketplace for experienced, well-capitalised entrepreneurs rather than for beginners.
2. Why do so many sellers give up?
The Great Compression
Marketplace Pulse has coined an apt term: "The Great Compression". Several cost drivers are squeezing margins at the same time:
FBA fees are rising continuously
+0.08€ per unit in 2026. On top of that, new fee types such as the Low-Inventory-Level Fee and Inbound-Placement Fee since 2024. The complete fee breakdown shows: for many sellers, the costs eat up the margin.
CPC risen to $1.18
A 15.5% increase year over year. The average ACoS is 30%. In Q4, click prices rise by a further 20-30%. Anyone who does not manage their PPC campaigns professionally burns money.
US tariffs are driving up product costs
Trump's tariff policy has increased purchasing costs for many products by 30-60% - especially for goods from India and China.
Chinese competitors
Another factor: Chinese sellers who sell directly from the factory and can undercut Western sellers on price. 40% of all new FBA sellers now come from outside the USA. Price competition is tougher than ever before.
3. Who benefits from the consolidation?
The other side of the coin is much more positive than many think:
58% of sellers become profitable within 12 months. But the key question is: what do these 58% do differently from the remaining 42%?
4. What the winners do differently
Data-driven instead of gut feeling
Successful sellers in 2026 operate like data companies that happen to sell products. They track every margin point, test methodically and build systems that reinforce themselves over time. Weekly margin analysis is not a nice-to-have but a must.
AI-first listing strategy
With Amazon Rufus, search has changed fundamentally. 38% of all shopping sessions already go through the AI assistant. Winners no longer write their listings for keywords but for the AI: natural language, complete attributes, context-rich A+ content.
Advertising + content as one unit
Many sellers treat PPC and listing optimisation separately. Winners do not. PPC brings visitors, strong content converts them. Without content, advertising becomes expensive. Without traffic, even the best content is useless. It only works together.
The winners' formula:
Niche instead of mass
The days of copying a generic product and throwing it onto Amazon are over. The winners of 2026 go narrower and deeper: niche branding, real value creation, bundles, refills and subscriptions. They design for customer lifetime value, not for the individual sale.
5. Rising advertising costs: the hidden hurdle
Advertising on Amazon is becoming more expensive - and that is a main reason why unprofessional sellers drop out. Anyone who does not have their ACoS under control burns money. Top performers keep their ACoS at 23-26%, while the average is 30%.
What you should do now
The consolidation is your opportunity - if you seize it. Here is your action plan:
- Set up profit tracking - weekly margin analysis per product, not per month
- Optimise listings for Rufus AI - natural language, complete attributes, strong A+ Content
- Push ACoS below 25% - through better conversion, not just by lowering bids
- Deepen your niche - bundles, subscriptions and branding instead of generic products
- Build a review strategy - authentic reviews are the strongest differentiator
- Secure your cash flow - plan for the DD+7 payout rule and rising upfront costs
The marketplace is not getting easier - but it is becoming more rewarding for those who work professionally. 100,000 sellers make over $1 million a year. The question is: are you one of them?
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