February 28, 2025

Amazon is propelling third-party sellers to a record high: a strategic transformation

In 2024, Amazon reached a decisive milestone: third-party sellers reached a record share of 62% of units sold on the platform. This evolution marks a major strategic transformation, with an assumed shift towards a model focused on infrastructure and high-margin services. Let's decipher the challenges and the implications of this change.

Amazon and its new strategy focused on third party sellers

For several years, Amazon has been gradually reducing its role as direct seller to promote its ecosystem of third-party sellers. This transition is part of an implacable economic logic: reduce the risks associated with stocks and maximize profits through high profitability services, including:

  • Sales and logistics expenses billed to third party sellers.
  • Advertising revenue, which reached $56.2 billion in 2024.

With $156.1 billion generated by services to third party sellers, they now represent 24.48% of Amazon's global turnover.

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The gradual end of own-selling

Amazon started reduce its agreements with certain suppliers and actively encourages brands to adopt the marketplace model. This transition allows him to:

  • Limiting the financial risks associated with stocks.
  • Increase margins by focusing on services.
  • Diversify your income by exploiting advertising and sales commissions.

Within three years, The combined revenues from third-party vendor services and advertising are expected to exceed those from own sales.

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Third-party sellers face increased dependency

Despite regular fee increases, sellers remain committed to Amazon due to:

  • Its immense visibility among consumers.
  • Its logistics infrastructure unmatched with FBA (Fulfillment by Amazon).
  • Its key role in global e-commerce, where being absent can be a commercial liability.

However, this growing dependency brings challenges:

  • Margins under pressure because of rising costs.
  • A need to invest in advertising to maintain visibility.
  • Changing conditions imposed by Amazon, requiring constant flexibility.

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Conclusion

Amazon is in the process of redefining its business model. By prioritizing third-party sellers and advertising, the platform is moving away from direct selling to positioning itself as an essential e-commerce ecosystem. This change offers opportunities but also imposes new challenges for salespeople, who must adapt to an environment where Amazon is both a partner and an omnipotent arbitrator.

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