Sellers who conduct over 60% of their sales on Amazon.com's (AMZN.US) massive e-commerce platform are currently facing a difficult period. High import tariffs from the previous administration have created challenges throughout the year, while recent geopolitical conflicts have driven up energy costs, forcing merchants to either raise prices for already strained consumers or absorb the losses themselves. As if these pressures weren't enough, Amazon is implementing a series of new policies that some sellers claim are making it increasingly difficult to sustain their businesses on the platform.
In recent weeks, Amazon altered how it disburses sales proceeds to sellers and collects fees for advertising services. Subsequently, the company announced it would begin charging merchants a 3.5% fuel surcharge to offset rising oil prices linked to international conflicts. For some sellers, these moves represent another example of Amazon increasing pressure on their operations. Michael Patron, who runs a multi-million dollar business on Amazon, stated, "Our profits are nearly gone," criticizing the company's policies on social media and adding, "I think that's why things are becoming increasingly frustrating."
On Wednesday, Patron joined hundreds of other major Amazon sellers in a coordinated boycott of the platform's advertising services to protest the recent policy changes that are squeezing their already tight profit margins. The 24-hour advertising boycott was organized by the "Million Dollar Sellers" group, a community with over 700 members whose collective annual revenue totals approximately $140 billion. In a social media post about the boycott, MDS co-founder Eugene Kayman wrote, "Sellers have complained for years, but this time feels different. The reason is simple: it's no longer just an annoyance; it's a direct cash grab."
An Amazon spokesperson, Ashley Vanicek, stated that the recent changes to advertising payment methods and disbursement schedules were intended to align "a small segment of sellers" with practices already adopted by the majority of merchants on the platform. The company said the fuel surcharge was introduced to partially recoup costs increased by rising oil prices and logistics expenses.
Amazon's third-party marketplace, launched in 2000, has become a crucial pillar of its retail strategy. This marketplace hosts millions of sellers, ranging from small businesses operating out of garages to well-known brands listing their products on the site. Revenue from seller services—including commissions, logistics, advertising, and customer support—has surged by over 400% since 2017. In the fourth quarter, this segment's revenue grew 11% year-over-year to $52.8 billion, accounting for approximately 42% of Amazon's total sales during that period.
The temporary fuel surcharge, effective April 17, is expected to lead some sellers to raise prices. However, other policy changes could freeze their cash flow, potentially causing more severe consequences. Kayman indicated this could prevent merchants from paying employees or suppliers and force them to take on more debt. "Most sellers are mom-and-pop shops or have just one or two employees. They typically earn about 3% cash back on their advertising spending, which is often their third-largest expense," Kayman explained in an interview. "So, they were getting a significant amount back, and [Amazon] has taken that ability away."
Kayman noted that many sellers, especially small businesses, rely on the "credit card rewards" earned from spending on Amazon Ads to help manage their finances. Earlier this month, Amazon announced it would begin automatically deducting advertising fees from some sellers' proceeds instead of allowing them to pay via credit card. A notice stated that if a merchant's sales revenue is insufficient to cover ad costs, Amazon would use their existing payment method as a fallback for deductions. The company also offered sellers a $2,500 advertising credit "to help with the transition."
While Amazon described this change as beneficial for sellers' "cash flow management," merchants argued it could have the opposite effect. On Tuesday, after receiving feedback, Amazon announced it would delay the implementation of the new advertising payment method until August 1. The company wrote, "Based on the feedback we received, we are delaying this change until August 1, 2026, to give this segment of advertisers more time to prepare."
In mid-March, Amazon implemented a new policy for some US sellers, meaning it would hold sales proceeds for a longer period. Sellers must now wait until seven days after a product is delivered to the customer to receive payment. Previously, Amazon paid merchants seven days after an item was shipped. The rapid succession of policy changes has created additional anxiety among sellers. "Combined with the payment delays, this creates a significant cash flow crisis," wrote Adam Ronquist, founder of Heist Labs, which acquires e-commerce brands, in a LinkedIn post responding to the advertising policy changes. "With rising fees and cash flow pressures, there is a tipping point—and Amazon may soon discover it."
A seller operating a six-figure business on Amazon for over two decades said the delayed payment policy would place substantial strain on his company, which is already struggling to cover daily operational costs. "Amazon has already taken its share," said the seller, who requested anonymity due to fear of retaliation. "What's left is our money, and we can't access it. Our payments are being delayed." Amazon stated that most of its sellers have been on a seven-day settlement system since 2016. The company said it provided a six-month notice period to sellers not yet using this system to prepare for the transition. Amazon explained that the policy gives customers time to receive their purchases, initiate returns, and file claims.
The boycott is the latest example of Amazon facing scrutiny over the rising cost of selling on its platform. According to third-party market research firm Marketplace Pulse, which cited seller profit-and-loss statement examples, Amazon's average take rate from each transaction exceeded 50% for the first time in 2022. Seller fees are part of an antitrust lawsuit filed against Amazon by the US Federal Trade Commission in September 2023, scheduled for trial in 2027, which accuses the company of using anti-competitive tactics to maintain its e-commerce dominance and suppress merchants on its marketplace. Amazon has previously refuted the FTC's allegations, stating its practices are pro-competitive. The company argued that Marketplace Pulse's findings inaccurately represent the cost of selling on the site because they combine fees with optional service costs that some sellers choose to purchase from the company.
An Amazon spokesperson said in a statement, "We are committed to supporting selling partners' success in our store and continuously help them achieve record sales year after year. We invest heavily in robust tools, services, and programs to support their business growth, often at costs lower than other alternatives."
Charles Chakalo, a seller on Amazon for 15 years, said the recent policy changes effectively reduce some sellers' cash flow cycle from 90 days to "virtually zero." "I believe this is entirely about Amazon squeezing the processing fees they pay to credit card companies," said Chakalo, who sells home and kitchen products and runs a newsletter for Amazon merchants. "If small sellers can't afford these charges, that's just how it is. There will always be other sellers trying to survive on the platform."
Amazon has served as a launchpad for many businesses seeking access to its vast customer base and frequently highlights seller success stories in annual progress reports, noting last year that independent merchants averaged approximately $290,000 in net annual sales in 2024. The company often refers to merchants as its partners. However, Chakalo remarked that the latest policy changes feel less like a partnership and more like merchants are merely "service providers" to the company.
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