Analysis
Independent merchants increasingly depend on Amazon as their primary or sole meaningful sales channel, The Information reported, even as many of those same sellers describe rising fees and shrinking margins publicly. The dependency has deepened gradually as consumer shopping behavior consolidated around Amazon's marketplace, search and Prime shipping expectations over the past decade.
The economics for third-party sellers have become more complex over that period. Amazon's marketplace take rate -- referral fees, fulfillment fees, advertising costs increasingly necessary just to achieve baseline product visibility -- has risen steadily, and sellers who once viewed Amazon as one channel among several increasingly describe it as the channel, with independent websites and other marketplaces generating a shrinking share of total sales relative to a decade ago when direct-to-consumer e-commerce was widely expected to reduce platform dependency, not deepen it.
That consolidation runs counter to the direct-to-consumer thesis that drove significant venture investment in the 2015-2020 period, when startups built Shopify storefronts and their own customer acquisition funnels specifically to avoid platform dependency and the fees that come with it. The reality that has played out since is more mixed: acquiring customers directly has become more expensive as digital advertising costs rose and privacy changes reduced targeting precision, while Amazon's built-in customer base and search intent remained comparatively cheap and reliable by comparison, pulling merchant behavior back toward platform dependency even for sellers who started with an explicit strategy to avoid it.
“The economics for third-party sellers have become more complex over that period.”
- Amazon -- the primary beneficiary of merchant consolidation, with a marketplace take rate that continues climbing
- Shopify -- represents the direct-to-consumer alternative that has not fully displaced marketplace dependency despite a decade of investment in the category
- Independent merchants -- increasingly concentrated in their sales-channel risk, even as many publicly criticize the economics of that concentration
The timing compounds an already difficult environment for small merchants. Rising Amazon fees are squeezing margins from one direction while memory-shortage-driven hardware and component price increases squeeze from another for any merchant selling physical electronics or hardware-adjacent products, leaving less room to absorb cost pressure from either side.
For venture investors, the structural lesson is that platform-dependency risk in e-commerce has proven more durable than the direct-to-consumer thesis assumed a decade ago, and any consumer brand's growth model should account for Amazon as a near-permanent, rising-cost distribution partner rather than a channel to eventually outgrow.