Amazon Sellers Revolt: Boycott Ads Amidst Policy Change

For Amazon sellers, who account for over 60% of goods sold on the e-retailer’s sprawling marketplace, times are increasingly challenging. A confluence of economic headwinds and evolving platform policies is placing unprecedented pressure on these businesses.

The persistent impact of elevated tariffs on imports has created a year of financial strain, compounded by recent geopolitical tensions that have driven a spike in energy costs. These factors are forcing merchants to make difficult decisions: either absorb the rising operational expenses, squeezing already thin profit margins, or pass the increased costs onto consumers who are themselves grappling with economic uncertainty.

Adding to these external pressures, Amazon is implementing a suite of new policies that a significant segment of its seller base argues are making it increasingly difficult to sustain profitable operations on the platform.

In recent weeks, Amazon has made significant adjustments to its payment disbursement processes and how it collects fees for its advertising services. This was swiftly followed by the announcement of a new 3.5% fuel and logistics surcharge, explicitly introduced to offset the escalating costs of oil and transportation, exacerbated by ongoing global supply chain disruptions and energy market volatility.

To many sellers, these strategic shifts by Amazon are perceived as another instance of the e-commerce giant intensifying its demands on its third-party partners.

“We’re running out of margin,” stated Michael Patrón, who manages a substantial Amazon business and has been vocal about his concerns regarding the company’s policies. “It’s becoming increasingly frustrating, and I believe it’s a direct result of these policy changes.”

In a coordinated protest against these recent policy modifications, which many believe are severely impacting their already strained bottom lines, Patrón and hundreds of other large-scale Amazon sellers are participating in an advertising boycott of the platform. The organized action aims to draw attention to the cumulative effect of these changes on their businesses.

This 24-hour advertising boycott is being spearheaded by Million Dollar Sellers, a prominent community comprising over 700 members whose collective annual revenue is estimated to be around $14 billion. The group’s organized action underscores the scale of discontent within the seller community.

“Sellers have voiced their concerns for years, but this feels different,” explained Eugene Khayman, co-founder of Million Dollar Sellers. “The reason is simple: this is no longer just about irritation. It is about cash extraction.” Khayman’s sentiment reflects a growing belief that Amazon’s recent actions are directly targeting the financial liquidity of its sellers.

An Amazon spokesperson, Ashley Vanicek, commented that the recent adjustments to advertising payment methods and seller disbursements are designed to align a “small subset of sellers” with practices already prevalent among the majority of its merchants. The company maintains that these changes are intended to streamline operations and bring consistency to its payment structures.

Regarding the fuel surcharge, Amazon stated that the fee was introduced to partially recover costs that have been significantly impacted by rising oil and logistics prices. This indicates a direct pass-through of external market forces onto the seller community.

Launched in 2000, Amazon’s third-party marketplace has evolved into a critical component of its retail ecosystem. It now hosts millions of sellers, from nascent startups operating from home offices to established global brands, providing a vast platform for product distribution. This marketplace model has been a key driver of Amazon’s growth, offering unparalleled reach to a diverse range of businesses.

The seller services segment, which encompasses commissions, fulfillment, advertising, and customer support, has experienced extraordinary growth, surging over 400% since 2017. This highlights the increasing reliance of Amazon’s overall revenue on its seller ecosystem.

In the fourth quarter, revenue generated from the seller services unit saw an impressive 11% year-over-year increase, reaching $52.8 billion. This figure represented approximately 42% of Amazon’s total sales for the period, underscoring the significant economic contribution of its third-party sellers to the company’s financial performance.

Multiple sellers have indicated to CNBC that they anticipate raising prices in response to the temporary fuel surcharge, which took effect on April 17. However, the more profound concern for many lies in the other policy changes, which threaten to significantly impact their working capital. These changes could lead to substantial disruptions in their ability to manage daily operations.

Khayman elaborated that these liquidity pressures could render merchants unable to meet payroll obligations, pay essential suppliers, or potentially force them into taking on additional debt to bridge financial gaps. This highlights the critical nature of cash flow for small and medium-sized businesses operating on the platform.

“The majority of sellers are husband and wife teams, perhaps with one employee or an assistant. For them, receiving a 3% cash back on their ad spend, which is likely their third-largest expense, is crucial,” Khayman explained. “By removing that ability to earn rewards or benefits on this significant expense, Amazon is directly impacting their financial stability.”

Furthermore, many sellers, particularly smaller enterprises, rely heavily on rewards programs, such as credit card points earned from their advertising expenditures on Amazon. These points often translate into tangible savings or perks that help offset operational costs.

Earlier this month, Amazon announced a shift in its advertising payment policy, opting to automatically deduct advertising costs directly from sellers’ earnings instead of allowing them to use credit cards. The company had indicated that if a seller’s proceeds were insufficient to cover advertising expenses, Amazon would then charge their existing payment method as a backup. To facilitate this transition, Amazon had offered eligible sellers a $2,500 credit towards their advertising costs.

While Amazon framed this move as beneficial for sellers’ “cash flow management,” many merchants expressed concerns that it would likely have the opposite effect, potentially tying up funds that could be used for other critical business needs.

In response to feedback received from the seller community, Amazon announced on Tuesday that it would delay the implementation of this advertising payment change until August 1. This deferral aims to provide sellers with additional time to prepare for the new system.

“Based on the feedback we heard, we’re deferring this change until August 1, 2026, to give this group of advertisers more time to prepare,” the company stated in its announcement. This move acknowledges the significant impact the original timeline would have had on seller operations.

In mid-March, Amazon introduced a new policy for certain U.S. sellers that extends the period during which sales proceeds are held. Under this new regulation, sellers now have to wait an additional seven days after products are delivered to customers before receiving their earnings. Previously, Amazon disbursed sale proceeds to merchants seven days after an item shipped.

The accumulation of these policy changes has led to increased anxiety and uncertainty among sellers regarding their financial stability and operational planning.

“Combined with the payout delays, this creates a MAJOR cash flow crunch,” Adam Runquist, founder of Heist Labs, a company specializing in e-commerce brand acquisitions, commented on a social media post following the advertising payment announcement. “There is a breaking point with the increased fees and cash flow pressures — Amazon may soon be finding it.” Runquist’s observation highlights a growing sentiment that the cumulative impact of these changes is unsustainable for many businesses.

One long-standing seller, who has operated a successful five-figure Amazon business for over two decades and requested anonymity due to fear of reprisal, expressed significant concern. The delayed payment policy, they stated, will place substantial strain on their company, which is already navigating the challenges of covering overhead costs.

“Amazon has already taken all its money out,” the seller explained. “Whatever is left over, that’s our money, and we’re not getting it. We’re getting it delayed.” This sentiment underscores the feeling of reduced control over their own revenue streams.

Amazon maintains that the majority of its sellers have been operating under a seven-day disbursement system since 2016. The company also stated that it provided sellers who were not yet on this system with a six-month notice period to allow for adequate preparation for the transition. This indicates a belief that sufficient lead time was given for the policy change.

The company further explained that the revised policy is designed to provide customers with ample time to receive their purchases, initiate returns, and submit any necessary claims, thereby improving the overall customer experience.

The current seller boycott represents the latest instance of Amazon facing intense scrutiny over the escalating costs associated with operating on its platform. The financial burden on sellers has become a focal point of concern and discussion.

According to Marketplace Pulse, a third-party market research firm that analyzed a sample of sellers’ profit and loss statements, Amazon’s average cut from each sale surpassed 50% for the first time in 2022. This metric highlights the significant portion of revenue that Amazon now retains from third-party transactions.

The issue of seller fees is a central element in the Federal Trade Commission’s antitrust lawsuit against Amazon, which was filed in September 2023 and is scheduled for trial in 2027. The lawsuit alleges that Amazon employs anticompetitive practices to maintain its dominance in the e-commerce market and to stifle competition from merchants on its platform.

Amazon has consistently disputed the FTC’s allegations, asserting that its business practices are beneficial for competition and promote a healthy marketplace. The company argues that its platform provides significant value to sellers and consumers alike.

Amazon also countered the findings from Marketplace Pulse, characterizing them as an inaccurate representation of the actual costs of selling on the site. The company stated that the research conflates mandatory platform fees with the expenses of optional services that some sellers choose to purchase. Amazon contends that these optional services are not reflective of the core selling costs.

“We are committed to supporting the success of selling partners in our store and continue to help them achieve record sales year after year,” Vanicek stated. “We invest heavily in powerful tools, services, and programs to enable their business growth at a cost that is typically lower than alternatives.” This statement emphasizes Amazon’s commitment to seller success and its investment in supporting their growth.

Charles Chakkalo, an Amazon merchant with 15 years of experience, believes that the recent policy changes effectively shorten some sellers’ cash flow cycles from a comfortable 90 days to “effectively zero.” This drastic reduction in available working capital can have severe repercussions for business operations.

“I think this is simply Amazon squeezing out the processing fees they’re paying the credit card company,” Chakkalo commented. “And if the smaller sellers cannot handle this kind of charge, so be it. There’s a handful of other sellers that are going to try to make it on the platform.” This perspective suggests that Amazon may be seeking to internalize costs previously borne by payment processors, with smaller sellers bearing the brunt.

For many businesses, Amazon has served as a critical launchpad, providing access to a massive customer base and driving significant sales. The company regularly highlights seller success stories in its annual reports, noting in its 2024 report that independent merchants averaged approximately $290,000 in annual sales. These narratives are often used to showcase the platform’s potential for growth and profitability.

Amazon frequently refers to its third-party merchants as its partners, fostering an image of collaboration and mutual benefit.

However, Chakkalo’s observations suggest a shift in this dynamic. He posits that the latest policy changes feel less like a collaborative partnership and more like a relationship where sellers are merely “facilitators” for Amazon’s broader business objectives.

“It’s, again, a slap in the face. A reminder that, ‘Hey, wake up, this is not your business,'” he stated, reflecting a feeling of vulnerability among sellers. “‘This is your business, subject to my reign.'” This sentiment captures the growing perception among some sellers that Amazon holds ultimate control over their businesses, dictating terms that can profoundly impact their operations and profitability.