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Amazon News: Prime Day Disappoints, Ad Taxes Rise, Returns Tighten & Q4 Challenges Ahead
Published 3 days ago • 9 min read
This Week's Top Amazon Seller News
Hey Reader,
This week’s news dives deep into new taxes, shifting ad costs, underwhelming Prime Day performance, and some surprising marketplace trends that could shape your Q4 strategy. Let’s get into it. Join us live today at 1 PM Eastern / 10 AM Pacific!
We’ll discuss the latest Amazon news and how it impacts your business. Tune in for valuable insights to help you stay ahead. Catch the live stream on LinkedIn, YouTube, and Facebook.
Amazon’s October Prime Big Deal Days fell short compared to July’s record-breaking event, with shoppers mainly buying everyday essentials like apparel, shoes, and household goods rather than splurging on big holiday purchases. Average order sizes dropped 15% from July, and satisfaction levels slipped as buyers compared deals with Walmart and Target.
Economic pressures such as tariffs, inflation, and rising living costs drove cautious spending, with fewer shoppers using the sale to jumpstart holiday shopping. For Amazon sellers, this signals that Q4 promotions may face softer demand, requiring sharper pricing strategies, better value positioning, and strong differentiation to capture cautious consumers.
Starting October 1, 2025, Washington state expanded its sales tax and business & occupation (B&O) tax to cover digital advertising, custom website development, IT services, live presentations, and temporary staffing. This includes online ad services like search engine marketing, campaign management, and traffic monitoring, which were previously exempt.
For Amazon sellers, this could raise the cost of running ads, developing websites, and using tech services if they operate in or purchase services tied to Washington. Compliance will become more complex, and sellers should track expenses carefully, consider tax automation tools, and monitor legal challenges to the law, as companies like Comcast are already contesting it.
As of October 1, 2025, Amazon is now required to collect Washington state sales tax on advertising services, meaning sellers with billing addresses in the state will see tax added to their Sponsored Ads and Display campaigns. This stems from Senate Bill 5814, which expanded sales tax to include digital advertising, IT services, and custom website development.
For Amazon sellers, this adds another cost pressure to already thin margins and raises questions about whether other states will follow Washington’s lead. Sellers should prepare for higher ad spend in affected regions and monitor state-level legislation that could expand similar taxes nationwide.
Amazon’s easy return policy benefits shoppers but creates major risks and costs for sellers, with return fraud and mishandling leading to serious brand damage—such as customers receiving used or unsafe items. Some sellers have left FBA entirely, citing safety, fraud, and razor-thin margins as reasons they can’t rely on Amazon to manage returns responsibly.
In response, Amazon has introduced measures like fees for high return rates, warning labels on frequently returned items, and programs like “Grade and Resell” and Liquidations to reduce losses. For Amazon sellers, these changes mean higher pressure to maintain quality listings, manage costs, and explore alternative solutions to protect profitability in the face of growing return challenges.
Amazon has rolled out a new “Add to Delivery” feature for US Prime members, allowing shoppers to add eligible items like electronics, clothing, books, or groceries to already completed orders that haven’t shipped yet. The option appears as a blue “Add to delivery” button on eligible products within the Amazon app or mobile site.
This update can help reduce split shipments and boost basket size, meaning sellers may see larger, more frequent orders from Prime shoppers. For Amazon sellers, it highlights the importance of ensuring your products qualify for fast fulfillment and are Prime-eligible to take advantage of this new convenience-driven feature.
Etsy once pushed sellers to offer free shipping to gain visibility, but after running its own loyalty program with free shipping perks, it has realized the costs aren’t sustainable. Starting November 4, 2025, Etsy will cover only up to $6 in domestic shipping for orders over $15, with buyers paying any excess, and it plans to expand this perk internationally next year.
For Amazon sellers, this highlights how marketplaces struggle with shipping incentives and often pass the burden onto sellers or customers. It’s a reminder to track your own shipping costs closely and consider how “free shipping” strategies really impact margins, especially as platforms test different models.
Amazon’s October Prime Day has reignited investor optimism, with analysts suggesting it could push the stock past its long-standing $240 resistance level. Historically, Prime Day has marked the kickoff of strong Q4 performance, and early momentum suggests this year could follow that trend.
For sellers, this is important because a bullish Amazon stock outlook often signals investor confidence in strong holiday sales, which could drive more traffic and demand on the platform. With AWS growth, AI adoption, and seasonal strength aligning, Q4 2025 may deliver both higher sales volume for sellers and increased competition.
Amazon now lets sellers issue partial refunds for FBA orders in the US, UK, Germany, France, Italy, and Spain without requiring customers to send products back. This helps reduce return shipping and processing costs while making the process smoother for buyers.
Sellers can set custom refund percentages, choose which products qualify, and adjust participation anytime for greater flexibility. Refund activity is tracked in the FBA Returns dashboard, marked as “Return not expected,” giving sellers more control and visibility over return management.
Amazon sellers are bracing for October’s Prime Big Deal Days and the holiday rush by focusing on pricing strategies, inventory planning, and marketing campaigns. Many are working to balance tariff pressures and supply chain challenges while still offering competitive deals to capture shopper demand.
Sellers also shared that they’re leaning more heavily on ads and promotions this year, knowing consumer budgets are tighter and competition is fiercer. For Amazon sellers, the takeaway is clear: success this season will depend on careful preparation and a mix of aggressive deals and operational resilience.
Amazon experts at Accelerate 2025 stressed that shippers must plan early, monitor inventory health, and provide accurate delivery windows to avoid delays during the holiday rush. Key inbound deadlines include Oct. 9 for AWD shipments, Oct. 20 for minimal splits, and Oct. 30 for Amazon-optimized splits.
Sellers are encouraged to maintain minimum inventory across all SKUs to optimize placement and avoid stockouts, while also using demand forecasting tools to anticipate shifts. To minimize congestion—especially on the West Coast—Amazon advises routing shipments to central or eastern regions and scheduling delivery appointments well in advance.
Many successful sellers still waste 30–50% of their ad budgets due to common mistakes like focusing on ACOS instead of TACoS, running auto-campaigns without harvesting, and neglecting negative keywords. These issues lead to inflated costs and lower profitability, even when campaigns look “healthy” on the surface.
Fixes include building strong negative keyword lists, restructuring campaigns with SKAGs, setting proper bid hierarchies, and following a 14-day optimization cycle instead of making daily changes. Sellers who tighten up PPC strategy can cut waste dramatically, improve sales velocity, and increase profitability—while positioning their business for higher valuations at exit.
Poppi and Olipop are leading the gut-healthy soda trend, but their Amazon trajectories are diverging. Poppi still leads in total revenue ($42.9M), yet its discovery variety pack sales are shrinking—suggesting fewer new customers entering the funnel.
Meanwhile, Olipop’s variety pack is up 64%, showing strong growth in customer acquisition and repeat purchase potential. For Amazon sellers, this highlights how discovery SKUs, brand positioning, and review strategies directly fuel long-term marketplace momentum.
OpenAI’s new Instant Checkout feature lets U.S. ChatGPT users buy directly from Etsy and soon Shopify merchants, streamlining purchases without leaving the chatbot. While this innovation highlights how AI shopping assistants are reshaping e-commerce, Amazon’s dominance remains largely unchallenged for now.
Amazon still controls the ecosystem with its vast Prime membership, fulfillment network, and $56B ad business—advantages AI-driven rivals can’t yet match. For Amazon sellers, the takeaway is that competition is evolving fast, but Amazon’s scale ensures it will remain the key marketplace in the near term.
Thrasio’s collapse shows that the aggregator model wasn’t inherently flawed, but it was crushed by the capital bubble of 2021 when acquisition multiples skyrocketed and execution couldn’t keep pace. At the peak, aggregators overpaid for low-quality brands, expanded too quickly, and faced operational failures that turned growth into costly mistakes.
For Amazon sellers, this highlights the importance of operational excellence and disciplined growth—qualities that many aggregators lacked but independent sellers can leverage to stay competitive. While roll-ups may return under better economics, today’s sellers must focus on profitability, efficiency, and long-term brand value rather than inflated valuations.
Amazon is rapidly expanding beyond Sponsored Products into a full ad-tech powerhouse, using its retail data and streaming partnerships to dominate measurement and reach. Its deal to absorb Microsoft’s DSP consolidates inventory and client access, letting advertisers tie exposure directly to purchasing behavior at competitive pricing.
For Amazon sellers, this means Amazon Ads are no longer just about on-platform PPC but part of a global ad ecosystem that will drive more traffic, shape consumer demand, and tighten competition. With ad revenue already hitting $15.7B in Q2 2025, sellers should expect Amazon to keep raising the bar — and the costs — of staying visible.
The article argues that Amazon has followed a predictable “enshittification” path: first rewarding users, then squeezing sellers, and finally prioritizing its own profits at the expense of both. For sellers, this means higher fees, mandatory programs like Prime and FBA to remain competitive, and increased competition from Amazon’s own private-label clones.
The result is an environment where sellers face shrinking margins while customers see cluttered search results dominated by paid placements, often leading to higher prices for lower-quality goods. The piece suggests that only systemic policy solutions — not individual seller strategies — will address Amazon’s monopoly power and fee structure that now takes 45–51 cents of every seller dollar.
Scott Needham shares insights from Thrasio’s infamous rise and fall, showing how acquisition multiples jumped from 2x to 7x while operational chaos and shady marketplace tactics eroded profitability. A single inventory mistake worth hundreds of millions underscored the risks of scaling too fast with debt.
For Amazon sellers, his takeaway is clear: the era of easy FBA roll-ups is gone, and success now requires resilient operations, defensible brands, and smart category selection. The lesson — tighter ops and real product differentiation beat chasing growth fueled by hype.
Washington State’s new digital advertising tax (ESSB 5814) expands sales tax to nearly all online advertising services while sparing traditional media, creating an uneven playing field. Comcast has already sued, arguing the law violates the federal Internet Tax Freedom Act.
For Amazon sellers and e-commerce businesses, this law directly raises costs for digital ads, which are often the most efficient way to drive traffic and sales. If upheld, the tax could spark copycat measures in other states, threatening margins and competitiveness for sellers who depend heavily on online advertising.
Washington’s proposed SB 5814 could force Washington-based companies to pay sales tax on all worldwide digital ad spend, at rates exceeding 10% in cities like Seattle. Unlike traditional advertising, digital ads would be taxed as retail transactions, creating a disproportionate burden on e-commerce and tech businesses.
For Amazon sellers and brands headquartered in Washington, this could mean higher costs on every campaign—even those targeting customers outside the state. The law also raises federal legal challenges under the Internet Tax Freedom Act and could drive companies to relocate to avoid a tax on global ad spend.
INNOVATE 2025 – October 20-21, 2025, New York, NY, USA
That’s it for this week — short, actionable summaries so you can scan fast and act faster. If one of these stories affects your listings or margins, prioritize it this week: update ad budgets, audit problem SKUs, and talk to your logistics partners.
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