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Amazon News: Prime Fatigue, Fee Hikes, and AI Competition Shape the Future of E-Commerce
Published 6 days ago • 9 min read
This Week's Top Amazon Seller News
Hey Reader,
This week’s briefing dives into Amazon’s latest legal battles, Walmart’s bold AI move, and new programs changing how sellers ship, advertise, and compete. 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. Let’s dive in! Click here to read on our website
Amazon is being sued for allegedly inflating list prices during Prime Day to create the illusion of steep discounts, with plaintiffs claiming that many “deals” were actually no cheaper—or even more expensive—than regular prices. The lawsuit follows Amazon’s $2.5 billion FTC settlement over deceptive practices, intensifying scrutiny on its sales tactics and discount transparency.
For Amazon sellers, this highlights the growing regulatory pressure around pricing integrity and the importance of maintaining accurate, transparent discounts—especially during major sales events. Sellers should also expect Amazon to tighten its promotional oversight, which could impact how deals are displayed and verified.
Amazon’s recent Prime Big Deal Days revealed cautious consumer behavior as shoppers prioritized essentials over splurges, with average order values dropping 15% and nearly half of all purchases under $20. Despite strong Q2 results, the decline in discretionary spending and lower satisfaction scores point to economic fatigue rather than Prime fatigue.
Tariffs and inflation continue to pressure prices, with 48% of buyers citing tariff concerns and more shoppers comparing Amazon prices to Walmart and Target. For Amazon sellers, this means a more price-sensitive audience, tighter competition, and the need to optimize pricing, product mix, and promotions ahead of a softer Q4 retail season.
Walmart has partnered with OpenAI to launch an AI-driven shopping experience that allows customers to browse and complete purchases directly inside ChatGPT using Instant Checkout. This integration enables both Walmart and Sam’s Club members to shop conversationally—transforming how consumers discover and buy products online.
For Amazon sellers, this marks a major competitive shift as Walmart blends AI with e-commerce to rival Amazon’s frictionless buying model. It also signals where online retail is headed—toward conversational commerce powered by generative AI—making innovation and customer interaction key differentiators moving forward.
E-commerce mergers and acquisitions are rebounding despite tariff pressures, with buyers prioritizing profitable, defensible brands that have diversified supply chains and strong customer retention. Direct-to-consumer (DTC) sellers face rising costs, as new U.S. tariffs averaging 25.6% are forcing price hikes of up to 12%, pushing many to focus on operational efficiency, AI adoption, and omnichannel strategies to sustain margins.
For Amazon sellers, this environment underscores the importance of profitability and adaptability—tariff volatility is reshaping sourcing, pricing, and competitive positioning across marketplaces. Brands that show stable unit economics, strong brand differentiation, and limited tariff exposure are expected to draw increased investor and acquisition interest heading into 2026.
Amazon’s new FBM+ Program lets sellers who fulfill their own orders offer FBA-like delivery speeds, leading to an average 34% sales boost during pilot testing. By using Amazon’s partnered carriers and predictive delivery models, packages shipped up to nine days faster, giving buyers greater confidence and sellers better conversion rates.
This program allows FBM sellers to compete directly with FBA listings—without warehouse storage fees or restock limits—while still earning cash-back rewards for on-time shipping. For Amazon sellers, this could be a major shift in logistics strategy, offering more control, lower costs, and the ability to match Prime-level delivery speed and visibility.
Independent sellers have surpassed $2.5T in cumulative sales while the number of active sellers has fallen materially, meaning more traffic per seller and less competition for those with strong ops and brand moats. At the same time, Amazon is pouring money into infrastructure and AI (FBA speed/coverage, rural delivery expansion, Alexa+/Nova tools), raising the bar on execution but also unlocking conversion and efficiency gains.
Capital is flowing selectively: defensible, data-driven brands with healthy unit economics are commanding premium valuations, while tariff pressure and rising fees push “me-too” operators out. Action items for sellers: double down on AI-driven listing/ads and inventory forecasting, diversify supply chains and channels (including new geographies), and prioritize Prime-eligible speed—FBA or high-performing FBM—to capture share as the field thins.
Raya Gurnett reports that Amazon is testing a new “Price History” button on mobile product pages, allowing shoppers to view past pricing directly on Amazon — a major move toward transparency and compliance. This feature could boost consumer trust while helping Amazon address increasing regulatory pressure over misleading discount practices.
For sellers, Gurnett notes this could reshape pricing strategy — ending inflated list prices, forcing consistency across marketplaces, and rewarding authentic discounts that convert better. Expect Amazon’s algorithm to begin prioritizing honest pricing and accurate deal history as part of overall Buy Box performance.
A recent report from Yahoo Finance highlights that Amazon’s marketplace has become fully pay-to-play, with new sellers struggling to gain traction without investing heavily in ads. One pickleball paddle brand spent nearly $400 on ads, receiving 121 clicks but zero sales — illustrating the difficulty of breaking through even with expert guidance.
Veteran sellers like Dave Dama and Alex Yale confirm that advertising is no longer optional but essential, warning that sellers should expect negative ROI early on before seeing momentum. For Amazon sellers, this underscores the importance of mastering campaign setup, data analysis, and long-term ad optimization rather than expecting quick wins from PPC.
Amazon will once again extend its holiday return window, allowing purchases made between November 1 and December 31, 2025 to be returned until January 31, 2026. The policy applies to all FBA, FBM, and Amazon Retail sellers, with Apple products maintaining a shorter deadline of January 15.
While the change is meant to boost early holiday shopping by reducing buyer hesitation, it also brings cash flow pressure, delayed revenue recognition, and higher storage fees for sellers. January now becomes an active returns management month, forcing sellers to balance post-holiday restocking and Q1 preparation under extended operational strain.
U.S. customs revenue surged to $215 billion in 2025, driven by new tariffs that are disproportionately impacting domestic retailers while many foreign sellers exploit weak enforcement and avoid paying full duties. Flexport CEO Ryan Petersen called out “massive customs fraud,” explaining that foreign companies can import goods without a U.S. entity and underreport values with little consequence.
For Amazon sellers, this widening gap means higher product costs, steeper import duties, and greater competitive pressure from **Chinese sellers—now over 50% of marketplace participants—**who face lower effective tariff burdens. With the Trump administration hinting at additional tariffs and no clear enforcement reform, U.S. e-commerce sellers risk tighter margins and more volatility heading into Q4.
More ecommerce brands are rethinking global sourcing and moving parts of their production back to the U.S. to gain speed, control, and flexibility amid tariffs and global uncertainty. Walmart is leading this push through its $350 billion domestic sourcing initiative, proving that reshoring can strengthen both supply chains and brand trust.
For Amazon sellers, reshoring offers shorter lead times, better quality control, and stronger “Made in the U.S.A.” appeal—key advantages when competing on fast shipping and authenticity. Balancing domestic production with selective global sourcing could become a strategic edge for sellers facing rising tariffs and volatile import costs.
Amazon has opened two new Amazon Warehousing and Distribution (AWD) centers in California and Arizona, adding 12 million cubic feet of palletizable storage space to its network. These facilities are designed for single-SKU or floor-loaded pallet shipments, helping sellers streamline inventory flow and reduce fulfillment delays.
Sellers who send qualifying palletized shipments by January 14, 2026, will receive a discounted inbound processing fee of $1 per box instead of the standard $1.35. For Amazon sellers using AWD, this expansion means faster replenishment for West Coast FBA centers, reduced logistics costs, and better control over large-volume inventory distribution.
After nearly a decade of selling independently, POKS Spices moved all sales to Amazon to stay afloat—highlighting how smaller brands often face a “survival or surrender” choice in today’s ecommerce landscape. The company cited Amazon’s massive reach as both a lifeline for visibility and a painful concession due to rising fees and limited brand control.
For Amazon sellers, this story underscores the growing reality that marketplace dominance offers scale but at the cost of independence, margins, and direct customer relationships. As competition and costs rise, sellers must adapt by leveraging Amazon strategically without losing sight of brand identity.
Starting January 15, 2026, Amazon will roll out a wave of FBA fee hikes—averaging $0.08 per unit—along with new compliance costs, higher AWD storage rates, and the end of all FBA prep and labeling services. Sellers must now send inventory fully prepped, labeled, and compliant, or risk shipment rejection, return fees, and lost reimbursements.
Additional increases include up to 22% higher AWD storage and transport costs, new inbound defect penalties, and stricter low-inventory and aged-inventory fees, all designed to push sellers toward automation and operational precision. Combined with Amazon’s DD+7 payout delay coming in March 2026, these changes will tighten margins and test cash flow—making 2026 the year sellers must operate leaner, smarter, and more professionally to stay profitable.
Pay-per-click (PPC) advertising has become an essential engine for e-commerce growth, giving sellers instant visibility and access to high-intent shoppers on platforms like Amazon and Google. Unlike slow organic strategies, PPC lets Amazon sellers drive immediate traffic and conversions for product launches and seasonal promotions.
Success depends on precise targeting, keyword intent, and smart bidding—especially focusing on return on ad spend (ROAS) rather than vanity metrics like clicks or impressions. For Amazon sellers, building structured campaigns, testing ad variations, and optimizing mobile-friendly landing pages are key to staying profitable in a competitive marketplace.
This guide shows Shopify brands how to tap Amazon’s 300M+ shoppers by exporting clean product data, mapping identifiers (UPC/EAN), and listing via bulk CSV or integration apps to keep inventory, orders, and pricing in sync. It stresses picking the right seller account (Professional) and listing workflow, then optimizing titles, keywords, images, and categories for Amazon search.
You’ll choose fulfillment (FBA, FBM, or hybrid) based on speed, control, and Prime eligibility, and use Sponsored Ads plus review generation to accelerate rank and conversions. For Amazon sellers expanding off-store, the playbook helps prevent overselling, reduce manual errors, and scale multi-channel operations with tighter visibility and cash-flow.
Amazon urges sellers to plan their holiday advertising early to maintain visibility throughout the extended shopping season. Use Sponsored TV and Sponsored Brands to engage both early researchers and last-minute shoppers, while updating Brand Stores and A+ Content with gift-focused messaging to highlight your products’ gifting potential.
Emphasize value-driven offers by creating dedicated deal pages, multi-pack promotions, and Store Spotlight campaigns that automatically update active deals. These tactics help Amazon sellers capture more traffic, conversions, and brand exposure during peak holiday demand.
Amazon is hosting a free live webinar to help sellers prepare for upcoming high-traffic seasonal shopping periods. The session covers how to optimize listings for visibility, leverage FBA for peak demand, and design effective promotional campaigns to capture more shoppers.
Sellers will also learn how to build cohesive marketing strategies to stand out during events like Black Friday and Cyber Monday. The webinar includes a live Q&A and is part of Amazon’s Seller University training series.
Ungating on Amazon remains challenging, but sellers are still finding success by submitting complete documentation packages — including invoices, order confirmations, delivery proof, and photos — often after 25+ attempts. New sellers are reportedly seeing higher success rates than older accounts, showing persistence and proper documentation still pay off.
Combining all documents into one PDF and even using an attorney letter through Amazon’s legal channels can improve approval chances. For those still stuck, posting politely in Seller Forums can help moderators escalate the case for review.
Amazon has introduced a new MCF Analytics Dashboard that gives sellers deeper insights into their fulfillment operations. Sellers can now track key performance metrics like orders shipped, on-time delivery rates, fees, and top-performing SKUs to identify cost-saving opportunities and operational trends.
The tool allows custom date comparisons (week over week, year over year) and generates detailed reports with order-level data including SKUs, dimensions, tracking numbers, and fulfillment costs. For sellers using MCF, this dashboard is a powerful way to make data-driven decisions to improve efficiency and profitability across channels.
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