by Andrew Maffettone
LAS VEGAS – For most of the past decade, Amazon’s marketplace was the primary growth engine of e-commerce. Today, the marketplace is no longer the center of gravity. And while Amazon isn’t abandoning it, it is increasingly deprioritizing it in favor of two businesses with far more long-term upside: fulfillment and advertising. We all like to think it’s just a temporary downturn, but the truth is it’s a structural shift that’s here to stay.
The Marketplace Math Is Breaking
Believe it or not, there was once a time when building on Amazon felt straightforward for anyone with the will to do it. If you got in early, you and your profit margins were laughing.
Yet little by little, from 2021 through 2025, several compounding trends reshaped everything:
• FBA fees increased by approximately 10% year over year (up again this year, too);
• cost-per-click increased by approximately 8% year over year; and
• category-level competition increased by approximately 6% year over year.
While none of them is alarming individually, when combined, they create a hostile environment for sellers, leaving them with little pricing power to fight back. A large part of it is what I call the Overseas Seller Effect.
The Overseas Seller Effect
After speaking on omnichannel growth strategies at Prosper 2025, I had a conversation with an Amazon representative that stayed with me. They shared that roughly 73% of sellers who joined the platform in 2024 were based overseas, either operating abroad or through U.S. entities.
That number is high and not independently verified; it aligns with what many operators are seeing. When you factor in lower manufacturing costs, lower labor expenses, and thinner margins, you get something our agency calls the Overseas Seller Effect. Simply put, it works like this:
Cheaper sellers at scale × Algorithms that reward low prices = Lower pricing power for everyone.
Great for overseas sellers, not so great for everyone else. No amount of branding or differentiation is saving sellers this time…
Marketplace Growth Is Slowing, and Amazon Knows It
In 2025, Amazon experienced one of its slowest periods of net new seller growth in recent years. While the marketplace continues to grow in absolute terms, the rate of expansion is decelerating. Enforcement costs are higher, there’s mass overseas competition (aka the Overseas Seller Effect), and the incremental value of each new seller is diminishing.
When platforms approach saturation, their incentives change. This means growth no longer comes from onboarding more participants. It comes from extracting more value from existing infrastructure. For Amazon, that means doubling down on the areas with the strongest margins and the greatest scalability.
Fulfillment is at the center of that strategy…
Amazon’s Fulfillment Pivot: Buy with Prime to MCF
I sit on Amazon’s Buy with Prime and Multi-Channel Fulfillment advisory council, and over the past several years, here’s what I can tell you: Buy with Prime was the initial fulfillment experiment.
And it worked. BlueTuskr’s omnichannel positioning around Buy with Prime was a major factor in being recognized as an Amazon Agency of the Year through that program.
But over time, Amazon learned something important: brands wanted more than speed.
They wanted:
• data ownership;
• experience control;
• relationship management; and
• brand autonomy
Buy with Prime delivers convenience, but not control.
MCF does. With Multi-Channel Fulfillment:
• orders are fulfilled by Amazon;
• packaging is white-labeled;
• delivery is highly predictable;
• brands avoid 3PL complexity; and
• peak-season capacity improves
Whether the order originates on Amazon.com or a brand’s own site becomes secondary. If Amazon fulfills it, Amazon wins.
Amazon’s Closed-Loop Infrastructure Strategy
To bring it back to the title…Amazon Isn’t Amazon Anymore. The company is expanding into freight, air shipping, and factory-to-warehouse transport to control more of the supply chain from start to finish. The long-term opportunity isn’t just helping buyers and sellers connect. It’s owning the systems that those transactions run on. Advertising fits into this same strategy.
Sponsored placements on Amazon are reaching their limits. After all, there are only so many high-performing ad spots. So Amazon has pushed growth outward through DSP, streaming, and off-platform advertising. Today, brands are encouraged to drive traffic to their own websites and external channels, especially when using MCF and Buy with Prime.
And it’s intentional. Amazon is at a place where it no longer needs every sale to happen on Amazon.com. As long as brands spend on ads and use Amazon for fulfillment, Amazon still gets paid.
Physical Retail and the Walmart Parallel
Physical retail may be the next step in this system. Amazon’s move into large-format stores looks similar to Walmart’s strategy (just in reverse). Walmart turned stores into fulfillment hubs. Amazon is turning fulfillment into stores. These locations may serve as storefronts, local warehouses, and distribution centers. Over time, in-store sales could help strengthen Amazon listings by improving brand visibility and sales velocity.
This is still a theory, not a confirmed outcome. But if it proves true, physical retail becomes another way Amazon reinforces its ecosystem. Together, logistics, advertising, and retail create a closed loop. Ads bring in customers; Amazon moves inventory; stores and listings reinforce each other; ad spend increases…
The cycle repeats. What does this mean for you, the seller? Success now depends on building awareness beyond Amazon because Amazon’s system rewards demand wherever it starts, as long as it flows through their infrastructure.
What This Means for You
The most important shift sellers need to understand is this: Amazon is no longer optimized for building brands. It is optimized for running a system. As the marketplace has become more crowded and harder to scale profitably, attractive outcomes for sellers have declined. That creates risk for Amazon. When fewer sellers can succeed inside the marketplace, Amazon must find growth elsewhere.
And the direction is clear. Instead of just a marketplace, Amazon is becoming a fulfillment backbone, an advertising network, and a demand engine.
If their strategy and infrastructure switched…yours probably should too. The next generation of winning brands will treat Amazon the way enterprise companies treat cloud infrastructure: essential, powerful, and expensive, but never the entire business. The mindset switch is this: Amazon becomes a system to plug into, not a home to live in. The brands that struggle will keep trying to win inside yesterday’s model, and the brands that thrive will align with the new one.
Andrew Maffettone is founder and CEO of BlueTuskr. BlueTuskr (Booth #636) will be exhibiting at Prosper when the show convenes March 10-12 at The Wynn Las Vegas.