Roughly 70% of Amazon-listed products are sourced from China
Some Chinese sellers are raising prices or exiting due to tariff pressure
Revenue breakdown:
-23% from third-party seller fees
-38% from first-party inventory sales
-8% from advertising
-16% from AWS/cloud services
Opinion
High tariffs on Chinese goods are disrupting Amazon’s seller ecosystem, which is central to its e-commerce model. With limited flexibility to pass on costs or relocate production, seller churn is accelerating, posing structural challenges to Amazon's growth engine.
Core Sell Point
Weakening seller participation strikes at the heart of Amazon’s revenue model, and introduces growing uncertainty around earnings performance in the coming quarters.
The U.S. administration’s aggressive tariff policy is beginning to disrupt Amazon’s core revenue engine. Approximately 70% of products sold on Amazon are estimated to originate from China, and rising tariff costs are eroding seller margins, leading some to raise prices or add “import surcharges.” A growing number of Chinese sellers are now preparing to exit the U.S. market entirely.
For sellers manufacturing in China, the inability to fully pass on tariffs to consumers is forcing margin compression. Even if alternative production sites are considered, manufacturing costs often double, making the transition economically unfeasible. These pressures are spreading across Amazon’s third-party ecosystem.
Amazon’s business model is highly reliant on third-party seller fees (23%) and first-party product sales (38%), meaning that a seller exodus could translate into direct profitability pressure. With limited contribution from high-margin segments like advertising (8%) and AWS cloud services (16%), the seller-driven disruption presents a material risk to Amazon’s near- and mid-term earnings.
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