Amazon Third-Party Sellers Keep Off Prime Day as Tariffs Hit Threaten Profit Margins

Amazon’s premier shopping event, Amazon Prime Day is losing its appeal among third-party merchants, Reuters reported. Amazon Prime Day sellers who sell Chinese manufactured products during the July event plan to keep off the event or significantly reduce their discounted merchandise this year.

Protecting Profit Margins

Amazon Prime Day merchants plan to withdraw from the shopping event to protect their margins amidst the US-China tariff war that saw US President Donald Trump introduce levies on Chinese imports.

One of the merchants, Kim Vaccarella said she chose to skip the Prime Day event in order to retain her US stock. Vaccarella is the CEO of Chinese-made tote bag firm, Bogg Bag. She plans to sell the stock through other outlets at full price or at minimum discounts. The bags go for $70 to $200 on Amazon. Vaccarella says she has halted production of the products in China as she explores manufacturing options in Vietnam and Cambodia.

Another merchant, Steve Green said this will be the first time he’ll be skipping the shopping event since 2020. Green sells $60 skateboards and $230 bikes manufactured in China on Amazon. Green will be retaining product stock that he imported before April 9 when the Trump tariffs took effect so he can sell them at full price later.

Green says Chinese tariffs, which currently stand at 145%, increase the cost of imported merchandise by over 100%. This makes the products unaffordable in the US.

Amazon has about 200 million Prime sellers across the world. Besides Cyber Monday and Black Friday, Prime Day has been the third largest shopping event on the ecommerce platform. Merchants have the option to participate in the event. Amazon invests heavily in the event through social media and television ads. The ads invite merchants to leverage the event and place their products in front of a bigger audience.

High Uncertainty

Amazon also has first party seller relationships with suppliers. These relationships allow that company to purchase products on wholesale directly from suppliers. The ecommerce platform handles the selling details. The majority of this inventory is manufactured in China.

Early this month, Amazon Chief Executive Andy Jassy said the company was exploring ‘strategic forward inventory buys’. He said that Amazon was renegotiating some of the terms to maintain low prices as China hit back on the tariff war. Jassy third-party sellers are expected to hike product prices to pass additional costs to customers.

Consultants that work with Amazon vendors say the ecommerce giant is already researching third-party sellers and large vendors to determine the impact of the tariffs ahead of the 2025 Prime Day. Last year, Amazon marketplace sellers accounted for about 62% of products sold on Amazon in quarter 4. Some sellers have started testing price increases and ad expenditure cuts instead of staying away from Prime Day.

“With the uncertainty, I can’t offer a 20% discount when I don’t know what my product cost is going to be in the future,” Michael Slate, who runs KitchenEdge on Amazon said.

Jon Elder, an Amazon Consultant who supports 100 Amazon sellers said, “Nearly all my clients are pulling back in Prime Day deals. It’s rough right now. Lots of difficult decisions are being made.”

Impact on Amazon

Amazon termed the response from selling partners towards Prime Day 2025 as strong. However, analysts say that the tariffs have placed Amazon third-party sellers in an awkward position.

“Amazon will be fine, but I do feel for some of the third-party sellers – they’re the ones that are going to be hurt the most in this environment,” CFRA Research Analyst Arun Sundaram said.

The ecommerce giant has set the deadline for opting to participate in the shopping event as May 2023. Withdrawal by third-party merchants means less ad revenue and fees for Amazon. It also means that customers will only access a limited selection of discounted products. The company has previously recorded huge sales through new Prime memberships that cost $139 annually or $14.99 monthly.

Sundaram holds that Prime Day generally reduces profit margins from merchants. This is because sellers offer higher discounts compared to other days. Amazon consultants say that on average, seller profits range between 15% to 20% after product costs and Amazon fees.

For each unit sold, Amazon takes a 15% commission, in addition to ad fees and host discounts. To get a discount highlighted as a ‘Lightning Deal’ and ‘Best Deal’, merchants pay $500 and $1,000 respectively.