Amazon has released a new Seller Insights Report focused on the performance and challenges of small and medium-sized businesses on its marketplace. The report highlights the growing contribution of independent sellers to Amazon’s ecosystem, while also shedding light on the strategies these businesses use to compete in an increasingly crowded digital retail environment.
According to the findings, small businesses continue to make up a significant portion of sales on the platform. In 2024, third-party sellers—many of them small operations—accounted for more than 60 percent of units sold on Amazon. This marks a continuation of a long-term trend, as independent merchants have steadily gained share against Amazon’s own retail division.
The report emphasizes the economic impact of these sellers. Many small businesses on the platform are family-owned or entrepreneur-led, and collectively they generate billions of dollars in revenue annually. Amazon positions itself as a partner to these enterprises, providing infrastructure, fulfillment services, and tools that allow them to reach a global audience.
A key theme in the report is the use of Fulfillment by Amazon (FBA). Many small businesses rely on the program to access Prime-eligible customers and leverage Amazon’s logistics network. The report notes that sellers using FBA tend to see higher conversion rates, particularly in competitive categories like electronics, home goods, apparel, and beauty. However, it also acknowledges that fulfillment fees and inventory restrictions remain concerns for many entrepreneurs.
The Seller Insights Report highlights geographic diversity, noting that small businesses from every U.S. state are active on Amazon’s marketplace. Some of the fastest-growing seller hubs are located outside traditional coastal centers, with states such as Texas, Florida, and Ohio seeing rapid expansion. The report also emphasizes the role of rural sellers, who are using Amazon to overcome geographic barriers and reach national and international customers.
International expansion is another focus. Small businesses increasingly use Amazon’s global marketplaces to extend their reach. The report highlights merchants who began selling locally but have since expanded to Europe, Asia, and Latin America. Amazon’s cross-border programs and translation tools have played a role in this shift, though sellers face challenges navigating customs, tariffs, and regional regulations.
The report underscores the growing importance of advertising for small businesses. Sponsored Products, Sponsored Brands, and other ad formats have become essential tools for visibility. Many small sellers are now allocating substantial portions of revenue to Amazon’s advertising services, a shift that reflects the competitive nature of the marketplace. While advertising can boost growth, it also adds to the cost of doing business, leading some sellers to raise concerns about shrinking margins.
Technology adoption is another theme. The report notes that small businesses are embracing artificial intelligence and automation tools to manage pricing, optimize inventory, and forecast demand. These technologies allow smaller operations to compete more effectively with larger players, though the upfront investment can be a barrier.
At the same time, the report acknowledges challenges faced by small businesses. Competition from both other third-party sellers and Amazon’s retail arm remains intense. Many sellers report difficulties with counterfeit goods, policy enforcement, and the volatility of search rankings. Storage limits at fulfillment centers and rising fees also add complexity. Despite these challenges, small businesses continue to grow their presence, reflecting the resilience of entrepreneurs in adapting to shifting market dynamics.
Amazon uses the Seller Insights Report to emphasize its role in supporting small businesses. The company highlights initiatives such as training programs, lending opportunities, and educational resources designed to help sellers scale. It also points to its investments in fulfillment infrastructure and technology as evidence of its commitment to enabling seller success.
The broader significance of the report lies in the continued integration of small businesses into the global e-commerce supply chain. Platforms like Amazon provide opportunities for entrepreneurs who may not have the resources to build independent online stores or manage complex logistics networks. By offering infrastructure and reach, Amazon has become a central player in the growth of digital small businesses.
Looking forward, analysts suggest that the challenges identified in the report—rising costs, competitive pressures, and regulatory scrutiny—will shape the trajectory of small sellers. Those who adapt by embracing technology, diversifying sales channels, and developing strong brand identities are more likely to thrive. Amazon, for its part, faces the task of balancing its dual role as both a retail competitor and a platform provider.
As e-commerce continues to expand, small businesses on Amazon are expected to play an even greater role in shaping consumer choices. The Seller Insights Report underscores both the opportunities and the complexities of building a business on the world’s largest online marketplace. For many entrepreneurs, Amazon remains both the most challenging and the most rewarding avenue for growth.