Independent merchants selling through Amazon.com Inc.’s marketplace are facing mounting competition from large brick-and-mortar retailers that have expanded aggressively into e-commerce. Companies such as Walmart Inc., Target Corp., and Best Buy Co. are using their scale, supply chain reach, and brand recognition to challenge Amazon’s dominance, forcing third-party sellers to refine strategies in order to maintain growth and profitability.
The Expanding Role of Big Box Retailers
The pandemic accelerated online adoption across all retail categories, allowing traditional retailers to capitalize on their existing customer bases. Walmart Marketplace, Target Plus, and Best Buy’s expanded digital platforms now serve as direct competitors to Amazon’s marketplace, offering merchants alternative sales channels and giving consumers multiple choices for fast delivery and competitive pricing.
For Amazon sellers, this shift has intensified competition. While Amazon remains the largest marketplace in the United States, with roughly 40% share of U.S. e-commerce sales, the presence of strong rivals means merchants can no longer rely solely on Amazon’s scale.
Branding and Differentiation
One of the most important strategies for Amazon sellers is building recognizable brands. Competing against Walmart or Target on price is often unsustainable, as big-box retailers can leverage bulk purchasing power and supplier relationships to secure lower costs. Sellers are responding by focusing on differentiation through product design, packaging, and brand identity.
Private label merchants in particular are investing more heavily in creating unique offerings rather than relying on generic goods. Establishing a brand that consumers recognize and trust helps insulate sellers from price wars and builds loyalty that extends beyond Amazon’s search-driven environment.
Leveraging Advertising and Data
Amazon’s advertising ecosystem has become a crucial battleground. Sellers are using pay-per-click campaigns, display ads, and sponsored brand placements to secure visibility in crowded categories. However, with advertising costs rising, merchants are also turning to external platforms such as TikTok, Instagram, and YouTube to drive traffic directly to their Amazon storefronts.
Data analysis is another key weapon. Sellers are increasingly relying on third-party analytics tools to forecast demand, identify gaps in the market, and adjust inventory planning. Sophisticated data-driven strategies allow them to compete with the advanced analytics capabilities of larger retailers.
Logistics and Fulfillment Efficiency
While Amazon’s Fulfillment by Amazon (FBA) network remains a powerful advantage, sellers are seeking ways to improve cost efficiency. Rising storage fees and seasonal surcharges have prompted many to adopt hybrid models that combine FBA with third-party logistics providers.
This flexibility helps merchants avoid capacity constraints and manage expenses more effectively. Some sellers are also experimenting with Amazon’s Multi-Channel Fulfillment service, which allows them to use Amazon’s logistics for orders placed on other platforms, further extending reach while maintaining delivery speed.
Expansion Beyond Amazon
Another response to big-box competition is diversification. Sellers are expanding onto Walmart Marketplace, Target Plus, and Shopify storefronts to reduce reliance on a single platform. While Amazon provides the largest audience, building a presence across multiple channels helps mitigate risk and captures shoppers who may prefer alternatives.
Some merchants are even experimenting with live-commerce platforms such as Whatnot, which emphasize community engagement and interactive selling. By broadening their presence, sellers avoid being squeezed by Amazon’s rising costs and the pricing power of big-box retailers.
Focus on Customer Experience
Large retailers excel at delivering consistent service, making customer experience a critical area of competition. Amazon sellers are placing greater emphasis on responsive customer support, high-quality packaging, and reliable fulfillment. Positive reviews and strong ratings remain decisive factors in Amazon’s search algorithm, reinforcing the importance of a customer-first approach.
Sustainability and Compliance
As consumer awareness of sustainability grows, sellers are adopting environmentally friendly practices to appeal to eco-conscious buyers. Amazon has also implemented new packaging and sustainability guidelines, creating both challenges and opportunities. Sellers who adapt quickly can differentiate themselves, while those who lag risk falling behind not only big-box retailers but also more agile competitors.
Outlook
The rise of big-box retailers in digital commerce is reshaping the competitive landscape for Amazon sellers. Merchants who once viewed Amazon as a standalone growth engine are now adopting multifaceted strategies centered on branding, diversification, and efficiency.
While the challenges are significant, the opportunities remain substantial. Amazon’s marketplace continues to deliver unmatched reach, and sellers who can combine its scale with smart branding, multi-channel presence, and strong customer experience are well-positioned to thrive.
The coming holiday season will provide a test for these strategies, as big-box retailers ramp up promotions and fulfillment capacity. For Amazon sellers, competing effectively means not only keeping pace with rivals’ logistics but also cultivating loyal customers who see value in unique brands and curated experiences.