No, it’s not just you: 2025 has been a turbulent year for Amazon vendors so far.
Geopolitical tensions and newly introduced U.S. tariffs have added pressure to already complex vendor negotiations. These external shocks have forced many brands to revisit their investment strategies and cost structures with Amazon.
But despite the macroeconomic uncertainty, Vendor Managers remain focused on protecting Amazon Retail’s bottom line.
For my latest study, I partnered with Russ Dieringer and Claire McBridge from Stratably to unpack how this year’s negotiations played out for 1P suppliers and what shifts we’re seeing unfold in the vendor landscape.
Summary of Key Findings
- Amazon remains a growth channel for 1P brands. 74% of vendors describe growth on Amazon as in line or above the category average.
- Tariffs and macroeconomic uncertainties negatively impact growth expectations of brands. Vendors forecast an average of 13.1% sales growth with Amazon in 2025, down -315bps from 2024.
- Vendor negotiations continue to be time-consuming, with the average negotiation lasting 3.2 months.
- Joint Business Plans remain transactionally focused. Every 1 in 2 surveyed vendors described trade negotiations as either challenging or highly confrontational.
- Despite margin compression year-on-year, most vendors rate their net margins with Amazon as either healthy (62%) or very healthy (6%).
- Annual trade negotiations reduced profitability for 49% of vendors, while 40% reported no change in net margins.
- Cost prices remained stable for 46% of vendors, while 22% accepted front-margin concessions and 33% successfully negotiated cost price increases with Amazon.
- Trade terms increased by an average of +91bps YoY, compared to +69bps in 2024.
- Amazon lacked new initiatives for vendors to invest in, leaving brands with limited options to allocate trade spend towards growth-driving activities.
- Every 1 in 2 vendors experienced punitive measures during negotiations, including Buy Box suppression, order stop ships, and traffic diversion tactics.
- Hybrid sales strategies are gaining traction among 1P brands. While 63% of surveyed brands still sell exclusively via Vendor Central, 47% say that a hybrid model is becoming increasingly relevant in 2025.
- 80% of surveyed U.S. vendors expect to pass on tariff-related cost increases to Amazon, with profitable vendors planning the highest cost increases.
Amazon fuels growth for manufacturer brands in 2025
Despite geopolitical shifts and cautious consumer spending amid the introduction of U.S. tariffs, Amazon remains a growth channel for first-party vendors.
43% of surveyed brands reported that Amazon’s growth beat the category average, while 31% described growth as in line with category benchmarks. 27% of respondents stated that Amazon grew slower than the category.
When comparing these results with our survey from last year, we can see that Amazon’s growth performance has somewhat slowed. Overall, fewer brands have found Amazon outperforming category growth rates.
Vendors in the Consumables segment reported mostly steady to strong growth, with 72% stating their performance is either average (33%), faster (39%), or much faster (11%) than the category average. Only 18% reported slower-than-average growth, and no vendors indicated that their growth was significantly below expectations – a signal of relative stability in this essentials-driven category.
In contrast, performance in Softlines has been notably more polarised: 59% of vendors reported faster-than-average growth, but only 12% said their performance was in line with category benchmarks, and 30% reported an underperformance. This suggests that a smaller subset of fashion and apparel brands are significantly outperforming, while many others are falling behind, indicating an uneven demand recovery and tighter consumer discretionary spending.
Hardlines vendors were the most evenly distributed, with 32% growing slower, 34% reporting average growth, and 30% growing faster than the category average, pointing to a more fragmented competitive environment in this category.
Tariffs and macroenomic uncertainty have lowered the growth expectations of brands
Despite the introduction of U.S. trade restrictions, surveyed brands still plan to reach an average growth rate of +13.1% YoY with Amazon in 2025.
25% of vendors stated a 0-10% growth ambition, 34% planned with 10-20% growth, 13% expected sales to grow between 20-30%, and 11% of brands budgeted a growth ambition of >30%.
8% of respondents stated no growth plans, while another 8% expected a negative growth scenario in 2025.
Vendor negotiations lasted an average of 3.2 months from start to finish
Amazon remained laser-focused on profitability in trade talks with vendors in 2025. This bottom line focus saw many brands having to negotiate longer than usual, as most Vendor Managers were not ready to accept concessions to their investment demands.
On average, trade discussions lasted 3.2 months from start to finish.
16% of vendors indicated that their negotiations closed within 1-2 months. 73% said their annual trade discussions lasted between 2-6 months. 4% of vendors were in permanent negotiations that lasted longer than 6 months, while only 7% of brands saw negotiations close within four weeks after kick-off.
2 in 3 vendors consider annual vendor negotiations as challenging or confrontational
With brands and Amazon trying to protect their profit margins, nearly half (49%) of all surveyed vendors found AVNs to be challenging or very confrontational in 2025.
22% of vendors had a neutral sentiment towards trade discussions, while 24% found them generally positive, and 5% highly collaborative.
Despite the overall negative sentiment, fewer brands found Amazon to be very confrontational in trade discussions compared to last year. While there was a general uptick in brands that found negotiations challenging to deal with, more vendors perceived the discussions to be positive than in 2024.
Amazon remains a profitable sales channel for majority of 1P brands
Although 2025 AVNs were tougher than in recent years, two-thirds of surveyed vendors still describe their net margins on Amazon as “healthy” (62%) or “very healthy” (6%).
Brands point to Amazon’s consistent traffic, scaled retail media, and lower last-mile costs as the key offset to rising trade terms. Hardlines suppliers report the strongest profitability, while Consumables and Softlines feel a tighter squeeze from higher advertising fees and heavier discounting.
Even so, most respondents say Amazon remains a profitable ecommerce customer once the full customer P&L is considered.
Trade negotiations reduced profit margins for nearly half of all vendors
However, the impact on margins following AVNs is mixed. 49% of suppliers saw a year-on-year drop in profitability coming out of 2025 negotiations, largely driven by higher demands to invest into base accruals, AVS, and retail marketing programs.
Another 40% reported no material change, while 11 % managed to improve margins by trading investment for price increases or by carving out low-velocity SKUs.
Vendors that protected profitability most effectively entered talks with detailed P&Ls, clear walk-away points, and pre-modelled give-and-get scenarios.
Economic pressure led suppliers to keep cost prices stable – but shifts occured at both ends
Cost-price movement was muted overall: 46% of vendors held costs steady despite inflationary pressures.
22% conceded front-margin cuts to secure catalogue stability, typically in lower-priced CPG, while 33% successfully passed through price increases, supported by brand strength or category-wide hikes.
Suppliers that landed increases anchored requests in commodity indices, provided granular cost-to-serve data, and demonstrated incremental media support to protect unit economics for Amazon.
Trade investments into Amazon Retail have increased +91bps year-on-year
On average, brands ceded an additional 91 basis points of margin, posing a sharper jump than the +69bps recorded in 2024. Only 7% of all surveyed brands were able to reduce their trade terms during annual vendor negotiations.
The 91bps in incremental trade terms was largely invested into higher base accruals, the Amazon Vendor Service (AVS), improved payment terms, and bulk-volume discounts to fund sales through Amazon Business (B2B).
1 in 2 vendors experienced punitive measures during trade talks with Amazon
49% of surveyed vendors faced punitive measures during trade talks. Sanctions were reported across all product categories but were especially frequent among vendors in Consumables (47%) and Hardlines (52%) categories.
When penalties were applied, 74% of vendors saw Buy Box suppression applied to their listings, followed by the suspension of orders (29%) and measures to divert traffic from the brand’s product detail pages (27%).
Hybrid sales strategies are gaining traction among 1P brands to reduce sales dependency
Difficult vendor negotiations are seeing brands re-evaluate their reliance on an exclusive 1P distribution model. With 63% of surveyed brands still selling purely via Vendor Central, 47% say a hybrid (1P + 3P) model is becoming “increasingly relevant” to their 2025 strategy.
22% of surveyed vendors operate a hybrid selling strategy, either through their own 3P account or a 2P distributor. 7% of respondents indicated the utilisation of a holistic multi-channel approach, using both distributors and their own 3P account to reduce their reliance from Vendor Central.
The rise of hybrid strategies in 2025 is driven by the desire for pricing control, margin protection, and channel resilience and is often intended as a buffer against sudden product delistings and promotional constraints imposed by Amazon Retail.
The most common playbook is to shift long-tail or innovation SKUs to a controlled third-party seller account to avoid CRAP designation and reclaim pricing agility, while keeping high-velocity core lines in 1P for scale and advertising efficiency.
63% of brands expect U.S. tariffs to directly lead to higher consumer prices
When asked about the expected impact from U.S. tariffs, 76% of US-based brands cite higher cost of goods as primary concern, followed by rising consumer prices (63%) and reduced margins with Amazon (54%).
Nearly half of vendors (44%) are actively considering or already shifting production out of China to mitigate cost exposure. Meanwhile, softer indicators like reduced promotional spend (35%) and lower growth forecasts (36%), reflect the expected commercial headwinds from trade policy uncertainty.
Only 15% of surveyed U.S. brands expect no meaningful impact on their business from U.S. tariffs, confirming the widespread disruption.
80% of vendors plan to pass on tariff-related cost increases to Amazon
Facing tariff-linked cost increases, most U.S. vendors plan to pass through at least part of the pressure. Rather than clustering around moderate increases, vendors are split between two ends of the spectrum: either opting for no increase at all or planning aggressive cost price hikes.
One in three vendors (33%) are preparing to increase cost prices to Amazon in the range of 5-10 %, while another 22% expect to raise prices of more than 10%.
Only one in five brands plan to hold prices flat, showing that cost pass-through is quickly becoming the norm to offset macroeconomic headwinds in 2025.
Profitable U.S. vendors lead the way in tariff-driven cost hikes to Amazon
Among brands profitable on Amazon, 19% do not intend to raise prices, while a striking 57% plan to increase cost prices by more than 5%.
A similar trend can be seen among unprofitable vendors. While 27% plan no changes, 50% anticipate price hikes above 5%.
Notably, moderate adjustments between 1% and 5% remain a minority view across both groups, suggesting that few brands believe marginal adjustments are sufficient to offset the tariff impact.
Instead, vendors are pursuing either a wait-and-see approach or bold adjustments to protect margins, reflecting the level of uncertainty in the current tariff environment.
Conclusion
This wraps up our recap of the 2025 Annual Vendor Negotiation cycle. I hope you found the presented insights useful for the further development of your Amazon business.
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And if you participated in the survey, Thank You! Without your support, this study would not have been possible.
Background of survey and profile of survey participants
The survey was conducted from May to June 2025 and targeted representatives of first-party Amazon suppliers. A total of 180 survey responses were recorded. The survey was conducted anonymously.
Vendor business size with Amazon
29% of survey respondents reported annual Amazon sales between $0 and $10 million. Another 46% of surveyed participants reported annual Amazon sales between $10 and $50 million. 8% of survey respondents reported annual Amazon sales between $50 and $100 million. 17% reported annual Amazon sales of over $100 million.
Vendor categories of survey participants
48% of survey participants sell items in the Hardlines goods product family, 42% are actively selling Consumer Goods (Consumables), 9% were manufacturers in Soft Lines (Fashion, Luxury, and Accessories), and 1% in Media (Books, CDs/DVDs, Video Games) categories.
Seniority of survey participants
The seniority of survey participants ranged from mid-level to C-Suite. 24% of participants said they were mid-level managers, 48% were senior managers, 18% were executives, and 10% were part of the C-Suite or owners of the company.
Geographical distribution of survey participants
The survey participants were located in multiple regions. 56% of respondents were located in North American markets, 44% in Europe, and 1% in Asia-Pacific markets.
Disclaimer
The survey is not and was not sponsored by, run, or affiliated in any way with Amazon.com, Inc. or any of its subsidiaries.