Tariffs Scare Third-Party Sellers: Here's How Amazon is Handling it

Amazon AMZN partners with millions of independent third-party sellers worldwide. These sellers use Amazon’s services, such as fulfillment, payment processing and shipping, to reach customers, while Amazon earns revenues from commissions and related fees. In the first quarter of 2025, third-party sellers accounted for 61% of total paid units sold globally.

During the quarter, Amazon’s third-party seller services generated $36.5 billion in net sales, up 5.5% from $34.6 billion in the year-ago quarter. This segment made up 23.5% of Amazon’s total revenues and remains a key part of its retail operations. The Zacks Consensus Estimate for this segment’s second-quarter 2025 revenues is pegged at $38.8 billion.

However, new tariffs on Chinese imports have raised concerns across the seller network. The United States had imposed 145% tariffs, later reduced to 30% under the Geneva truce. The initial peak tariff impacted sellers relying on Chinese manufacturing and low-cost goods. To protect margins, some sellers scaled back participation in events like Prime Day. These tariffs placed Amazon in a difficult position, requiring careful management of pricing, inventory and customer expectations.

To address these challenges, Amazon worked with sellers to bring in inventory earlier than usual, helping stabilize prices and maintain availability during Prime Day. The company extended the event and coordinated promotions based on stock levels and cost impact. With more than 2 million global sellers, Amazon noted that not all responded the same. Some reduced discounts, while others maintained pricing to preserve share. As a result of these efforts, Amazon’s Prime Day 2025 delivered strong results, with independent sellers achieving record sales and a record number of items sold this year.

AMZN’s Competition in the Third-Party Marketplace Space

Amazon’s third-party marketplace is facing stiff competition from platforms like eBay EBAY and Etsy ETSY. Both rivals are doubling down on seller-focused innovation to capture more market share.

eBay reported $18.8 billion in GMV in the first quarter of 2025, driven by AI-powered listings and luxury authentication services that simplify selling and boost trust. eBay's 134 million active buyers reflect sustained seller engagement.

Etsy, with 5.4 million active sellers and 89 million buyers, continues to attract niche sellers through personalized tools like Etsy Apps and AI-driven recommendations. As seller ecosystems improve elsewhere, Amazon must evolve to defend its marketplace dominance.

AMZN’s Share Price Performance, Valuation and Estimates

AMZN shares have gained 3% in the year-to-date (YTD) period, underperforming the Zacks Internet – Commerce industry and the Zacks Retail-Wholesale sector’s growth of 7.9% and 5.1%, respectively.

AMZN’s YTD Price Performance

From a valuation standpoint, AMZN stock is currently trading at a forward 12-month Price/Sales ratio of 3.28X compared with the industry’s 2.17X. AMZN has a Value Score of D.

AMZN’s Valuation

The Zacks Consensus Estimate for second-quarter 2025 earnings is pegged at $1.32 per share, which has been revised upward by a penny over the past 30 days, indicating 7.32% year-over-year growth.

Amazon.com, Inc. Price and Consensus

Amazon.com, Inc. price-consensus-chart | Amazon.com, Inc. Quote

Amazon currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

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This article originally published on Zacks Investment Research (zacks.com).

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