So many things happening, all at once. How are your businesses coping so far? Reply to this email to share with us your thoughts!
- Sellers are asking, “Are Amazon fees killing margins?”
- Amazon vs USPS: The breakup that could reshape last-mile
AMAZON NEWS
Amazon is quietly preparing for a future with less USPS in the mix—and that’s a big deal for anyone shipping products online.
Here’s what just happened 👇
📦 What’s going on
Amazon and USPS spent more than a year trying to hammer out a new delivery agreement—but talks ultimately stalled. According to Amazon, USPS walked away from negotiations late last year, leaving both sides without a clear path forward once the current contract expires in September 2026.
While nothing changes immediately, the relationship is now in a kind of “lame duck” phase. Both parties are still working together—but planning for a future where they might not.
🚚 Why this matters
This isn’t a small partnership. USPS handles roughly 1.7 billion Amazon packages annually, making Amazon one of its largest and most important customers. On the flip side, Amazon relies on USPS especially for rural and last-mile deliveries, where its own network is less dense.
That mutual dependence is what makes this tension so significant. If either side pulls back, the impact won’t be contained—it’ll ripple across the entire ecommerce ecosystem.
⚙️ What’s changing behind the scenes
USPS is undergoing a broader transformation. Instead of locking in large, long-term deals with major partners like Amazon, it’s shifting toward a more competitive, bid-based model.
That means:
- Pricing could become less predictable
- Capacity may be allocated differently
- Large shippers lose some preferential positioning
In other words, USPS is trying to operate more like a commercial carrier—and less like a legacy partner tied to a few dominant clients.
🧠 Amazon’s strategy
Amazon has been preparing for this scenario for years.
It has already built one of the largest logistics networks in the U.S., including:
- Its own delivery vans and drivers
- Regional air cargo operations
- A rapidly expanding network of fulfillment centers
This gives Amazon leverage. If USPS becomes less favorable—on cost, service levels, or flexibility—Amazon can shift volume internally or to other carriers like UPS or regional providers.
But it’s not a full replacement (yet). USPS still plays a key role in hard-to-reach areas, which means Amazon’s goal isn’t necessarily to eliminate USPS—but to avoid being dependent on it.
🧩 What this means for sellers
If you’re an ecommerce brand, this is where it hits home.
A breakdown (or even partial pullback) could lead to:
- Higher shipping costs, especially for lightweight or rural deliveries
- More fragmented carrier strategies
- Longer delivery times in certain regions
- Increased pressure to optimize fulfillment and margins
Brands that rely heavily on USPS rates—especially for DTC—may feel the squeeze first.
📉 The ripple effects
For USPS, losing or even reducing Amazon volume would be a major financial hit. That volume helps keep routes efficient and costs spread out.
For competitors, this could open opportunities:
- Regional carriers could win more contracts
- UPS/FedEx could absorb additional volume (selectively)
- New last-mile players could emerge in niche markets
In short, the delivery landscape could become more decentralized and competitive.
🔮 What happens next
There’s still time for a deal. The current contract doesn’t expire until late 2026, and both sides have incentives to maintain at least some level of partnership.
But even if an agreement is reached, it likely won’t look like the old one. Expect:
- More flexible, shorter-term contracts
- Volume diversification by Amazon
- Continued investment in Amazon’s in-house logistics
🧾 Bottom line
This isn’t just a contract dispute—it’s a signal.
Amazon is moving toward full-stack logistics independence, while USPS is trying to reinvent itself in a more competitive shipping market.
The result?
A more complex, less predictable—and potentially more expensive—future for ecommerce delivery.
TOGETHER WITH REDHENLABS
Most sellers overthink Amazon PPC - here’s why you shouldn’t
Amazon’s ad ecosystem quietly rewards two things: control and efficiency.
Not flashy tactics. Not constant bid movement. Just consistent inputs into a system that already has enough volatility built in.
Attribution is delayed. Traffic quality fluctuates. Auction logic adjusts continuously in the background. In that environment, overly complex automation often ends up optimizing against incomplete data. Dayparting, hyper-granular rules, and aggressive AI reactions tend to create churn, not stability.
Experienced sellers usually arrive at the same conclusion the hard way: restraint performs better.
Strong Amazon PPC results typically come from:
- Simple automations that handle obvious, repeatable actions without thrashing
- Clean, readable campaign data that highlights what matters instead of burying it
When changes are deliberate and explainable, campaigns stay predictable. When reporting is clear, sellers spend less time decoding dashboards and more time making decisions Amazon’s system can actually reward.
RRW Ads was built around this reality. Automations are intentionally limited. AI recommendations explain their reasoning. Nothing goes live without approval. The goal isn’t to outsmart Amazon — it’s to operate efficiently inside it.
For SellerBites readers who already understand this dynamic:
Use promo code Adspend for 15% off your first three months.
BITES OF THE WEEK
- TikTok Tightens Fulfillment Control: TikTok Shop announced plans to eliminate “seller shipping,” forcing merchants to use TikTok logistics services or approved partners.
- AI Is Driving “Zero-Click” Shopping: Generative AI is reshaping ecommerce discovery as shoppers increasingly use conversational tools to find products instead of browsing categories.
TRENDING TOPIC
Are Amazon fees killing margins?
There’s a shift happening inside the Amazon seller community—and it’s getting louder. Not from headlines. From the trenches.
Here’s what sellers are saying 👇
💸 The core complaint
Across the thread, one idea keeps coming up:
“Margins are getting squeezed from every angle.”
It’s not just one fee that’s hurting sellers—it’s how everything stacks together. Amazon takes its cut, ads take another, and what’s left keeps shrinking. On paper, each cost still makes sense. In reality, the combined weight is what’s breaking profitability.
🧾 What sellers are actually experiencing
What stands out isn’t just the frustration—it’s who it’s coming from.
These aren’t brand-new sellers struggling to figure things out. Many have been in the game for years, have stable products, and understand the system. And yet, they’re saying the same thing:
“Margins are basically gone.”
“Feels like you’re working for Amazon.”
That shift—from confidence to doubt—is the real story.
📉 How margins quietly disappear
Margins don’t usually collapse overnight. They fade.
A little goes to Amazon’s fees. A little more to ads just to stay visible. Then returns, storage, and small inefficiencies start eating away at what’s left. Nothing feels catastrophic on its own—but together, they leave very little room to breathe.
And that’s what makes this frustrating. Sellers aren’t failing because of one bad decision. They’re getting squeezed by the system itself.
🧠 What’s really changed
It’s easy to blame fees—but that’s only part of it.
The bigger shift is competition.
Sellers today are sharper. They understand ads better, optimize listings faster, and move more aggressively. So even if your costs stayed the same, you’d still feel pressure—because staying competitive now costs more.
You’re not just paying Amazon.
You’re paying to keep up.
🔄 Why it feels harder now
There used to be more margin for error.
You could survive with a slightly weak listing, average ads, or imperfect sourcing. Now, every inefficiency shows up immediately in your numbers. A small mistake doesn’t just hurt—it compounds.
Amazon hasn’t just gotten more expensive.
It’s gotten less forgiving.
🧩 The mindset shift
You can see the change in how sellers talk. It used to be about scaling—finding the next winning product, growing revenue, expanding catalogs.
Now it’s more defensive.
Sellers are questioning whether products are worth keeping at all. They’re thinking harder about costs, cutting underperformers, and focusing on efficiency instead of expansion.
Growth is no longer the default goal, sustainability is.
🚪 The quiet exits
Not everyone is adapting.
Some sellers are simply stepping away—closing SKUs, clearing inventory, or shifting focus to other channels. You don’t hear much about it, but it’s happening in the background.
Because while success stories get shared, slow exits usually don’t.
🧠 Amazon’s side of the story
From Amazon’s perspective, this isn’t about squeezing sellers—it’s about building a better machine.
Faster delivery, better infrastructure, more ad tools—those improvements drive the platform forward. But they also raise the cost of participating in it.
And those costs don’t disappear. They get passed along.
🧪 Who’s still winning
Some sellers are still doing well—but they’re playing a different game. They’re not relying on thin margins or hoping things work out. They’re intentional about pricing, disciplined with ads, and focused on building products that can actually تحمل the cost structure.
In this environment, profitability isn’t something you stumble into.
It’s something you design.
⚠️ The uncomfortable truth
Amazon still works. But it’s tighter now. Harder. Less forgiving. The platform hasn’t stopped being an opportunity—it’s just become a more demanding one.
🧾 Bottom line
This isn’t just about rising fees. It’s a deeper shift:
Amazon is maturing. Competition is leveling up. Margins are compressing.
And the real question isn’t whether fees are killing margins—It’s whether your business can survive after them.bling down on what actually converts.
