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The Marketplace Myth: Why Being on Amazon Alone Won’t Guarantee Success

Jun 27, 2025 - Jameel Sumra
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For many emerging ecommerce brands, Amazon represents the path of least resistance. The platform's massive built-in audience, streamlined logistics, and powerful search engine make it the obvious first choice. But that convenience comes with a dangerous myth: that being on Amazon is enough to succeed.

Amazon’s ecosystem, while powerful, is not designed to empower brands, it’s built to serve consumers and itself. Over-reliance on Amazon exposes brands to volatile fees, unpredictable policies and zero ownership over customer relationships.

While Amazon remains a valuable part of a healthy channel mix, it should never be your only one. To build a truly resilient and scalable brand, you need a diversified, omnichannel strategy.

Our growth marketing team helps brands move beyond platform dependency to build a growth engine that’s scalable and defensible.

The hidden costs of Amazon dependency

Most focus on Amazon's obvious benefits such as massive reach, built-in logistics and ready-to-buy customers. But the true cost of Amazon dependency extends far beyond monthly seller fees.

The hidden costs driving this gap fall into four categories that every growth-minded businesses must understand.

1. Unpredictable fees are eating your margins

Amazon's fee structure has become a masterclass in gradual margin compression. While Amazon confirmed it will not raise referral or FBA fees in 2025, the cumulative impact of recent increases continues to devastate seller profitability: 

  • Inbound Placement Service Fees: Introduced in 2024, it now costs sellers an average of $0.27 per unit for standard-sized products and $1.58 per unit for large bulky-sized products.
  • Low Inventory Fees: Brands are penalized for carrying less than four weeks of inventory, making stock management more expensive and stressful.

These rising costs cut into already slim margins and complicate long-term financial planning. You might often find yourself trapped in a cycle of chasing sales volume to offset fees, with little left for reinvestment or brand-building.

2. You’re renting customers, not building relationships

Sales volume without customer ownership is revenue without equity building. Amazon owns the data, the relationship, and the experience.

This creates several challenges:

  • No access to first-party data for remarketing or personalization
  • Limited ability to build retention and customer lifetime value (LTV)
  • No direct communication with customers

Without customer ownership, your ability to scale profitably is severely constrained.

3. Algorithm dependency and competitive vulnerability

Amazon's algorithm treats your brand as a commodity. Your years of brand building, customer service excellence, and product innovation get reduced to a search ranking determined by factors you can't control.

The platform's structure incentivizes a race to the bottom. When differentiation gets commoditized by algorithm-driven product comparison, price becomes your only competitive lever.

4. Platform volatility is a constant threat

Amazon’s algorithm, policies, and seller rules can shift without notice. A single change can wipe out your visibility or even suspend your account. Examples include:

  • Sudden account suspensions with no clear path to reinstatement
  • Competitors gaming the system and hijacking listings
  • Rising advertising costs cutting into margins

When Amazon is your only channel, your business is one policy change away from crisis.

What diversification looks like in modern ecommerce

Ecommerce diversification isn't about listing products everywhere, it's about strategically building multiple revenue engines that compound rather than cannibalize each other.

Effective diversification operates across four dimensions:

  1. Platform diversification: D2C websites, social commerce, specialty marketplaces
  2. Geographic diversification: International market expansion and localized customer acquisition
  3. Product diversification: Adjacent categories that leverage existing customer relationships
  4. Channel-type diversification: Wholesale, retail partnerships, subscription models

73% of retail shoppers are omnichannel shoppers who interact with 6 touchpoints before making a purchase. Your customers are already diversified, which means your sales strategy should match their behavior.

Why omnichannel brand building drives value

A. Stability through multiple sales channels

By spreading your sales across multiple platforms, you insulate your business from:

  • Policy shifts on any one channel
  • Technical outages or fulfillment disruptions
  • Seasonal volatility

With multiple revenue streams, your business can absorb disruptions on one channel without halting growth.

B. Full control of customer experience

Your DTC site gives you the ability to:

  • Customize branding and user experience
  • Control promotions and pricing
  • Implement A/B tests to optimize conversions

You’re not at the mercy of a third-party platform’s algorithm or layout. You own the experience.

C. Build long-term equity with owned assets

Your email list, SEO rankings, and social media following are assets that compound in value over time. These elements:

  • Reduce reliance on paid traffic
  • Enable retention strategies
  • Increase business valuation in exit scenarios

E. Reach distinct audiences through the right channels

Each channel has its own audience:

  • Amazon: High-intent shoppers looking for convenience
  • TikTok/Instagram: Younger, discovery-driven consumers
  • Your website: Loyalists and high-value repeat buyers

Expanding your presence allows you to tap into different buyer behaviors and demographics.

Challenges and considerations of diversification

A. Resource requirements and management complexity

The most common diversification failure occurs when brands attempt too much expansion too quickly without building necessary capabilities. Multi-channel success requires sequential capability development rather than simultaneous channel launches, combined with proactive investment in systems that handle operational complexity automatically.

Successful implementation prioritizes:

  1. Technology infrastructure before channel expansion
  • Centralized inventory management with real-time synchronization across all channels
  • Integrated order fulfillment that optimizes shipping costs and delivery times
  • Unified customer service with complete purchase history visibility 
  • Performance analytics platforms that provide comprehensive cross-channel insights
  1. Team expertise development through training or strategic hiring

B. Maintaining brand consistency across channels

To maintain brand trust, consistency is key:

  • Unified messaging and visuals across channels
  • Harmonized pricing to avoid confusion or channel conflict
  • Coordinated inventory to avoid overselling or stockouts

Partner with our growth marketing team to develop your diversified channel strategy

Amazon can play an important role, but it shouldn't define your business. Long-term growth, profitability and resilience come from a multi-channel approach designed around your brand’s strengths and customer behavior. 

Our growth marketing team works with ambitious ecommerce brands to craft and execute strategic channel diversification plans that drive reach, reduce risk, and maximize return on investment. 

Partner with Cart.com’s Growth Marketing Team to develop your diversification plan.