Something happened on Amazon last quarter that hasn’t happened in twenty years. Third-party sellers, the independent businesses that make up most of what you buy on the platform, dropped to 60% of paid units sold in Q1 2026. That’s down from 61% in Q4 2025 and 62% the quarter before. Two straight quarters of decline. According to Marketplace Pulse, that is the first back-to-back drop in this number since Amazon started reporting it in 2004.
For more than a decade this metric only moved one direction. Up. So when it falls twice in a row, after years of nothing but gains, it’s worth paying attention to what’s actually going on. At Ecommerce Paradise I’ve spent fifteen years telling people the same thing: the platform you build on matters more than almost any other decision you make. This data is the clearest proof of that I’ve seen in a while.
And here’s the part that makes it interesting for anyone running an independent store. While Amazon’s seller share was slipping, total US ecommerce grew 9.8% year over year in Q1 to $326.7 billion, the strongest quarter in two years per the Census Bureau. The pie is getting bigger. Amazon’s sellers are just getting a smaller slice of one corner of it. Below I’ll break down exactly what moved, why it moved, and what a high-ticket store owner should actually do about it this week.
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What Happened
The headline number comes from Marketplace Pulse, which tracks the percentage of paid units on Amazon sold by third-party sellers versus Amazon’s own first-party retail. In Q1 2026 that figure was 60%. The two prior quarters were 61% and 62%. A single quarter dip would be noise. Two in a row, after the metric peaked at an all-time high of 62% in Q4 2024 and then held in a tight 61 to 62% band for five straight quarters, is a real turn.
The biggest driver appears to be groceries. Amazon’s paid unit growth hit 15% in Q1, the highest since the tail end of the COVID lockdown surge, and a lot of that volume is first-party. Groceries, household staples, and Amazon’s own private-label goods ship 1P, which means every grocery order Amazon wins tilts the ratio away from third-party sellers even when those sellers are doing just fine in absolute terms. First-party unit growth outpaced third-party growth for the quarter, and that’s what pushed the share down.
So the marketplace is not actually shrinking. That’s the nuance most coverage will skip. Total units are still climbing. What changed is the mix. Amazon is selling more of its own stuff, faster, and that dilutes the seller share even in a growing market.
At the same time, the seller base itself is consolidating. Modern Retail reported that Amazon’s active seller count is falling while revenue concentrates among the top sellers. A small group of large operators is taking a bigger cut, and the long tail of small sellers is thinning out. Marketplace Pulse also noted that average traffic per active seller climbed 25% over the past year to 3,544 monthly visits, which is the flip side of the same coin. Fewer sellers, more traffic each, bigger winners at the top.
Zoom out and the macro picture is loud. US ecommerce hit $326.7 billion in adjusted Q1 sales, up 9.8% from a year earlier and up 2.7% from Q4, per the Census Bureau report released May 18. Online sales were 16.9% of all retail, up from 15.9% a year ago. Total retail grew just 3.9% over the same period, so ecommerce is expanding at more than twice the rate of retail overall. PYMNTS framed the quarter as consumers leaning harder into digital shopping across the board. Demand is not the problem. Where that demand lands is the whole question.
How We Got Here
To understand why this matters, look at the trend it broke. Between 2013 and 2016 Amazon’s third-party share gained a full percentage point every single quarter for eleven straight quarters. That was the era when “sell on Amazon” became the default advice for anyone starting an online business. The platform was handing sellers a growing share of an exploding market, and getting in early felt like free money.
That run ended years ago, but the share kept grinding upward in smaller increments until it topped out at 62% in late 2024. For the five quarters after that, it flatlined. Now it’s declining. The shift lines up with Amazon’s strategic priorities. The company has poured money into groceries, same-day delivery, private label, and its own retail muscle, and those bets are first-party by nature.
It also lines up with a broader read on where retail is heading. eMarketer has been pointing to a more fragmented selling environment, with TikTok Shop gaining legitimacy and buyers spreading purchases across more platforms instead of defaulting to Amazon for everything. Amazon is still the giant. It’s just no longer the only game, and its own growth engine is increasingly its own inventory rather than its sellers’.
There’s a concentration story sitting underneath the share number too. A relatively small group of large sellers now drives a disproportionate slice of Amazon’s third-party revenue, and the count of active sellers is shrinking even as traffic per seller rises. When a platform rewards scale and its own private label at the same time, the operators with the least bargaining power are the small and mid-size sellers stuck in the middle. That’s the exact group that got told for a decade that Amazon was the safe, easy bet. The data is now saying the safe bet has a ceiling.
Why This Matters for Your Store
If you sell on Amazon, this is a yellow flag, not a fire alarm. The marketplace is growing in absolute terms, so your units can still climb. But the platform is optimizing for itself and its biggest sellers, and the long tail is getting squeezed. Fewer sellers taking more of the pie means the middle is the dangerous place to be. If you’re a small or mid-size third-party seller competing on price against Amazon’s own private label, the next few quarters get harder, not easier.
Now flip it around. This is exactly the case for building a store you actually own. When 16.9% of all retail is online and growing at 9.8% a year, the demand is there for an independent brand. You just have to capture it on ground you control instead of renting space inside someone else’s algorithm. I’ve made this argument for years, and the people who took it seriously are the ones who aren’t sweating Amazon’s mix shift right now. I wrote a full breakdown of the tradeoffs in high-ticket dropshipping on Amazon if you want the deeper version.
High ticket is the cleanest way to play this. You’re not fighting Amazon’s private label on a $14 phone case. You’re selling $1,500 saunas, $3,000 outdoor fireplaces, $2,500 standing desks, the kind of product where the buyer wants a real store, a phone number, and a human who knows the catalog. Those buyers convert on independent Shopify sites every day, and Amazon’s grocery push has nothing to do with that market. The niche you pick still does a lot of the heavy lifting in this market, so choose a vertical with real margin and motivated buyers.
The math is what makes it work. On a $2,000 product at a 25% gross margin you clear about $500 a sale before ad spend. Land four sales a week and that’s a six-figure run rate from a catalog you could manage in a few hours a day. You don’t need Amazon’s volume when a single order is worth twenty or thirty of theirs. That economics gap is the reason I’ve stayed in high ticket for fifteen years instead of chasing pennies on commodity products, and it’s why a seller-share wobble on Amazon barely registers for an independent high-ticket operator.
Your own store also means you set the rules. On Shopify you own the customer relationship, the email list, the checkout, and the data, which is the opposite of being one of a thinning herd of sellers fighting for visibility on a platform that’s quietly favoring its own inventory. The store I’d build today routes around marketplace risk by design.
The foundation underneath that store matters too. Before you take a dollar through a high-ticket store, you want an LLC, a business bank account, and the legal structure that keeps your personal assets separate from the business. I usually point people to Bizee for fast, cheap formation when they’re just getting the entity stood up. The whole point is to build something durable instead of something that depends on a platform’s roadmap.
If reading all of this makes you think “I get it, but I don’t want to build the whole thing from scratch,” that’s a normal reaction and it’s exactly why my team exists. We build and launch high-ticket stores for people who’d rather own the asset than spend six months learning the setup. You can see how the turnkey done-for-you build works and decide if it fits where you are.
Not sure which high-ticket vertical to build in while Amazon tilts toward its own inventory? Grab my free list of 1,000+ proven high-ticket niches and pick a lane. Get the free niches list →
What To Do This Week
This isn’t a drop-everything moment. It’s a check-your-foundation moment. Here’s where I’d put my time over the next seven days if I were reacting to this data.
- Pull your channel mix. If more than half your revenue comes from Amazon, write that number down and sit with it. Marketplace concentration is the single biggest risk most sellers refuse to look at. Know your exposure before you decide what to do about it.
- Stand up an owned channel if you don’t have one. Even a simple Shopify store with your best products and a working checkout gives you a place to send repeat buyers who you currently hand back to Amazon for free. Start collecting emails day one.
- Compare platforms honestly before you commit. If you’re weighing where to build, read my Shopify versus WooCommerce breakdown so you pick the one that matches how hands-on you want to be.
- Get help instead of doing it all yourself. A trained virtual assistant can handle product uploads, supplier emails, and customer service for a fraction of a US hire. I find mine through OnlineJobs.ph, which is where most of my team came from.
- Map out your diversification plan on paper. If you’re sitting on an Amazon business, decide now what percentage of revenue you want off-marketplace in twelve months, then reverse-engineer the monthly steps to get there. A target you can measure beats a vague intention to “diversify someday.”
Frequently Asked Questions
Is Amazon’s marketplace actually shrinking?
No. Total units are still growing. What fell is the third-party share of those units, because Amazon’s own first-party sales, especially groceries, grew faster than seller sales last quarter.
Should I quit selling on Amazon?
Not necessarily. If Amazon is profitable for you, keep it. The lesson is to stop treating it as your only channel and to build an owned store alongside it so you’re not fully exposed to Amazon’s roadmap.
Why is high ticket better positioned for this shift?
High-ticket buyers want a real store, expert help, and phone support, which independent sites deliver better than a marketplace listing. Amazon’s grocery and private-label push doesn’t touch the $1,000-plus product market where high-ticket stores live.
How fast can I launch my own store?
A focused high-ticket store can be live in weeks, not months, once you’ve picked a niche and lined up suppliers. If you’d rather skip the build entirely, a done-for-you service can stand the whole thing up for you.
Do I need an LLC before I start?
You want one before you process real revenue, mostly to separate personal and business assets and to open a proper business bank account. Forming one is quick and cheap with a service like Bizee.
Is now a bad time to start selling online?
The opposite. Online sales are growing near 10% a year and just hit 16.9% of all retail. The opportunity is real. The only question is whether you capture it on a platform you rent or a store you own.
Where is all this ecommerce growth coming from if not Amazon sellers?
Across the board. Census data shows online sales are now 16.9% of retail and growing at nearly 10% a year, spread across independent stores, other marketplaces, and direct-to-consumer brands, not concentrated on any single platform.
Want my team to build and run your high-ticket store for you instead of renting space on a marketplace that’s tilting toward its own inventory? See the turnkey done-for-you service →
The takeaway I keep coming back to is simple. Demand for buying online has never been stronger, but where that demand lands is shifting under everyone’s feet. Build on ground you own. Subscribe to the YouTube channel for daily breakdowns, and I’ll have more breaking news for you later today.
Related Articles
If this was useful, these go deeper:
- How I Got Into High-Ticket Dropshipping in 2011
- The High-Ticket Niches List
- Why Your High-Ticket Dropshipping Business Needs an LLC
Trevor Fenner is an ecommerce entrepreneur and the founder of Ecommerce Paradise, a platform focused on helping entrepreneurs build and scale profitable high-ticket ecommerce and dropshipping businesses. With over a decade of hands-on experience, Trevor specializes in high-ticket dropshipping strategy, niche and product selection, supplier recruiting and onboarding, Google & Bing Shopping ads, ecommerce SEO, and systems-driven automation and scaling. Through Ecommerce Paradise, he provides free education via in-depth guides like How to Start High-Ticket Dropshipping, advanced training through the High-Ticket Dropshipping Masterclass, and fully done-for-you turnkey ecommerce services for entrepreneurs who want a faster, more hands-off path to growth. Trevor is known for emphasizing sustainable, real-world ecommerce models over hype-driven tactics, helping store owners build scalable, sellable, and location-independent brands.
