Amazon vendors say Amazon is more aggressively blocking ads of unprofitable products and telling them to lower wholesale prices for ads to be reinstated
Eugene Kim / CNBC :
Context & Ripple Effects
This lands mid-purge of Amazon's wholesale business. Two weeks earlier, Bloomberg reported that Amazon had abruptly stopped buying from thousands of vendors and was pushing them onto the marketplace as third-party sellers (abruptly stopped buying from thousands of wholesale vendors) — so the vendors now reporting ad blockages are the ones still inside the first-party system, being squeezed to make their economics work or leave.
The ad lever is the newest pressure point in a pattern regulators were already circling: by August, antitrust experts flagged Amazon's practice of burying items priced lower elsewhere as scrutiny bait (making items harder to find if they're priced lower elsewhere), and years later court filings in California's lawsuit alleged the company kept blocking cross-platform price competition despite claiming it had stopped (court filings in California's Amazon lawsuit). Using ad placement to force wholesale price cuts is the same playbook applied to vendors rather than sellers.
First-order effects
- Vendors whose products Amazon deems unprofitable lose ad visibility immediately, and the only stated path back is accepting lower wholesale prices — a direct margin cut negotiated under threat of lost traffic.
- Amazon converts its retail media dominance into procurement leverage: the vendor's advertising budget becomes a bargaining chip in wholesale pricing talks.
Second-order effects
- Vendors facing the squeeze have a ready exit path Amazon itself built — the marketplace shift reported earlier in March — so more brands may go direct as third-party sellers rather than accept price cuts, eroding Amazon's first-party selection.
- Rival retailers and ad platforms gain a pitch against Amazon: guaranteed ad delivery untied to your wholesale terms, at exactly the moment vendors are learning their ads can be switched off unilaterally.
Third-order effects
- If the pattern holds, ad placement functions as an enforcement mechanism for retail terms across the platform — the same visibility-for-pricing structure antitrust experts flagged for sellers, now documented for vendors, which strengthens the case for regulatory scrutiny of how Amazon monetizes its gatekeeper position.
The trend: Amazon is consolidating control over its retail ecosystem by making visibility — ads, placements, search rank — conditional on terms it sets, converting its ad business into leverage over both vendors and sellers.