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pilothouse.co
In 2020, Amazon's fees ran about 26% of your product cost. Today they run 34 to 40%, and once you add advertising most brands are at 50 to 60% before they reinvest a dollar. For the first time in years, the number of sellers on Amazon is shrinking.
Tyler, head of Amazon at Pilothouse, is back to explain what he calls the Amazon paradox: you can't afford to be on Amazon, and you can't afford not to be.
If you sell on Amazon, buy Amazon ads, or keep putting off the decision to launch there, this is the operator's version of the math.
What you get:
- Where the 40% actually goes, and which parts of it you can still fight
- The hidden fee stack (long-term storage, inbound, freight, returns, chargebacks) that quietly takes another 5 to 8% of margin, one fraction of a percent at a time
- Reimbursements: Amazon loses and damages inventory and wrongly charges you for it, and will pay it back if you dispute it. Most brands never do
- AGL / AWD, shipping straight from your manufacturer into Amazon's fulfillment network, and the 2 to 5% freight savings that comes with it
- Why the April 15 change (Amazon pulling ad spend out of your disbursement instead of your credit card) is a cash flow problem, not an ad problem
- The death of the middle: half of Amazon's GMV now sits with roughly 8,000 sellers, down from 15,000, and what changed in the algorithm to cause it
- Cosmo and what comes after A9: why external traffic into your listing now reads to Amazon as brand authority
- Nike showed up. What happens to the small sellers who used to feast on big brands' unconverted branded search
- TACoS as a vanity metric, and the three-report method (SQP, Helium 10 rank, ad spend) that shows whether your ads are driving incremental sales or paying for organic ones you already had
- Rufus is now Alexa for Shopping, most people use it on the product page rather than in search, and what that means for your listing copy
- What Tyler expects out of Amazon Accelerate 2026
Who this is for: Amazon sellers, DTC founders weighing the channel, and anyone managing Amazon ad spend.
What to steal: the reimbursement audit, the AGL freight move, and the zero-sale keyword sweep on your last quarter of ad spend.
Timestamps:
00:00 The Amazon Paradox
04:00 Why Amazon Is Getting More Expensive
10:00 Hidden Amazon Fees Hurting Margins
15:00 Why Brands Still Need Amazon
21:00 How to Make Amazon Ad Spend More Profitable
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