Amazon marketplace news

t’s been a while since I’ve done a tactical edition of Amazon news. As always, things happen and move in Amazon space. Here are some updates relevant for CPG brands.

Amazon “Bend the Curve”

The ever expanding Everything Store continues to take a closer lens on the marketplace total catalog size. Amazon has launched “Bend the Curve,” a sweeping catalog cleanup aimed at purging at least 24 billion underperforming or inactive ASINs from its marketplace. The goal is to reduce total listings from ~74 billion to under 50 billion, streamlining the platform and cutting AWS storage costs. While Amazon isn’t abandoning its commitment to a wide selection, it’s moving to eliminate stale, low-selling, or inaccurate listings that clutter the site and confuse customers. Internally debated, this move represents a strategic shift from Amazon’s historic “everything store” model toward a leaner, more curated catalog.

It’s always wise to curate your brand’s catalog for performance, efficiency, and size. But with this initiative Amazon will get more aggressive. It’s best to proactively ensure your listings are active, accurate, and performing, as inactive SKUs face removal.

Despite fears of reduced selection, Amazon insists this initiative is about data hygiene and efficiency, not limiting assortment.

Tightened FBA capacity limits

In the last couple months Amazon has tightened FBA inventory capacity limits, reducing most sellers’ storage allowances from ~6 months of sales volume to about 5 months. Amazon does this during Q4, but this year it surely was a result of the tariff wars. Amazon just didn’t want sellers to stock up at FBA with pre-tariff inventory.

The new rules tie capacity to performance metrics – including Inventory Performance Index (IPI) scores, sell-through rates, and catalog efficiency. This means that slow-moving stock can block space for faster-selling items, forcing brands to optimize their inventory mix. FOr some clients I have seen capacity cut by as much as 50%, in spite of growing sales velocity. To adapt, CPG brands should focus on improving IPI scores (keep them >500), culling aging stock, and possibly using Amazon Warehousing & Distribution (AWD) as an overflow buffer. With Prime Day and back-to-school season ahead, ensuring space for best-sellers is now critical.

Amazon marketplace ecosystem and 2025 strategic shift

3P sellers make up 60% of all unts sold on Amazon. In Q1 2025, Amazon’s third-party seller services revenue rose 6% year-over-year to $36.5 billion, reflecting the enduring importance of 3P sellers despite a slowdown from last year’s double-digit growth.

Meanwhile, Amazon’s 1P retail side (Vendor Central) showed only modest growth (5% YoY), highlighting a broader pivot in Amazon’s approach. The company is increasingly rationalizing its 1P inventory, tightening purchasing patterns, and potentially nudging brands—especially those with lower-volume or long-tail products—toward self-service via the 3P model.

Amazon continues steadily and surely de-risk itself from 1P side and lean into breadth, agility, and if I may say resilience of 3P sellers.

Marketplaces competitive landscape: Walmart marketplace growth

Walmart is rapidly emerging as a strong alternative to Amazon, with U.S. e-commerce sales up ~21% YoY and the first profitable online quarter achieved in early 2025. This growth is powered by expanding third-party (3P) marketplace activity (34% of total growth) and a surge in Walmart Connect ad revenue. Walmart’s competitive edge comes from combining store pickup/delivery and enhanced same-day/next-day delivery (45% under 3 hours)

For CPG brands, this makes Walmart’s marketplace and retail media channels essential considerations for growth, particularly in categories like grocery, household essentials, and mass-market items. Walmart’s 3P platform is continuting to scale.

I put together a high level comparison of Amazon vs. Walmart marketplace capabilities as of 2025.

Saludos,

Irina