Brands seeking to enter or expand on Amazon face a challenging paradox. While Amazon delivers unrivalled global reach, commanding 15% of global retail e-commerce value sales, the dominance of third party (3P) sellers creates a uniquely complex environment.
In 2024, 3P merchants accounted for 65% of Amazon’s sales (GMV), up from 56% in 2019. This rapid evolution demands a deep understanding of the 3P landscape, where opportunities and challenges go hand in hand.
93% of skin care brands fall into high dependency trap, yielding lower returns
For the nine months ending March 2025, Euromonitor International examined 3,204 skin care brands in moisturisers and treatments on Amazon by categorising them into four segments based on the proportion of sales attributed to 3P sellers: 1P-led (0-24%), Measured 3P (25-49%), Goldilocks Zone (50-75%) and High 3P Dependency (76-100%).
Analysis reveals a pronounced "long tail" dynamic on Amazon, with 93% of brands falling into the High 3P Dependency segment, yet averaging only USD0.4 million in sales. This highlights significant fragmentation, intense competition, pricing pressures and the persistent risk of brand dilution within this overcrowded segment.
Brands perform best when operating with a Measured 3P strategy
Conversely, brands adopting either a 1P-led or hybrid strategy observe better performance. Notably, brands in the Measured 3P segment, with 25-49% of revenues generated through 3P sellers, achieved the strongest performance per brand. These brands effectively leverage Amazon’s strategic demand generation tools, including Fulfilment by Amazon and Sponsored Brands, while maintaining brand control.
Meanwhile, 1P‑led and Goldilocks players retain brand control through selectively utilising 3P partnerships to enhance product availability without compromising brand equity.
Strategically, brands should migrate out of the overcrowded high dependency tier to avoid the "long tail" trap of low revenue. By reallocating 10-15% of their listings towards the Measured 3P segment or forging selective 1P alliances with Amazon, brands can significantly enhance visibility, leverage promotional mechanisms and strengthen inventory oversight to drive revenue.
Brands represented entirely by 3P sellers face the greatest risks, including pricing discrepancies, aggressive promotions and exposure to counterfeits. For most, these are not the result of deliberate strategy, but rather the consequences of limited oversight and the inherent complexity of marketplace dynamics.
Prestige brands illustrate this challenge clearly. Many do not view Amazon as a primary e-commerce channel and, instead, prioritise partnerships with specialist retailers like Sephora or Ulta. However, the absence of active oversight has allowed 3P sellers to establish a strong presence for these brands on Amazon.
For example, Amazon sales of prestige brands such as Kiehl’s, Lancôme, Tatcha, Dermalogica, Elemis and Zo Skin Health are almost entirely driven by 3P sellers – often with little or no direct involvement from the brands.
To manage these risks, most brands either diversify their e-commerce presence or avoid selling on Amazon altogether. In 2024, nearly 49% of Kiehl’s online category sales came from Amazon, but this share declined to 40% in 2025 as the brand shifted focus to other retailers.
The reality for most brands is that absolute control over 3P sellers is unattainable. Low barrier to entry on Amazon enables almost anyone to list products, often without the brand’s knowledge or consent. As a result, many brands do not have full visibility into which segment – 1P-led, Measured 3P, Goldilocks Zone, or High 3P Dependency – they are operating in, unless they are investing in continuous monitoring, management and curation of their portfolios.
Amazon is responding with initiatives like Premium Beauty store and Indie Beauty programmes. Clinique's success with Premium Beauty, offering live consultations and personalised tools demonstrates how brands can enhance consumer experience and loyalty within Amazon's ecosystem.
Navigating the 3P maze on Amazon demands a calibrated channel strategy. By identifying the right segment, fostering the right partners and using policy, tools and relationship-building, brands can sidestep the pitfalls of high 3P dependency while carving out sustainable growth.
Read our report, The State of Marketplaces in FMCG E-Commerce, for more analysis on marketplace performance across industries.