What changed
Survey of 181 marketplace sellers sorts them into thriving, grinding, consolidating and distressed
When
Results published April 2, 2026; follow-up analysis April 16, 2026
Who it affects
Marketplace Pulse; sellers on Amazon, Walmart, eBay, Shopify, TikTok Shop and others
What to do
Check revenue growth and contribution margin per SKU, then fix the grinding SKUs first

Key takeaways

  • Only 23% of 181 marketplace sellers grew revenue and margins together in the Seller Index 2026; 38% were distressed.
  • Among the most fee-frustrated sellers, 42% were growing their Amazon share and only 24% were cutting it.
  • Grinding (revenue up, margin down) is 31% of sellers: check margin per SKU, not just sales.

How the seller squeeze built up

  1. 584,000 active sellers on Amazon.com

  2. Active sellers down to 500,000

  3. Seller Index: 23% thriving, 38% distressed

  4. 49% name fees, 46% ads as top margin worry

  5. Holiday deals test grinding margins

What the Seller Index found

According to Marketplace Pulse, the 2026 Seller Index surveyed 181 marketplace sellers representing over $2 billion in combined annual revenue, across 27 questions. It sorts them by two things: is revenue growing, and are margins improving. Only 23% are thriving, meaning both are up. Another 31% are grinding: revenue is up, but margins are flat or falling. And 38% are distressed, with no growth at best and both revenue and margin falling at worst.

Marketplace Pulse also names a fourth group, consolidating, but gives no share or definition in its public article. The three published shares add up to 92%, so consolidating would be the remaining 8% or less; that is our arithmetic, not a stated figure. One secondary summary we read reports different cohort shares; we use Marketplace Pulse's own numbers here.

  • Thriving: 23%, revenue and margins both improving
  • Grinding: 31%, revenue up, margins flat or down
  • Distressed: 38%, no growth or worse
  • Consolidating: named, share not published

Seller Index 2026 cohorts

  • Thriving23%
  • Grinding31%
  • Distressed38%
Source: Marketplace Pulse Seller Index, 2026

The fee paradox nobody expected

Two weeks later, Marketplace Pulse published a follow-up analysis on April 16, 2026. Among sellers active on Amazon, 49% named marketplace fees as their primary margin concern and 46% named advertising spend. In all, 47% reported a year-over-year margin decline. Yet among the sellers most frustrated with fees, only 24% were reducing Amazon's share of their revenue mix, while 42% were actively growing it.

The reason is concentration. Marketplace Pulse estimates that fewer than 8,000 sellers now generate half of Amazon's roughly $300 billion in US third-party GMV, down from 15,000 sellers under three years earlier, and that active sellers on Amazon.com fell from 584,000 in January 2025 to 500,000 in March 2026. Demand is still on Amazon; it is just flowing to fewer sellers. Leaving costs more than staying, even when staying hurts. The firm also notes the survey ran before three policy changes it lists: a 3.5% fuel surcharge, automatic ad cost deduction and DD+7 disbursement terms. So the real picture today may be tighter, not looser.

So what: grinding is the dangerous cohort

Distressed sellers know they have a problem. Grinding sellers often do not, because the revenue line looks healthy. At 31%, grinding is the second largest group, and it is where fee and ad cost increases show up first: sales rise, profit does not.

The math is simple. Profit equals revenue times margin. If revenue grows 10% but margin falls by a quarter, profit falls. Growth funded by deeper discounts and higher ad spend can make a business bigger and poorer at the same time.

A worked example, with illustrative numbers

For example, take a brand doing $1,000,000 a year on Amazon at a 12% contribution margin after referral, FBA, storage and ad costs: $120,000 of profit. It grows revenue 10% to $1,100,000, but higher cost per click and a deeper coupon push margin down to 9%. Profit is now $99,000, about $21,000 less than before the growth. In the Seller Index, that brand counts as grinding, not thriving. These numbers are illustrative; run your own with the Amazon profit calculator.

What this means for sellers and brands

Use the same two tests Marketplace Pulse used. Compare this year's revenue with last year's, and this year's contribution margin with last year's. That puts you in a cohort in ten minutes. Then work SKU by SKU, because most catalogs mix thriving and grinding products. Our Amazon FBA fees guide lists every fee line to include.

  • Finance lead: pull the last 12 months from the Payments Reports Repository in Seller Central and compute contribution margin per SKU after referral, FBA, storage, inbound placement and ad spend. Metric: which cohort each SKU falls into.
  • PPC owner: set every target ACoS from that SKU's margin, not a blanket number, using the break-even ACoS calculator. Metric: TACoS trend by SKU over 60 days.
  • Catalog owner: reprice, bundle or retire the bottom fifth of SKUs by margin dollars. Metric: share of profit from the top 20% of SKUs.
  • Ops lead: review inbound placement and low inventory fees in the FBA fee reports each month. Metric: fulfillment and storage fees per unit sold.
  • Promotions owner: cap coupon depth for grinding SKUs during Black Friday and Cyber Monday. Metric: margin per order during the event vs the four weeks before.
  • Channel lead: test a second channel only with SKUs that already make money on Amazon. Metric: profit per channel, not revenue per channel.

Find your cohort in 10 minutes

  • Revenue this year vs last
  • Contribution margin this year vs last
  • Margin per SKU after all fees
  • Target ACoS set per SKU
  • Coupon depth capped for BFCM
  • Profit per channel, not revenue

When this does not apply

The Seller Index is a self-reported survey of 181 sellers, so treat the cohort shares as a directional signal, not a census. It covers marketplace sellers across Amazon, Walmart, eBay, Shopify, TikTok Shop and others; some blogs present it as Amazon only, but the cohort split is not confirmed as Amazon only, while the 49% and 46% concern figures are for sellers active on Amazon. If you are in your first year, margin trends are noisy and revenue growth matters more. If your margin fell because you chose to invest in a launch, you may be grinding on purpose; just set an end date.

If you want a second opinion on which of your SKUs are grinding, our Amazon account management team does this work every month, and a free Amazon audit will show fee and ad leaks. More seller health coverage is on the Amazon FBA news channel, including our report on Amazon's active seller count falling to 500,000.

Sources

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