Sell on Amazon without GTINs or UPCs

Amazon’s marketplace requires some form of a product identifier for nearly every category. Whether it’s baby toys or industrial bolts, sellers need a Universal Product Code (UPC) or, similarly, a Global Trade Item Number (GTIN).

Yet some items have no such identifier and require an “exemption” from Amazon.

GTIN

GS1, a global standards organization, developed the GTIN to identify products. The identifier encompasses several worldwide formats, including the familiar UPC (GTIN-12) in the United States and Canada. In Europe, merchants use the European Article Number (EAN), technically GTIN-13.

The GTIN standards identify any trade item (product or service) priced, ordered, or invoiced. Hence GTINs help Amazon and the merchants selling in its marketplace keep track of inventory and manage orders.

Identifying Products

For resellers offering products from prominent consumer brands, listing a product on Amazon is as simple as looking up the GTIN or copying the UPC number from the item’s barcode.

There are, however, many products that don’t have an obvious barcode or identifier. Here are some examples.

• Print-on-demand products. T-shirts are perhaps the best example. Services such as Printful and Gooten are excellent sources of quality shirts with crisp printing, but they don’t have UPCs.

• Private label items. Some small brands, including in-house manufacturers, may not have a GTIN.

• Handmade merchandise. Artisans creating anything from leather belts to home-sown bibs may not have UPCs.

• Parts or accessories. Replacement parts, components, and accessories may not come with individual GTINs. An example is a generic phone case.

• Bundled or items in a multipack. Most major brands have a GTIN-14 or similar for multipack, but some smaller companies with bundled products do not, despite Amazon’s guidelines.

For those and other numberless products, Amazon marketplace sellers have two options: obtain a GTIN or get an exemption from Amazon.

GTIN Exemption

Amazon often awards exemptions for categories with private-label, handmade, or similar products.

The process is straightforward. Create a listing in Amazon Seller Central, select “I don’t have a product ID,” and click “Next.” An “Apply” button will appear for products requiring a GTIN exemption.

If the product category is restricted, the seller will need double approval: an authorization to sell and a separate GTIN exemption.

Brands with existing GTINs cannot apply for an exemption for other like-branded items.

Exemption approval typically requires excellent documentation, as follows.

• Clear photographs. Amazon wants detailed product and packaging photos, not illustrations or markups. These pictures should show the item and packaging from each side, but will not appear in product listings.

• No GTIN. There cannot be (i) any barcode or identifier on the item or package or (ii) a GTIN associated with the product. Amazon has an exhaustive list of registered GTINs and will check.

• Consistent branding. The brand name on the GTIN exemption form must exactly match the packaging and product. And the packaging must permanently show the brand name or logo.

• Proper category. Ensure the product category for the GTIN exemption is correct. An error will almost guarantee a rejection.

According to its support, Amazon usually approves or rejects an exemption request within two days. Merchants who have obtained an exception often recommend waiting an additional day afterward before building those product listings, allowing Amazon’s systems to reflect the status.

Amazon’s notification of denied GTIN exemptions may state why. For example, the product and packaging photographs might not demonstrate the absence of a GTIN or may belong to a brand requiring a UPC.

Sellers with denied exemptions can reapply after updating or clarifying the initial culprits.

Finally, if all else fails, a company can purchase a UPC for about $30, plus an annual fee.

The Pricing Strategy of Temu Sellers

Temu sellers show massive discounts to boost perceived savings and win customers. The strategy is working.

Launched in September of 2022, Temu has grown rapidly. By December 2023, Temu had captured 17% of the U.S. dollar store market — Five Below, Dollar General, more — according to Reuters.

Certainly Temu’s prices are low. A recent comparison from Omnisend showed shoppers can often save 40% on Temu versus similar products on Amazon (but not Amazon Haul).

However, seller success on Temu relies as much on discount psychology as the savings.

Temu’s success relies in part on the psychology of discounts.

Cheap Headphones

Consider a hypothetical contract manufacturer that sells on Temu. Among the many products the company produces for various brands are noise-canceling, over-the-ear headphones that retail for $99.

This manufacturer-turned-Temu seller has the materials, models, and expertise to build a nearly identical set of headphones. Stopping short of using the original brand’s patented and expensive noise-canceling technology, the company tweaks the earpieces.

The “nearly identical” headphones cost $5 to manufacture. This company lists the headphones on Temu at a regular price of $99, with a 75% discount. That $24.75 price could produce more profit than it gets from building the client’s high-end version.

This made-up scenario is extreme but instructive.

Temu Prices

Remember that Temu is a marketplace with thousands of sellers. Temu does not buy and sell inventory. It connects manufacturers and brands to shoppers.

Thus the prices are not Temu’s but those of sellers. Yet Temu’s success relies on low-cost and, perhaps, low-quality alternatives to popular and brand-name products.

For example, the Omnisend comparison found that Temu listed an item that “matched” a product in Amazon’s camera and photo category about 96% of the time. But none — 0.0% — of those Temu items were the same brand or known quality as on Amazon. Instead, the items were unbranded and generic and “closely resemble well-known brands, often with blurred logos or modified packaging,” per Omnisend.

For identical items and brands, Temu’s prices are roughly the same as Amazon’s.

Temu Discounts

Sellers on Amazon and Temu differ significantly on the frequency and amount of discounts.

“While Amazon offers discounts on around 47% of its products, 65% of Temu’s listings are marked down. In addition, some items on Temu see discounts as high as 98%, compared to Amazon’s highest discount being 67%,” according to Omnisend.

Collectively, Temu’s deep discounts make products feel significantly cheaper. This is the psychology part.

For example, a February 2018 study in the academic journal “Fashion and Textiles” found that deep discounts can enhance shoppers’ perception of savings, making them feel like they are getting a better deal.

The study noted that discounts elicit an emotional response impacting shoppers’ perception of savings, quality, and value.

These findings are more or less common sense to seasoned marketers and precisely what is happening with Temu.

Product Perception

Yet deep and frequent discounting can be dangerous. Substantial markdowns may lead to doubts about product quality or authenticity, and rightly so.

Imagine a machine with three dials:

• Quality,
• Savings,
• Value.

Ecommerce sellers can manipulate the dials. Changing one has the opposite effect on another. The proper mix leads to an ecommerce sale.

Many Temu sellers have learned that turning up the perceived savings dial overcomes the associated decline in perceived quality. Temu customers presumably realize they are buying what could be a subpar item, but the perceived savings make it worthwhile.

To be sure, Temu’s success does not rely solely on psychology. “Many of Temu’s products ship directly from manufacturers to consumers so that product prices can remain low by bypassing distributors and other third-party handling fees,” explained Greg Zakowicz, senior ecommerce expert at Omnisend, in an email to Practical Ecommerce. “They also use the least expensive shipping method to reduce prices further.”

Nonetheless, the quality-savings-value exercise is a lesson for all ecommerce sellers. Every merchant has access to the purchase intent machine with its various dials, knobs, and switches. Good marketing is tuning the mix for success.

Born to Run with Amazon

Will enterprise brands boost inventory positions with Amazon in 2025? While a recent survey of Amazon sellers doesn’t necessarily answer that question, it does point to a now seven-year-old inventory program meant to help brands grow.

Some 41% of U.S.-based enterprise brands and retailers planned to use an Amazon-sponsored program — such as Vine or Born to Run— to help drive sales in 2025, according to the recently released “State of the Amazon Seller 2025” report from Jungle Scout.

In January 2025, Jungle Scout queried nearly 1,500 Amazon vendors, marketplace sellers, and folks just getting started with the platform. About 75% of  respondents came from the United States, and 47% worked at a “large brand or retailer.” The report reflects the sentiment of surveyed sellers but not necessarily the overall marketplace.

Nonetheless, more than four in 10 respondents from enterprise-level businesses ticked the “Born to Run/ Vine / Amazon Programs” box for planned growth channels in 2025. Vine is Amazon’s program that invites trusted reviewers to share their candid product opinions. The unspecified other “Amazon programs” tells us little, but “Born to Run” is interesting.

What Is Born to Run?

Amazon’s Born to Run program is an exclusive, invitation-only initiative to help Amazon vendors accelerate sales of new or existing products.

Started in 2018, Born to Run lets the vendor — a company selling directly to Amazon, not a marketplace seller — request purchase orders from Amazon and specify the anticipated unit sales in 10 weeks of a given product. If approved, Amazon purchases the requested quantity.

Here is a scenario. Imagine a brand called “Amazing Gizmos” that sells, well, gizmos. The Amazon purchasing team orders 400 units for the next 10 weeks. But Amazing Gizmos is about to launch a campaign on streaming television, and its marketing team expects to sell 1,000 units on Amazon.

With the Born to Run program, Amazing Gizmos can ask Amazon to increase its order to 1,000 units. Amazon agrees, and — assuming all goes well — Amazing Gizmos stays in stock and sells 978 units.

Hypothetically, Amazing Gizmos sold 578 extra gizmos (978 minus 400) because Amazon had ample inventory. What’s more, on its next regular order, Amazon’s purchasing team doubles down on the product without needing a second Born to Run request.

Similarly, a new vendor could use the Born to Run program to boost Amazon’s initial order. For example, Amazon says it will buy 100 of the new item, the vendor requests 300, and Amazon steps up. Just like that, the product launch could drive significantly more sales.

The key benefit in each case is that Amazon won’t run out on the vendor’s products.

Unsold Units

As long as the additional Born to Run items sell, an Amazon vendor should enjoy growth. If the extra inventory doesn’t sell, Amazon has two options.

• Return the items. Under the program terms, Amazon can return unsold units. The vendor refunds 100% of the product cost plus a 10% shipping and handling fee.

• Keep the items. Amazon can also retain the unsold units. The vendor will pay Amazon a “retention fee” equal to 25% of the cost of the unsold items — more or less a discount to Amazon to keep the items.

In either case, the “penalty” for being overzealous on project sales can be severe — 10% of the cost for returned units and 25% if kept.

Invitation Only

Sellers cannot apply for the Born to Run program. Amazon selects them based, at least in part, on a few requirements.

• Approved vendor. The seller must be enrolled in the Amazon Vendor Central program.
• Approved product. Only approved products with an Amazon Standard Identification Number (ASIN) are eligible.
• Product particulars. An item must sell for at least $5 and not be bulky, heavy, or classified as dangerous.

Finally, participating in an Amazon marketing program, such as advertising, could increase the likelihood of acceptance.

Survey

Based on Jungle Scout’s survey, sellers (including enterprises) are attracted to Born to Run and similar Amazon programs. The survey doesn’t reveal actual participation, but it’s a reminder that incentives like Born to Run exist and may work for some brands.

Temu’s U.S. Seller Program Is a DTC Opportunity

Direct-to-consumer brands eager to find customers have an opportunity with Temu, China’s rapidly growing discount marketplace.

In February 2024, Temu launched a U.S. Seller Program, effectively opening the platform to American businesses. The program gives U.S. brands access to an estimated 185 million domestic and international shoppers each month — and growing.

In 2023, Temu became Apple’s most downloaded free application and dominated the iOS and Android app stores in 2024.

The Temu U.S. home page focuses on discount items.

U.S. Seller Program

Temu, like its sister site, Pinduoduo, operates primarily on a consignment model.

Chinese and East Asian manufacturers fill Temu’s warehouse with goods and create product listings for the marketplace. When sold, the item is shipped directly from the Temu facility in a familiar, bright orange bag using clever air freight strategies to keep costs low.

The company recently changed tactics, allowing American merchants to list products and optionally employ Temu’s warehouse and fulfillment system.

The program is free for small sellers, but a business requires a subscription ranging from 2% to 5% of the selling price. At the time of writing, the marketplace also charged a payment processing fee of 2.9% + $0.30 per transaction, and sellers paid all shipping costs. Collectively, the fees make Temu similar to other marketplaces.

DTC Opportunity

Temu’s low prices may not fit traditional retailers, but DTC brands could have an opportunity.

A DTC product is unique. Similar products may exist in Temu, but none are identical. Plus, American-made products might have a competitive advantage owing to perceived value and quality.

All told, I see five potential benefits for DTC brands selling on Temu.

Brand building

DTC brands on Temu can introduce shoppers to the company and build relationships.

The introduction happens when a Temu buyer finds the brand’s products. The relationship starts with order fulfillment. DTC sellers could include in the packaging a physical product catalog, a coupon for a free item, or a note describing the brand’s story.

Items requiring a warranty registration offer the opportunity to collect the buyer’s email address and phone.

Revenue

Any established sales channel is a revenue opportunity. Temu has a massive user base, and those shoppers, discount-oriented as they may be, are the opportunity.

Temu’s media agency told me the company does not share estimated or average seller revenue. DTC shops should test, optimize, and iterate on the platform.

Marketing

DTC brands listing products on Temu can participate in platform-wide promotions and flash sales, driving traffic to listings and thus more interactions

Chinese expansion

DTC brands can flip the script and offer products to Chinese buyers via inventory stored in Hong Kong or other Temu locations.

Product development

The absence of a Temu listing fee facilitates the testing of new items. DTC brands can create short runs of prototype products, offer them on Temu, and learn what appeals to shoppers.

Marketplaces Generally

Selling on Temu should be part of a general marketplace strategy for DTC brands.

A brand selling on one marketplace can consider others. Hence listing on Amazon, Temu, Walmart, Esty, and eBay could all be part of an overall marketplace approach, such as:

• Set marketplace-specific objectives. Define revenue targets, customer acquisition rates, or brand awareness metrics for each marketplace.

• Establish marketplace audiences. Use analytics to learn customer demographics and purchasing behavior on a per-marketplace basis. A Temu shopper will likely differ from one on Amazon or Walmart.

• Align products with the marketplace. A brand might have several versions of similar items. Perhaps the top quality goods are on Amazon and entry-level items on Temu. Returns and seconds could sell on eBay.

• Optimize product listings. Common optimization tactics across all marketplaces include quality images, keyword-rich descriptions, and competitive prices. But keep in mind platform-specific practices, conventions, and rules.

How Amazon Haul Impacts Ecommerce SMBs

Last month Amazon launched Haul, a low-price marketplace competitor to China-based Temu and Shein. Both have made headway in the U.S., shipping extremely low-cost items directly from China.

Reuters reported in December 2023 that Temu had captured 17% of the U.S. market among discount retailers, which include Dollar Tree, Dollar General, and Five Below.

Temu and Shein are the first and second most downloaded shopping apps on the Apple App Store, per Yahoo Finance in April 2024.

Amazon Haul

Amazon needed more low-cost options to stave off this rapidly growing Chinese competition for, essentially, the dollar store market.

At the time of writing, Haul was available only in the Amazon app, and its listings were separate from the general Amazon marketplace.

Prices for Haul items are $20 or less, with many under $10 and some as low as $1. Shipping is free for orders of $25 or $3.99 otherwise.

Haul brings dollar-store items to Amazon via its app. Click image to enlarge.

Seller Impact

Informed Amazon sellers have warily anticipated Haul for months.

Amazon presumably believes Haul will attract shoppers, which seems to be the case. On Black Friday 2024, Amazon offered 50% off for everything on Haul to help kickstart interest. Marketplace Pulse reported many of the nearly 3,000 sellers participating in Haul sold out of key items during the promotion.

“If you’re a merchant selling low-ticket items, Haul is just another means to help price-conscious consumers find your products more easily,” wrote Katie Moro, global director of managed service at Productsup, a provider of ecommerce product content, in an email.

“Shoppers don’t have to set a filter to narrow their search to products in your price range. They can scroll through the Haul storefront on the Amazon app freely, knowing the products meet their budget requirements,” Moro continued, “Haul provides a huge benefit to your business in this way, as it helps compete with merchants on Temu or Shein.”

Thus Haul might be a marketplace booster.

It could also impact customer acquisition tactics, private label brands, and arbitrage sellers.

Customer acquisition

Some brands will likely use Haul to promote loss leaders and acquire customers. Loss leader strategies are similar to advertising. A brand buys an ad or sells a product at or below cost to get sales.

“It’s a similar strategy to the viral Lululemon belt bag. Compared to the usual price tag of its athletic wear, Lululemon made the bag significantly cheaper,” wrote Moro.

“By attracting first-time buyers to its brand and exposing them to the quality of its products, Lululemon could establish customer loyalty — what starts as a small belt bag purchase evolves into a pair of leggings, and so on. Similarly, you can leverage the high visibility of Haul to expand your audience reach with a few cheaper items and then continue to build the customer relationship on the regular Amazon storefront with the rest of your product catalog,” according to Moro.

Private label rival

Many private label sellers on Amazon source products from China. Nothing stops those Chinese manufacturers from selling directly on Haul — a common practice for items on Temu and Shein.

If Haul products started appearing in the regular Amazon marketplace, sales of private-label goods could suffer.

Arbitrage competitor

Ecommerce drop-shippers that rely on AliExpress-style arbitrage could also face competition from Haul.

These sellers typically use Dsers and similar apps to identify products on the AliExpress marketplace and resell them at a profit via Shopify and marketplaces.

This sort of retail arbitrage works because relatively few consumers know about AliExpress or how to access it. Amazon Haul makes direct-from-China retail mainstream; every AliExpress seller could end up on Haul.

Cheap Ecommerce

Only time will tell whether any of these scenarios play out, and many other factors could impact direct-from-China retailing —new U.S. tariffs, for example.

What we do know is the popularity of cheap ecommerce items, very cheap.

Amazon’s Direct-from-China Plan Criticized

We asked industry pros to comment on Amazon’s plan to create a new section for Chinese sellers to ship directly to U.S. customers. The move is an apparent effort to recoup consumers who have turned to Temu and Schein, producers of inexpensive household goods and apparel, respectively.

China-based Shein sells inexpensive “fast fashion” apparel.

Bad Idea

It’s a bad idea, according to Phil Masiello, CEO of CrunchGrowth Revenue Acceleration Agency and a longtime Amazon seller and founder of multiple ecommerce companies.

Sellers and brands have been fighting with Amazon against cheap fakes from China for years. “It’s going to anger the brands on there,” Masiello said in a video interview, adding, “Amazon should go higher. They should go into exclusives versus trying to be a Temu.”

The Chinese competition is selling “junk to the uneducated. They buy it once. They’re not long-term Temu customers,” Masiello said. Temu’s popular, he says, but the business model is not sustainable.

“Amazon has one thing that any brand would love, which is retention,” Masiello added. “Everybody has the Amazon app on their phone. It’s the first place we look for something.”

Masiello believes the move will cost Amazon, where quality sellers face increasing fees — about 50% of sales go to Amazon.

Masiello’s not alone in his opinion that Amazon’s making a mistake.

Inviting Competition

“Amazon made a deal with the devil by letting this crap in from overseas,” stated Rick Wilson, chief executive officer of Miva, an ecommerce platform. “They invited the competition.”

Higher-end products will be insulated from the new storefront, but “it ultimately depends on the item.”

“Amazon continues to aggressively pursue overseas manufacturers and make it easier for them to become consumer brands themselves,” James Thomson, managing partner at Equity Value Advisors and a former Amazon executive, said. “In many categories, U.S.-based brands on Amazon are sourcing stuff overseas and now competing against their manufacturers. Amazon’s enabling them.”

“As Amazon goes after lower cost options, it’s harder for small brands in the United States to do well,” Thomson said.

Still, Thomson doesn’t see much of a problem for better sellers at higher price points.

“Lots of stuff on Temu and Schein is a spontaneous purchase,” Thomson said. “I don’t go to these types of sites thinking here’s what I need to refill my supplies at home.”

Thrasio, the ecommerce aggregator that recently emerged from bankruptcy, is focusing on quality and loyalty to avoid competing with Temu and Schein products.

Commoditized items, like kitchen utensils, will become even cheaper for consumers with direct-from-China offerings.

By focusing on quality, Thrasio hopes to avoid competing against inexpensive alternatives.

“There’s just no way to compete on some of those commodity products,” Stephanie Fox, Thrasio’s new chief executive officer, said in an interview. “Your margins are going to be 5%, which will never support a scaled business. Could solo entrepreneurs potentially compete against those products? Sure, but they won’t make a ton of money doing it.”

“Competing in those low-margin commodity products, which is exactly what Amazon is focusing on, it’s not going to be worth it,” Fox said.

Mark Daoust, the founder of Quiet Light, an ecommerce brokerage, compared the move to the launch of Amazon Basics.

“I saw a business that was killed by Amazon Basics,” Daoust said, citing one client who sold lower-priced office chairs. “Most sellers want to build a brand, a quality product, and focus on a uniqueness that no one can imitate. The client made economical chairs that were accessible to a lot of people. That was the whole value proposition.”

It wasn’t necessarily the best chair on the market, but it was economical and worked very well — until it didn’t. “Amazon Basics destroyed that company.”

Prime Day 2024: What We Don’t Know

Here’s what we don’t know about Prime Day 2024. Amazon says the event was global but famously provides no revenue details. We’re left with estimates by Adobe and others of U.S. purchases.

Thus we don’t know the worldwide volume or the impact on Amazon’s income since most of the purchases are presumably with third-party marketplace sellers from which Amazon earns a commission — $1 billion of purchases at a 20% commission would be $200 million of earnings to Amazon.

Less clear, too, is the bottom-line effect of Prime Day discounts on third-party merchants who tell Practical Ecommerce that Amazon takes roughly 50% of every transaction with sales commissions, FBA fees, and advertising costs.

Certainly Prime Day is good for consumers and Amazon, which carries little inventory risk and earns fees and commissions no matter the selling price. Amazon is mostly a service provider, after all, and most of that is from its cloud computing division, not marketplace activity.

Nonetheless, here’s our recap of Prime Day 2024.

Prime Day 2024 Recap

Adobe Analytics is popular among large U.S. online retailers. It has long been a credible source for Prime Day data. For this year’s event, Adobe says it tracked 1 trillion U.S. web visits, 100 million SKUs, and 18 product categories. All told, per Adobe, U.S. consumers spent a record $14.2 billion during July 16 -17, up 11.8% from a year earlier. (Amazon stated only that the 2024 event was “the biggest ever.”)

Other Adobe findings:

• 49.2% of purchases were on mobile devices, up 18.6% from 2023.

• Sales of back-to-school goods (backpacks, lunchboxes, supplies) increased by 216% from last year, presumably owing to the event occurring a week later than in 2023.

• Electronics sales increased 61% due to “product refresh cycles” wherein consumers upgrade their devices.

• Housewares, furniture, and appliance sales were strong, with increases in kitchen appliances (up 76%) and cookware (up 26%) leading the category.

• Categories with the top discounts from list prices were electronics (23% off), apparel (20% off), home goods/furniture (16% off), television (16% off), and toys (15% off).

Other Metrics

Numerator is a U.S.-based data and analysis firm. For its Prime Day 2024 report, Numerator tracked 93,513 U.S. orders, 35,588 households, 188,000 items purchased, and 7,311 verified buyer surveys. The report included:

• Shoppers’ ages: Under 34 (14%), 35-44 (19%), 45-54 (18%), 55-64 ( 22%), 65+ (27%).

• Household spending: Under $100 (34%), $100-$200 (43%), $200+ (23%)

• The top-selling item was the Amazon TV Fire Stick, followed by Premier Protein Shakes, Liquid I.V. Packets, Glad Trash Bags, and COSRX Snail Mucin Serum.

Consumers want discounts, according to Pacvue, an ecommerce advertising platform.

“Shoppers are still feeling the effects of inflation and are hungry for deals,” Melissa Burdick, president of Pacvue, told Practical Ecommerce.

For once, Amazon didn’t dominate the site with its own products. “Interestingly, it’s one of the first years that we have not seen Amazon devices dominate the Prime Day home page, with Apple products owning the main landing page,” she said.

Advertisers allocated more money this year due to increased competition, according to Burdick. Compared to 2023, this year’s Prime Day saw a 30% higher total managed spend starting from the pre-event phase, with a 47.5% increase on the event’s first day. On the second day, average spend increased by 24% compared to the same day last year.

“In the lead-up period to Prime Day, brands increased their spend by 15% from last year,” Burdick said. “We’ve also seen brands reallocate ad budgets from August to support their Prime Day efforts.”

Another Bad Year for Amazon Aggregators

2023 was bad for Amazon aggregator funding, and this year is on track to be even worse.

Just two equity funding rounds were closed through June 27, compared to five at the same time last year and 12 in all of 2023.

“The decline in funding reflects the overall venture environment, where funding has slowed across industries. For Amazon aggregators in particular, the biggest and most well-known player, Thrasio, prepared for bankruptcy in late 2023 as the overall slowdown in ecommerce sales growth slowed funding to the space as well,” Laura Kennedy, principal analyst at CB Insights, said in a written statement to Practical Ecommerce. “These aggregator companies still exist and are making acquisitions, but overall the market has flatlined.”

Thrasio announced last week that it had emerged from Chapter 11 bankruptcy and promoted Chief Operating Officer Stephanie Fox to CEO and a director of the company, effective immediately. CEO Greg Greeley had been expected to step down following the restructuring.

“The revitalized Thrasio will prioritize its top-performing brands with a focus on profitability as a consumer goods company,” Thrasio said in a press release.

Thrasio, based in Walpole, Mass., filed for Chapter 11 bankruptcy protection in a New Jersey court in February. It requested that the court oversee a restructuring agreement with lenders, allowing it to cut about $495 million in debt and defer interest payments for a year after exiting bankruptcy.

“The restructuring has left Thrasio financially stronger, with a clean balance sheet, reduced debt, and an infusion of $90 million in fresh capital,” the company said.

Thrasio will concentrate on its leading brands with a loyal customer base and potential for product and channel expansion, the company said, including The Hate Stains Co. stain removers, which has grown over 100% in the last year, and Angry Orange pet deodorizer, which has achieved 21 times top-line growth since being acquired in 2018.

“We are emerging from Chapter 11 with a clean balance sheet, fresh capital, and a renewed focus on our core business of building brands,” Fox said. “I have been with Thrasio since day one and remain as excited about the opportunity ahead now as I was in 2018.”

The ecommerce landscape, however, has changed with China’s Temu and Shein taking an ever-increasing share of the market with cheap goods.

In 2021, Amazon brand acquirers spent more than $6 billion in acquisitions amid the pandemic stay-at-home frenzy that pushed ecommerce demand through the roof. So far this year, aggregators have spent $100 million.

“I have to imagine the growth at Temu and Shein has not helped the aggregator market, as the idea of an inexpensive online ‘brand’ becomes even less important in that environment focused on the lowest price possible (and now Amazon is going to start its own direct-from-China product marketplace as well),” CB Insight’s Kennedy said.

Amazon Mid-2024: Earnings, Overview

Amid the hoopla surrounding next month’s Prime Day, it’s worth remembering the marginal impact of that event on Amazon’s overall financial performance. Measured by bottom-line profit, Amazon in 2024 is mostly a cloud computing company.

Yet millions of merchants and consumers rely on Amazon’s marketplace. What follows is our analysis of the company’s overall financial performance and its plans for shoppers, sellers, logistics, and more.

Assessing Amazon’s financials requires a bit of scrutiny. The company, famously opaque for what it discloses (and doesn’t disclose), operates three components.

The first is physical and digital goods that it carries as inventory and sells directly to consumers either online or through its outlets such as Whole Foods Markets. Amazon calls this component “Product sales.”

Next is what the company calls “Service sales.” It consists of commissions from its massive marketplace and related fulfillment, shipping, and advertising revenue. Grouped into Service sales are Prime membership fees and, notably, fees to Amazon Web Services, its monster cloud-computing division.

For purposes of this article, however, AWS is a separate component given its size and profitability.

All told, the three components generated $143.3 billion in Q1 2024 revenue, a 13% increase from the first quarter a year earlier.

Operating income for Q1 2024 reached $15.3 billion, much higher than the $4.8 billion a year earlier.

Big-picture takeaways are this.

• Amazon is highly dependent on AWS. The cloud division drove all operating income (net sales less operating expenses) in the first quarter last year and roughly 62% this year.

• “Product sales,” while modestly growing, are likely only marginally profitable, at best, given the presumed cost of goods attached to that category. Amazon does not report operating income for Product sales alone.

• “Service sales” (excluding AWS), with “Third-party seller services” (marketplace commissions and related), “Advertising services,” and “Subscription services” (Prime memberships, mostly), could easily be more profitable than “Products.” But, again, Amazon doesn’t separately report operating income for Services. Here’s the revenue breakout, however, for those items.

According to Marketplace Pulse, Amazon pockets more than 50% of marketplace seller revenue, up from 40% five years ago. A typical Amazon seller, per Marketplace Pulse, pays a 15% transaction fee, 20-35% in Fulfillment by Amazon fees, and up to 15% for advertising and promotions on Amazon. The total fees vary depending on the category, product price, size, weight, and the seller’s business model.

Delivery and AI

Amazon delivers to Prime members faster than ever, with more than 2 billion global packages arriving the same or next day in the first quarter. In March, across the top 60 largest U.S. metro areas, nearly 60% of Prime member orders arrived the same or the next day, and in London, Tokyo, and Toronto, three out of four items were delivered the same or the next day.

Whole Foods and Amazon Fresh now offer a grocery subscription service with unlimited delivery on orders over $35. The program is available to Prime members in more than 3,500 U.S. cities, as well as customers using an Electronic Benefits Transfer card, i.e., those using government benefits.

Amazon continued rolling out Rufus, its generative artificial intelligence shopping assistant, to millions of U.S. customers. The bot, still in beta, can answer shopping-related questions, compare and recommend products, and more. Amazon said it improved Rufus’s accuracy and response speed and added features, including “My Orders,” which answers questions such as “when did I last order coffee?” and “what dog treats did I last order?”

The company continues adding generative AI features for marketplace sellers. One new tool allows sellers to sync product listings from their own websites by providing a URL. The program parses the information from the websites to create “high-quality, engaging listings” on Amazon.

Profitability

Amazon reported net income (operating income less taxes and extraordinary items) of nearly $37.7 billion for the 12 months ending March 31, up 778% from $4.3 billion a year earlier. Yet the company sees further improvements ahead.

In the April earnings call, CEO Andrew Jassy stated he “doesn’t believe that we’re at the end of what we can do in terms of improving our cost structure on the Stores side [i.e., “Products sales”]. Yes, I think there are really unbelievable growth opportunities in front of us, and on the Stores profitability.”

He added, “We’re looking for ways to, again, turn over every rock, look at every process and everything that we do on the logistics side, and see how we can get our cost structure down and get speed and selection up. So, it’s working on a lot of fronts there, but cost is certainly front and center as we meet and improve customer experience.”

Profits grew immensely over the year, but the company’s operating margin percentages have not, which may be a driver of the cost concerns. Amazon reported a global net sales operating margin of 8% for the 12 months through March 31, compared to 2.5% a year earlier. That figure for North America totaled 5.2% through March and -0.1% a year earlier. The figures for international net sales improved to -0.4% from -6.6%.

Global Logistics

In September 2023, the company introduced Supply Chain by Amazon, offering third-party logistics worldwide.

“It really kind of, in some ways, mirrors some of the other businesses we’ve gotten involved in, AWS being an example of it,” Jassy said on the call.

The service helps sellers get items across borders and through customs. It also ships items from customs to various facilities, including allowing sellers to store items in warehouses that they can automatically replenish into Amazon’s fulfillment centers or move elsewhere.

“It turns out to be pretty hard work to actually import items from overseas, get them through customs and the border, and then ship them from that point to various facilities,” Jassy said. “We built that capability for ourselves first, and then we opened up those services as individual services to our sellers.”

Supply Chain by Amazon is “growing very significantly. It’s already what I would consider a reasonable-sized business,” Jassy said, adding that it’s still early for the low-capital program.