The Retail Roundup: A Deep Dive into Early 2025
🎧 On the go? Listen to this roundup in audio format.
Every month, we’ll be breaking down the most impactful changes across Amazon’s ecosystem, covering key developments in retail media, business operations, or content compliance.
For this inaugural edition, our subject matter experts are Ross Walker, Director of Retail Media at Acadia, and Armin Alispahic, Operations Team Lead.
Here are the most important updates of January 2025:
Amazon Retail Ad Services: The Next Evolution in Retail Media
One of the most buzzworthy announcements was Amazon's launch of Retail Ad Services at CES. This new offering allows brands to create sponsored product ads for other retail websites using Amazon's ad technology stack.
Currently partnering with smaller retailers like Sprouts, iHerb, and Oriental Trading Company, this development signals Amazon's ambition to become a dominant force in the broader retail media landscape.
While the immediate impact may be limited due to the current roster of smaller retail partners, the long-term implications could be substantial.
As Ross suggested, we might eventually see larger retailers like Target adopting Amazon's ad stack, though this remains speculative.
The Rise of Longtail Retail Media Networks (RMNs)
As we move beyond Amazon's announcements, we must consider the ripple effects these changes may have across the broader retail media landscape. The growth of retail media networks (RMNs) and Amazon's aggressive innovations hint at an increasingly competitive environment where adaptability is key.
While Amazon dominates headlines, longtail RMNs are quietly reshaping brand strategies. Platforms tied to specialty retailers like iHerb and Sprouts offer niche targeting opportunities that larger networks can't match. These smaller RMNs often provide higher ROIs due to less competition and more engaged audiences.
💡Ross noted, "Brands that overlook longtail RMNs are missing out on untapped potential. The key is not just advertising where everyone else is, but finding where your unique audience thrives."
For brands, this means diversifying spend beyond Amazon and Walmart. It’s about strategic placements aligning with product relevance and audience intent, ensuring marketing dollars stretch further.
Major Changes to Amazon's Reimbursement Policy
Perhaps the most impactful announcement for sellers was Amazon's shift to COGS-based reimbursements for lost or damaged products, replacing the previous retail price-based system.
This change, effective March 2025, represents a significant reduction in reimbursement values for many sellers – potentially 40% or more in many cases.
Amazon is introducing a new manufacturing cost page within its inventory defect and reimbursement dashboard, allowing sellers to upload their COGS data and supporting documentation.
However, this raises concerns about:
- Privacy and competitive intelligence
- The accuracy of Amazon's COGS estimates
- The verification process for seller-submitted COGS data
- The potential impact on seller profitability
Armin provided a clear breakdown of what sellers can expect:
- No Immediate Action Required: Amazon will estimate COGS unless sellers choose to upload their own data via the new Inventory Defect and Reimbursement Dashboard.
- Data Submission: Sellers can bulk upload ASINs with COGS and supporting documentation (e.g., invoices), though this excludes additional costs like shipping and duties.
- Potential for Discrepancies: Expect challenges, including disputes over Amazon's COGS estimates and back-and-forth with seller support.
The broader implication? This policy aligns the seller experience more closely with that of vendors, where COGS is often a negotiated figure rather than a fixed one.
While some fear this data could fuel Amazon's private label strategies, Armin emphasized that the shift is more likely driven by Amazon's post-pandemic focus on profitability.
💡Key Takeaways for Brands:
For Sellers: Evaluate Amazon's COGS estimates before deciding whether to submit your own data. Prepare for initial hiccups and consider the long-term impact on margins.
For Industry Watchers: The convergence of seller and vendor experiences reflects Amazon's evolving ecosystem. Brands must stay agile, and ready to adapt to policy shifts and new ad opportunities.
Content Compliance Gets an AI Upgrade
Amazon's new AI enforcement for product titles and images has sparked mixed reactions. Non-compliant titles will no longer be suppressed; instead, Amazon’s AI will auto-correct them. While this reduces downtime, it introduces risks if AI misinterprets product details.
Key changes include:
- Stricter enforcement of 200-character limitation for titles
- Restrictions on word repetition
- Ban on special characters
- Enhanced AI-powered image compliance checking
Armin summed it up perfectly: "The hype is at 10 because I want those word soups gone, but the dread is also at 10 because of what AI might do to listings it doesn’t understand."
💡 Key Takeaways for Brands:
Brands must proactively audit content to maintain control over product listings. Don’t rely on Amazon’s AI to get it right—because when it doesn’t, your brand reputation is on the line.
With great power comes great responsibility. As AI capabilities grow, so do concerns about data privacy and ethical ad practices. Brands must balance innovation with transparency to maintain consumer trust.
AMC's Five-Year Lookback: A Data Goldmine
Perhaps the most universally impactful update is Amazon Marketing Cloud's (AMC) new five-year lookback window. Previously confined to 12 months of data, brands can now analyze long-term customer behavior, unlocking insights into lifetime value and more nuanced purchasing trends.
Ross emphasized the significance: "This is a huge unlock that could make your Amazon customer much more valuable than you previously thought."
💡 This isn't just a data extension; it's a strategic advantage. Brands should dive into this expanded dataset to refine targeting, measure true customer lifetime value, and enhance cross-channel attribution models.
Looking Ahead
As Amazon continues to roll out these changes, sellers and brands must stay agile and adapt their strategies accordingly. While some updates bring improved capabilities and efficiency, others – particularly the COGS-based reimbursement change – may require significant operational adjustments.
The increasing role of AI in Amazon's ecosystem, from content compliance to advertising capabilities, signals a future where automation and machine learning play an even more central role in e-commerce operations.
💡 Brands will need to balance leveraging these new tools while maintaining control over their presence on the platform.
For brands and sellers on Amazon, 2025 is already shaping up to be a year of significant adaptation and strategic refinement as these changes take effect and new opportunities emerge in the retail media landscape.
Give It a Listen
You can tune in for the full interview with Ross Walker and Armin Alispahic on the Ecommerce Braintrust hosted by Julie Spear and Jordan Ripley.
This show gives you access to the world's best brains when it comes to building momentum online for established consumer brands. Join in and listen to discussions with expert guests about e-commerce strategies, trends, and innovations.