Amazon's ad business grew faster than its store sales in Q2

Amazon reported second-quarter net sales of $200.6 billion on July 30, up 20% from a year earlier, with North America sales of $116.2 billion growing 16%, according to the company's earnings release. Inside those headline numbers sits the figure that matters most to a marketplace seller: advertising services revenue rose 26% to $19.8 billion, while third-party seller services revenue, the commissions and fulfillment fees Amazon charges sellers, rose 16% to $46.8 billion.

Online store sales grew 15% to $70.4 billion over the same period. Set side by side, the advertising line grew about 1.7x faster than the store it advertises, as EcomCrew's analysis of the quarter puts it. Worldwide paid units grew 17%, and third-party sellers accounted for 61% of them, one point below the 62% share of a year earlier.

What the quarter says about the cost of being seen

The useful comparison is per unit. With paid units up 17% and ad revenue up 26%, Amazon collected roughly 8% more advertising revenue per unit sold than it did a year ago, according to EcomCrew. Seller services revenue per unit, by contrast, rose only about 1%, which means Amazon's fee take per item was close to flat and almost all of its fee growth came from volume. The squeeze on sellers in this quarter did not come from commission or FBA rates. It came from the price of placement.

Chief executive Andy Jassy told analysts that Sponsored Products remains the largest advertising product and a key driver of growth, and that shoppers who click a sponsored placement convert 48% more often and spend 21% more than those who do not, per the earnings call transcript. He also said the company's AI-driven Ads Agent has expanded to 11 more countries and that advertisers using it see an 8% lower cost per impression and a 6% lower cost per acquisition. Chief financial officer Brian Olsavsky attributed the North America operating margin of 7.9% partly to the FBA logistics surcharges Amazon introduced in April, which offset fuel inflation and higher line-haul rates.

Why sellers read the ad line as a leading indicator

Ahead of the release, Nova Data's seller preview argued that accelerating ad growth on Amazon almost always precedes tougher cost per click in the fourth quarter, and suggested sellers model 10% to 15% higher CPCs for the holiday period. The Q2 print delivered exactly the acceleration that framework warns about, with ad growth of 26% against 17% unit growth. Amazon guided third-quarter net sales to between $197 billion and $202 billion, or 9% to 12% growth, which implies the platform expects demand to hold into peak while the auction for attention keeps tightening.

The quarter also fits a pattern in Amazon's recent seller-facing changes. The company has been removing friction that used to filter who could win placement, dropping the seller-performance gate on the Featured Offer in July, and standardizing the listing surface with the enforced 75-character title cap. Each of those changes widens the field of eligible offers on a given page, and a wider field is what makes paid placement worth more. EcommerceBytes noted in its coverage that Amazon Business, the platform's B2B storefront, has reached $60 billion in annualized gross sales, another surface where the same dynamics apply.

What this costs a furniture seller

Why it matters: For a furniture and home seller, advertising is already the largest variable cost after fulfillment, and this quarter confirms it is the cost line growing fastest. A category with average order values in the hundreds of dollars is where CPC inflation compounds hardest, because a single click can cost more than a small-category seller's entire margin on a unit. The practical read is that fee rates are stable for now, so the levers that protect margin into the fourth quarter are ad efficiency and conversion, not negotiating the commission. Sellers who go into peak with the same bids and the same listing quality as last year should expect to pay more for the same rank.

What it means for our partners: We plan fourth-quarter Amazon budgets for our suppliers on the assumption that cost per click rises into the double digits, and we shift spend toward the ASINs whose listing quality and conversion rate can absorb it, rather than defending every placement at any price.