Chinese sellers now top 50 percent of Amazon's best, squeezing U.S. merchants

Overseas sellers, especially from China, now account for more than half of Amazon's top sellers, up from well under half a few years ago, according to industry tracking data. Walmart's marketplace is on the same trajectory at roughly 30 percent Chinese sellers, up from 20 percent a year ago, and Amazon's new Haul section sells nearly 100 percent China-based goods as it chases Shein and Temu on price.

Critics say many overseas sellers exploit structural loopholes: under-declaring shipments or using the de minimis exemption to dodge duties, skipping U.S. taxes amid lax enforcement, operating through shell companies that leave customers no recourse, and flooding listings with fake reviews or one-star attacks on competitors. Researchers estimate $4.75 billion in taxes is lost annually on foreign seller profits in Amazon's U.S. marketplace alone, and documented cases include copycat products with safety compromises, such as a knockoff that swapped kid-safe glue for industrial adhesive.

Proposed fixes circulating among sellers include a withholding tax on foreign seller payouts unless they file U.S. returns, closing the de minimis loophole, requiring liability bonds from foreign entities, steeper tariffs on direct-from-foreign-company sales, reciprocity in market access, audits of shell registrations with frozen funds for non-compliance, and fast-track IP courts. A revived tariff agenda could remove some cost advantages but risks short-term marketplace chaos.

Separately, baby brand KeaBabies, an $78 million-a-year company, suffered a devastating account hijacking on January 16. Despite no phishing mistakes by the team, an attacker repeatedly changed admin emails, overrode one-time passcodes, and swapped bank details, defeating Amazon's three-day bank-change hold and siphoning tens of thousands of dollars. The breach cost an estimated $230,000 in daily sales for over a week and took an emotional toll on an 80-person team. The sophistication of the attack sparked speculation of insider involvement or a systemic Amazon vulnerability, and a lawyer in the seller community confirmed similar client cases with losses over $1 million. Security guidance for sellers: use app-based two-factor authentication rather than SMS, audit global user permissions regularly, diversify revenue beyond Amazon, monitor account details daily, and pressure Amazon for crisis procedures.

On the training circuit, a January 29 session promised sellers a system for replacing PPC agencies in-house, and a January 31 workshop is demonstrating an AI automation stack that generates product visuals, video content, and workflows without designers or code.

New data shows 57 percent of shoppers compare prices across multiple sites before buying.