Last Updated: February 13, 2026
Amazon remains one of the most powerful e-commerce platforms in the world, drawing roughly 90 million visitors every single day. With that level of traffic, it seems like an obvious place to grow a brand, but with the rising Amazon customer acquisition costs, is it still worth it?
Most e-commerce brands move to Amazon because shoppers arrive ready to buy, not just browse. It’s no surprise the marketplace now hosts millions of active sellers competing for the same high-intent customers.
But selling on Amazon is not automatic success, and it is far from easy money. One of the biggest pressures today is the steady increase in Amazon customer acquisition costs despite the massive built-in audience.
This article breaks down what Amazon customer acquisition costs really mean, why they are climbing, and how they impact both FBA and FBM sellers. Our Amazon agency also shares practical strategies brands use to lower acquisition costs and protect profit margins.
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What Is Amazon CAC?
Amazon Customer Acquisition Costs, or CAC, refer to the total amount a seller spends to gain one new customer on the platform. This includes advertising spend, promotional discounts, referral fees, fulfillment costs, and any other expenses directly tied to generating that first purchase.
For many sellers, CAC is often mistaken for just PPC spend, but it is much broader than that. In reality, Amazon customer acquisition costs are a financial calculation where rising ad bids, higher fees, and competitive pricing all combine to determine how expensive it truly is to win a customer.
How to Calculate Your True Amazon Customer Acquisition Cost
There are many components that contribute to determining Amazon customer acquisition costs. By computing all relevant expenses, sellers can get a clear picture of how much it truly costs to bring a new customer in.
A basic formula for calculating Amazon CAC is:
Amazon CAC = Total Sales and Marketing Expenses/Number of New Customers Acquired
Components to Include in Total Expenses:
- Advertising Costs: Sponsored Products, Sponsored Brands, and Sponsored Display ads.
- Promotional Expenses: Coupons, Lightning Deals, and discounts.
- Operational Costs: FBA fees, agency fees, marketing tools, and content creation.
- Personnel Costs: Salaries for employees managing Amazon marketing efforts.
Why Amazon Customer Acquisition Cost Is Rising
The rise of Amazon CAC doesn’t happen by accident because there are several factors pushing costs higher faster than most sellers realize. Here are the main reasons Amazon customer acquisition costs are climbing:
- Organic search is shrinking, so sellers must pay for visibility.
- More sellers and big brands drive up keyword bids.
- FBA increases, low-stock surcharges, and return processing add costs.
- Mobile limits and automatic bid suggestions push ad spend higher.
- Sellers keep prices low to stay visible, cutting margins and raising CAC.
How Rising Amazon CAC Affects Sellers
The rising cost to acquire customers on Amazon is reshaping how sellers operate. High CAC is eating into profits, forcing strategic changes across product, advertising, and fulfillment decisions.
- Higher ad spend and FBA fees reduce net revenue even when sales stay steady.
- Increased CPCs and fees tie up more capital for advertising and inventory.
- Sellers raise prices to cover costs, risking customer dissatisfaction and lower loyalty.
- More sellers and limited ad space make it harder to gain clicks and conversions.
- Sellers pursue direct-to-consumer sites or external platforms to lower reliance on Amazon fees.
FBA Challenges with the Rising Amazon Customer Acquisition Costs
Amazon FBA lets sellers outsource storage, packaging, and shipping while offering fast delivery and Prime eligibility. Despite these perks, rising fees, intense competition, and limited control over the customer experience are driving up acquisition costs for FBA sellers.
1. Saturated Marketplace Leading to Higher Competition
Amazon’s marketplace is increasingly crowded, with new sellers joining daily. This surge in competition makes it difficult for FBA sellers to stand out, leading to higher advertising costs and thinner profit margins as more sellers compete for the same customers.
Example
An FBA seller offering a popular product like wireless earbuds faces intense competition from other sellers and Amazon’s private labels. Even with heavy investment in ads and promotions, standing out and achieving a positive return on investment can be very challenging.
Solution
- Create a strong brand identity and use Amazon’s Brand Registry tools to enhance your presence.
- Focus on a specific product niche to reduce competition and increase conversion chances.
- Use quality images, detailed descriptions, and enhanced A+ Content to improve organic rankings.
- Encourage customer reviews and showcase them to build trust and differentiate your product.
2. Increased Cost-Per-Click in Amazon Advertising
As competition on Amazon grows, the cost-per-click (CPC) for ads has risen sharply, making advertising a major expense. This higher CPC increases customer acquisition costs, forcing FBA sellers to spend more to stay visible and attract buyers.
Example
An FBA seller running a PPC campaign for their home decor product notices that the CPC for the targeted keywords “picture frame” has doubled over the past year. Despite maintaining the same budget, the seller is receiving fewer clicks and conversions, leading to higher costs for each customer acquired and squeezing profit margins.
Solution
- Focus on long-tail keywords to lower CPC and attract qualified traffic.
- Use Amazon’s automated bidding tools to show ads to the most relevant audiences and maximize ROI.
- Improve titles, descriptions, and images to boost organic rankings and reduce reliance on paid ads.
- Analyze campaign performance to cut underperforming ads and reallocate budget.
3. Rising FBA Fees and Fulfillment Costs
Amazon FBA makes storage, packing, and shipping easy, but rising FBA fees are cutting into profit margins. These higher costs make acquiring and fulfilling customer orders more expensive, adding financial pressure on sellers.
Example
An FBA seller selling seasonal products like holiday decorations faces high long-term storage and fulfillment fees if inventory doesn’t move quickly. These rising costs force the seller to either raise prices and risk losing customers or absorb the fees, cutting deeply into profits.
Solution
- Optimize stock levels to prevent excess inventory and reduce long-term storage fees.
- Bundle products to increase average order value and lower storage costs.
- Adjust pricing to account for rising fulfillment costs using dynamic pricing tools.
- Use a mix of FBA and FBM to manage costs for low-turnover or high-storage items.
However, know that switching to FBM can also lead to a negative outcome. Check this video on how our Amazon agency helped a client understand why their sales plummeted despite lowering the shipping costs:
4. Limited Control Over Customer Experience and Engagement
Using Amazon FBA means sellers give up control over key aspects of the customer experience, such as packaging, shipping, and customer service. This lack of control can lead to inconsistent branding, packaging issues, and delays in customer support, all of which can negatively impact customer satisfaction and increase the cost of acquiring and retaining customers.
Example
An FBA seller of premium skincare products can’t control packaging, even with a plan for a luxury unboxing experience. Poor or damaged packaging can lead to unhappy customers, negative reviews, and higher return rates.
Solution
- Enroll in Amazon’s Brand Registry to access tools that improve brand representation and consistency.
- Regularly review and address customer feedback to show commitment to satisfaction.
- Consider using a hybrid fulfillment model for certain high-value or brand-sensitive items.
- Invest in high-quality images, detailed product descriptions, and A+ Content to set clear expectations for customers before they purchase.
5. Decreased Organic Visibility and SEO Challenges
With increasing competition and changes in Amazon’s search algorithms, FBA sellers find it harder to rank their products organically. The dominance of paid ads in search results further reduces organic visibility, making it challenging to acquire a new customer without heavy advertising spend.
Example
An FBA seller of fitness equipment sees their product drop in search rankings for the “yoga mat” keyword despite a well-optimized listing. Algorithm changes and an influx of sponsored listings push them lower, forcing the seller to spend more on ads to regain visibility.
Solution
- Refine titles, descriptions, and bullet points with relevant keywords to improve organic ranking.
- Use A+ Content and high-quality images to boost conversion rates and organic visibility.
- Encourage customer reviews and ratings to strengthen search ranking and trust.
- Drive external traffic from social media, email, or blogs to supplement organic reach.
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FBM Challenges with the Rising Amazon Customer Acquisition Costs
Amazon FBM (Fulfillment by Merchant) lets sellers handle storage, packing, and shipping themselves, giving them more control but also more responsibility. Without Amazon’s logistics perks or Prime eligibility, FBM sellers face higher costs and tougher competition when acquiring new customers.
1. Challenges in Competing with FBA Listings
FBM sellers struggle to compete with FBA listings because FBA offers Prime eligibility and faster shipping. This preference reduces visibility and sales for FBM sellers, making customer acquisition more costly.
Example
An FBM seller offering kitchen gadgets notices that their products are consistently outranked by an FBA seller selling the same products in search results. Despite competitive pricing, their sales lag behind because FBA listings are Prime-eligible and offer faster shipping, which are major selling points for customers.
Solution
- Enhance product titles, descriptions, and images to make your listings more appealing and informative.
- Provide fast and reliable shipping options, and consider offering free shipping to attract customers.
- Boost your visibility through social media, email marketing, or other channels to boost visibility.
- Enroll in MFP to offer Prime benefits while maintaining control over fulfillment.
2. Higher Shipping and Logistics Costs
FBM sellers handle their own shipping and logistics, resulting in higher costs for warehousing, packaging, shipping, and returns. This added expense makes it harder to offer competitive prices and increases customer acquisition costs.
Example
An FBM seller of handmade jewelry faces higher-than-expected shipping costs from storage, supplies, and variable rates. This makes it harder to compete with FBA sellers who offer faster and often cheaper shipping.
Solution
- Negotiate better rates with carriers and streamline packaging to reduce costs.
- Partner with a 3PL provider to handle warehousing and shipping efficiently and at potentially lower costs.
- Simplify your shipping strategy with flat-rate shipping to attract customers while managing costs.
- Keep inventory levels optimized to reduce storage costs and avoid overstocking.
3. Difficulty in Building and Maintaining Customer Trust
FBM sellers struggle to build customer trust since they handle their own shipping and customer service. Inconsistent delivery times, packaging issues, and slower responses can lead to negative reviews, making it harder to acquire and retain customers compared to FBA sellers who benefit from Amazon’s reliable logistics.
Example
An FBM seller of organic skincare products faces negative reviews due to delayed deliveries and inconsistent packaging. These issues damage their reputation, making it tough to compete with FBA sellers who offer more reliable service.
Solution
- Partner with reputable carriers and provide accurate delivery estimates to avoid delays.
- Invest in consistent, quality packaging that reflects your brand and protects the product during transit.
- Actively seek customers to give feedback by asking them for pictures of using the product.
- Respond to customer inquiries promptly and resolve issues quickly to maintain a positive customer relationship.
4. Limited Access to Advanced Marketing Tools and Programs
FBM sellers often lack access to Amazon’s advanced marketing tools like Prime promotions and Enhanced Brand Content, which are more accessible to FBA sellers. This limitation reduces their visibility and competitiveness, leading to higher customer acquisition costs as they must invest more in alternative marketing strategies.
Example
An FBM seller struggles to compete with FBA listings because they can’t participate in Prime deals or use Enhanced Brand Content. To compensate, they spend more on external advertising, which increases their overall marketing costs.
Solution
- Use social media, email marketing, and influencer partnerships to drive traffic to your Amazon listings.
- Optimize your product listings with effective keywords and high-quality images to improve organic rankings.
- Use Amazon tools that are accessible to FBM sellers, such as Sponsored Products, to enhance visibility.
- For key products, consider using FBA temporarily to access Prime and other advanced marketing benefits.
5. Increased CPC in Amazon Advertising
FBM sellers face higher cost-per-click rates due to increased competition on Amazon. This rise in CPC makes acquiring new customers more expensive and reduces overall profitability.
Example
An FBM seller of kitchen gadgets notices that their CPC for the target keywords “kitchen scissors” has doubled over the past year. Despite increasing their ad budget, the seller sees fewer clicks and conversions, leading to higher costs for each customer acquired and squeezing profit margins.
Solution
- Drive traffic to Amazon listings through social media and other channels to supplement paid ads.
- Focus on long-tail keywords with less competition to lower CPC.
- Use Amazon’s automated bidding tools to allocate budget more efficiently.
- Improve listings to boost organic rankings and reduce reliance on paid ads.
FAQs About Amazon Customer Acquisition Costs
Solving the Rise in Amazon CAC
Rising customer acquisition costs are a big challenge for Amazon FBA and FBM sellers because of higher fees, more competition, and complicated logistics. But by understanding these challenges, sellers can use strategies like targeting specific niches, improving listings, using outside traffic, and managing shipping more efficiently.
Focusing on SEO, finding the right mix of FBA and FBM, and staying proactive can help sellers control costs and boost sales. With a clear plan, sellers can handle Amazon’s marketplace better and grow their business over time.
Struggling with Amazon CAC? Contact our full-service Amazon agency to get the help you need today!
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