Overview

In this special year-end episode of MerchantSpring’s “Marketplace Masters” podcast, Paul Sonneveld (Co-Founder & CEO of MerchantSpring) switched roles from host to guest, interviewed by Asha Bhalsod (Founder of Etopia Consultancy) as a guest interviewer. Together, they reflected on key Amazon agency trends and events of 2024 and discussed strategies for success heading into 2025. This blog post distills their insightful conversation – from the highlights and lessons of 2024 to predictions and priorities for 2025 – offering valuable takeaways for Amazon-focused agencies and the brands that work with them.

Highlights of 2024: A Fragmented Yet Flourishing Agency Space

Amazon Agency Saturation vs. Fragmentation: One major theme of 2024 was the sheer number of Amazon agencies in the market. Paul acknowledged that “on one hand, it’s saturated” – there are indeed many agencies, and brands often hop from one to another – but “on the other hand, the market’s still super fragmented”. Low barriers to entry mean new agencies continue to pop up in every region. This fragmentation implies that while competition is high, there’s still room for agencies who differentiate themselves and “do a good job” for clients. Even in a crowded field, agencies that can outperform the “bottom quartile” in service quality or specialised expertise have opportunities to thrive.

Client Retention as the True Measure of Success: What does it mean to “do a good job” as an agency? According to Paul, the clearest indicator is long-term client loyalty. If an agency’s clients are still with them after several years, that speaks volumes. In his words,

“good job to me means your clients are loyal and sticking with you… after three years, your client’s still there”. -Paul Sonneveld, Co-Founder & CEO, MerchantSpring

Many agencies talk about metrics, but retention and lifetime client value ultimately reflect whether the agency is delivering real value. Paul notes that agencies with high churn (constantly losing and replacing clients) may show growth on paper but are likely “spinning a lot of wheels” without sustainable progress. By contrast, agencies that retain clients over 3+ years – even through changes in the client’s internal team – demonstrate resilient partnerships and successful performance. This was a key lesson in 2024: agencies must focus on client satisfaction and relationships to reduce churn and fuel stable growth.

Specialisation Pays Off: 2024 also highlighted the value of industry specialisation for agencies. Paul observed that agencies narrowly focused on certain high-margin categories tend to be “very successful and very profitable”, citing premium beauty as an example in both Europe and North America. Categories like beauty offer strong repeat purchase rates and often higher margins, making them attractive for agencies to specialise in. Specialised expertise can set an agency apart – whether by product category (beauty, toys, electronics, etc.) or by Amazon model (1P vendor vs 3P seller).

In fact, Paul stressed that servicing Amazon vendors is a “completely different skill set” from servicing third-party sellers. From handling purchase orders and chargebacks to navigating annual terms negotiations, vendor-focused work requires distinct commercial and operational capabilities that go beyond typical seller management. The takeaway is that agencies who honed niche expertise in 2024 often outperformed more generalist competitors, as they could deliver deeper value in their chosen domain.

Key Reasons Brands Switch Agencies: Despite agencies’ best efforts, client switching was a common occurrence in 2024’s fragmented landscape. Paul outlined a few common reasons brands change agency partners:

• Personnel Changes at the Brand: A new Head of E-commerce or Amazon at a brand often brings in their preferred agency, meaning “you’re out and another agency is in” due to prior relationships. This can happen regardless of the incumbent agency’s performance. The lesson for agencies is to build multiple relationships within the client organisation and stay connected even when contacts move roles or companies.
  
  
• Unmet Expectations: Overpromising and underdelivering remains a pitfall. An agency might project a 5× sales increase but achieve 3.5× – objectively good growth, yet disappointing against inflated promises. Such poor expectation management can lead to churn even when results are decent. Transparent goal-setting and education about Amazon’s complexities (inventory, supply chain, etc.) are critical to avoid this trap.
  
  
• Perceived Value or Attention Drop: Particularly for larger retainers, brands expect high-touch service. Paul noted cases where a client paying hefty fees felt they lost their star account manager or weren’t getting the same focus over time, prompting them to seek another agency. Ensuring consistent service quality – regardless of internal staffing changes – is essential to retain high-value clients.
  
  
• Cost Pressures: In a tough economic climate, some brands faced margin squeezes from rising Amazon fees and supply costs. Even satisfied clients sometimes “love working with their agency, but there’s just not enough left over to pay for it”, pushing them to downgrade from a full-service (onshore) agency to a cheaper solution (e.g. an offshore-heavy or smaller provider). Agencies in 2024 learned to justify their fees by delivering clear ROI or offering flexible models, as budget-cutting was a reality for many brands.
  
  

Understanding these drivers helps both agencies and brands address the root causes. For agencies, 2024’s experience reinforced the importance of managing expectations, proving value, and aligning with clients’ internal changes and cost realities. For brands, it underscored that switching agencies might yield diminishing returns if underlying issues (like supply chain or product-market fit) aren’t resolved – the “Midas touch” agency that magically fixes everything is largely a myth.

Lessons Learned: Ingredients of Agency Success

From the year’s highlights and challenges, several key lessons emerged for agencies aiming to succeed in the Amazon ecosystem:

• Relentless Focus on Client Relationships: As noted, retention is king. Agencies should invest in client success and communication to build “long-term relationships” that can weather personnel changes and external hiccups. A loyal client base not only provides stable revenue but often drives referrals for new business.
  
  
• Differentiation Through Strengths: In a crowded field, agencies that carved out a differentiator – whether it’s category specialization, technical capabilities, creative excellence, or geographic focus – had a better chance to stand out. There’s always an opportunity to “do better than the bottom quartile” of agencies, so identifying and marketing an area of excellence is crucial. For example, an agency might tout its proprietary analytics tools, its hands-on experience in a specific category, or its Amazon vendor management expertise as unique selling points.
  
  
• Efficiency and Profitability Matter: Agency owners were reminded that growth for growth’s sake is not the only path. Paul shared an anecdote of a one-person agency that deliberately stays small but extremely profitable – focused on providing the “best possible service with the lowest possible cost” to a limited number of high-paying clients. This unconventional model (essentially a lifestyle business) shows that an agency can be a “cash generating machine” without scaling up headcount, as long as margins are healthy. Even for larger agencies, the broader point stands: operational efficiency and profitability are key. With remote work and low overhead, well-run agencies should maintain strong margins in this industry.
  
  
• Adaptability Between 1P and 3P: Some agencies learned to broaden their skill sets or partner up to cover both Amazon vendor (1P) and seller (3P) needs. As discussed, the vendor side requires different knowledge (logistics, retail negotiations, etc.). Agencies that could offer hybrid services or guide brands through transitioning from 1P to 3P (or vice versa) added value in 2024’s changing marketplace. This adaptability can be a differentiator and a client retention tactic, as brands often reconsider their Amazon model.
  
  
• Marketing and Thought Leadership: A lesson from agencies that grew quickly in 2024 is the power of marketing and thought leadership. Paul observed that certain U.S.-based agencies achieved outsized presence by positioning themselves as educators in the field – their founders became full-time PR evangelists, speaking at events and sharing knowledge. This built credibility and inbound leads. The downside was sometimes misaligned expectations (marketing promises vs. delivery), but there’s no doubt that strong brand visibility helped some agencies scale their client rosters significantly.
  
  

Looking Ahead: Agency Strategies and Goals for 2025

What will success look like for Amazon agencies in 2025? Asha and Paul’s discussion suggests several strategies and focus areas as agencies plan for the year ahead:

1. Deepening Service Scope to Increase Stickiness: One insight was that brands often consider bringing Amazon management in-house once their revenue hits a certain threshold – reasoning that the hefty agency fees (which might be a base retainer plus commission) could fund a full-time internal expert instead. To counter this, agencies should “drive more complexity” for the client. In practice, that means expanding the scope of services and channels an agency handles. 
   
   If an agency manages not only Amazon UK but also helps the brand sell on Walmart, eBay, or even emerging platforms like TikTok Shop, it becomes much harder for a brand to replicate that in-house. By integrating multi-channel marketplace management, content creation, analytics, and even broader e-commerce strategy, agencies can make themselves indispensable partners rather than easily replaceable vendors. The 2025 strategy for agencies is clear: increase your value by managing complexity, thereby improving client retention and justification for your fees.
   
   
2. Embracing Consolidation (Smartly): After the rapid expansion of agencies in recent years, 2025 may see an uptick in consolidation. Some trends noted include large advertising/marketing holding companies acquiring Amazon-specialist agencies, and traditional brick-and-mortar broker firms adding e-commerce agency divisions via acquisitions. There is also interest from established U.S. agencies looking to buy European Amazon agencies to gain local presence. 
   
   However, Paul characterised the current M&A activity as “relatively minor scale” – the agency market remains so large and fragmented that acquisitions haven’t significantly reduced the total number of players. Many mid-sized agency owners are openly looking to sell in the next couple of years, but buyers (especially those seeking “premium quality” agencies) are still selective. For agencies eyeing an exit in 2025 or beyond, the implication is to focus on building a strong, quality business (with robust client relationships, solid financials, and perhaps a niche focus) to attract potential acquirers. 
   
   For those planning to continue independently, be prepared for new competitors formed via mergers or for clients asking about the stability of your firm. Either way, consolidation will be a theme – just not an overnight overhaul of the landscape. Agencies should watch the trend but not rely on a buyout as an easy way out, since many acquisitions so far have been small “acqui-hire” style deals where only client contracts and talent change hands modestly.
   
   
3. Continuing Specialization vs. Broadening Services: The coming year will likely reward two seemingly opposite strategies – niche specialization and broad service expansion – as agencies find the model that suits them. On one hand, doubling down on a successful niche (like the beauty-only agency model) can yield strong profitability and a clear market reputation. On the other hand, as mentioned, broadening into a one-stop-shop for all things e-commerce can increase your stickiness with clients. Agencies will need to assess their strengths: 2025 might see more agencies explicitly branding themselves as experts in a particular category or Amazon program, while others brand as full-spectrum e-commerce growth partners. Both approaches can work, but clarity of positioning will be vital in marketing to new clients.
   
   
4. Strengthening Client Value Propositions: With brand-side cost pressures likely to continue, agencies must refine how they communicate and deliver value in 2025. This could involve more flexible pricing models, like performance-based components or tiered service levels, though those come with the risk noted above of clients churning once fees grow large. Agencies might counter that by highlighting successes beyond pure sales growth – for example, how they save the client time, provide strategic guidance, or prevent costly errors (like avoiding Amazon chargebacks or policy violations on the vendor side). 
   
   In other words, the narrative should shift from “we’ll grow your sales by X%” to a more holistic partnership value. Paul’s insight that some brands feel “the grass isn’t always greener” after leaving an agency for in-house or freelancers is telling. Agencies should leverage testimonials and case studies of long-term engagements to show prospective clients the benefit of an expert partner versus trying to build internal capabilities from scratch.
   
   
5. Leveraging Analytics and Tools: As the marketplace data continues to expand, agencies in 2025 will lean even more on advanced analytics to gain an edge. (It’s no surprise that MerchantSpring’s own agency analytics platform was built to address this need.) Paul, as MerchantSpring’s co-founder, has a unique vantage point: “we get to talk to a lot of agencies globally on a weekly basis” and see trends through the data connections on their platform. 
   
   Modern agencies are increasingly using such tools to centralize client reporting, monitor account health, and identify growth opportunities across channels. Integrating robust analytics is becoming a standard best practice, enabling agencies to be proactive with insights and save time on manual reporting. (For those interested, MerchantSpring’s agency platform is one option that offers cross-marketplace dashboards and streamlined reporting – a helpful resource for agencies managing multiple client accounts.)

Emerging Themes to Watch in 2025

Beyond individual agency tactics, Asha and Paul touched on broader industry trends likely to shape 2025:

• Community and Collaboration: The Amazon agency community, while competitive, remains remarkably collaborative and open. Asha noted that despite being competitors, many agency folks maintain friendly relationships and share knowledge freely, much like in her previous experience in the toy industry. This camaraderie could foster more partnerships, consortiums, or knowledge exchanges in 2025, as agencies realize the pie is big enough and that shared insights can uplift the whole industry.
  
  
• Global Expansion of Services: As brands expand internationally on Amazon, agencies are following suit. The interest from U.S. agencies in acquiring EU-based agencies hints at a push for truly global service offerings. Even smaller agencies might form alliances across regions to service clients in multiple marketplaces (Amazon EU, Amazon LATAM, etc.). Being able to navigate diverse Amazon markets could become a strong selling point.
  
  
• Hybrid Models (Consultancy + Execution): Some brands may seek a mix of strategic consulting and hands-on management. We might see agencies offering short-term audit or strategy packages (to appeal to those considering in-house management) alongside full-service management. This hybrid approach can capture clients who are not ready for a long-term retainer but need expert guidance – and it keeps the agency in the conversation for when execution help is needed down the line.
  
  

Impact on Agency Owners and Brand Managers

For Agency Owners: The reflections from 2024 make it clear that agency owners should define their long-term game plan. If one’s goal is to “build to sell” in the next few years, then focusing on profitability, a strong client portfolio, and perhaps a distinct niche will increase the agency’s attractiveness to buyers. If the goal is to “build to last” as an independent business, then nurturing client relationships and a positive reputation in the community are paramount.

In either case, ensuring your agency is financially healthy (with good margins and efficient processes) is non-negotiable – as Paul quipped, running an agency can and should be profitable if done right, especially with today’s remote work advantages. Agency owners should also stay plugged into industry discussions (podcasts, forums, events) to continuously learn and adapt. As MerchantSpring’s data and Paul’s conversations show, the agency landscape evolves quickly, and staying ahead of trends is part of maintaining a competitive edge.

For Brand Managers/Vendor Leaders: If you are a brand considering working with an Amazon agency (or evaluating your current one), the takeaways are equally valuable. Look for agencies that have a track record of long-term client retention – that’s a proxy for delivering consistent value. Be clear about your expectations and ensure the agency sets realistic goals; mutual honesty at the start prevents disappointment later.

If your business is in a specialized category or has unique needs (e.g. you’re an Amazon Vendor needing 1P supply chain expertise), seek out agencies that specialize in that area. Don’t be afraid to ask potential agencies about how they handle challenges like personnel turnover or rising costs – a good agency will have strategies for these scenarios (for example, cross-training teams to mitigate single-point dependence, or flexible resourcing models to control costs).

Lastly, recognise that a great agency partnership is a two-way street: as Asha hinted, agencies aren’t magicians. Brands that collaborate closely and address internal issues (inventory, product, pricing) in tandem with agency efforts see the best outcomes. As 2025 approaches, vendor and brand managers should view agencies not just as service providers, but as strategic partners who can help navigate the complex and ever-changing Amazon marketplace.

Conclusion: Ready for 2025’s Opportunities

The year 2024 showed that the Amazon agency space is robust, dynamic, and maturing. It was a year where many agencies learned hard lessons about overextension and the importance of core client fundamentals. At the same time, it was a year that proved there’s ample opportunity for those who innovate – whether through specialisation, smarter marketing, or new service offerings. As Paul and Asha’s discussion highlighted, success in 2025 will come from balancing growth with quality: expanding capabilities and pursuing new clients, but without losing sight of why clients stay in the first place (trust and results).

Both agency owners and brand leaders can take these reflections to heart. For agencies, it’s a chance to sharpen strategies, improve services, and maybe embrace new tools or partnerships that set you apart. For brands, it’s a reminder to choose your partners wisely and value the ones that consistently deliver. If there’s one sentiment to carry forward, it’s that the Amazon agency community is ultimately a “friendly” space – one where sharing knowledge and focusing on long-term success benefits everyone. Here’s to learning from 2024’s highs and lows, and forging even stronger agency-brand collaborations in 2025.

As 2024’s lessons echo into 2025, one truth stands out: the Amazon agency winners will be those who see the full picture—and act faster than their competitors.

MerchantSpring was built for exactly that. By unifying all your clients’ marketplace data into a single, real-time view, it helps agencies sharpen strategy, win retention battles, and uncover growth opportunities others miss.

Lead the 2025 Amazon agency landscape—start with MerchantSpring.