Advertising Up 24%, Online Store Revenue Up 12% — Amazon Q1 2026 Earnings
Amazon just released its Q1 2026 earnings, and the results have some important implications for sellers.
Related Reading: Amazon Q4 2025 Earnings Surge on AWS Growth and AI Investment
Advertising Up 24%, Online Stores Up 12%
There are two metrics sellers should focus on in Amazon's earnings report: advertising revenue and online store revenue. If advertising growth outpaces online store revenue growth, sellers are effectively paying more to compete for visibility.
In Q1 2026, online store revenue grew 12% year over year, from $57.4 billion in Q1 2025 to $64.3 billion in Q1 2026. Online store revenue covers only first-party sales, items sold directly by Amazon, but serves as one of the best proxies for overall retail growth since Amazon does not report gross merchandise value for third-party sellers.
Advertising revenue grew 24% year over year, from $13.9 billion in Q1 2025 to $17.2 billion in Q1 2026. That is double the rate of online store revenue growth, continuing a trend that has persisted for several quarters. As the gap between advertising growth and retail growth widens, sellers are paying more per unit of visibility than they were a year ago.
Third-Party Seller Fees Up 14%
Third-party seller services, which include referral and FBA fees, grew 14% year over year to $41.6 billion, up from $36.5 billion in Q1 2025. That growth rate outpaced online store revenue growth of 12%, which suggests that fee increases contributed to the difference beyond just volume growth alone.
Worldwide paid units grew 15% year over year in Q1 2026, the highest growth rate since the COVID lockdown era. If unit growth drove most of the third-party seller services increase, fee rates per unit would be roughly flat. But the 14% fee growth alongside 15% unit growth suggests Amazon is not raising per-unit fees aggressively this quarter, unlike previous quarters where fee growth significantly outpaced volume growth.
The Bigger Numbers
Total net sales came in at $181.5 billion, up 17% from $155.7 billion in Q1 2025. AWS grew 28% to $37.6 billion, its fastest growth rate in 15 quarters. Operating income rose 30% to $23.9 billion. Net income hit $30.3 billion, though that figure includes $16.8 billion in pre-tax gains from Amazon's Anthropic investment. Stripping that out, operating income is the cleaner measure of business performance.
What It Means for Sellers
Advertising growing at twice the rate of online store revenue is the number sellers should focus on. It means the cost of visibility on Amazon continues to rise faster than the overall growth of the marketplace. Unit growth is strong at 15%, which is good news for demand, but competing for that demand is getting more expensive quarter over quarter.
Amazon confirmed Prime Day will take place in June 2026, and Q2 guidance of $194 to $199 billion in net sales is built around that event. For sellers, that means the advertising environment heading into Prime Day will reflect the same dynamic: strong buyer demand, rising costs to reach it.
