Retail Media Is Eating DTC Margins: Why Amazon and Zalando Become Gatekeepers in 2026

If you're selling on Amazon or Zalando in 2026, commission is just the entry fee — you're also buying back your own visibility. What was a nice-to-have revenue lever a few years ago is now table stakes: without sponsored placements, a product simply doesn't show up where customers are searching in many categories anymore.

For e-commerce managers and brand leads at DTC companies, that creates a dilemma that gets worse every quarter. Marketplace ad costs keep climbing, while the core promise of direct-to-consumer — independence from third-party platforms, direct customer relationships, owned data — quietly erodes. You're technically selling direct to end customers, but through an infrastructure that charges you for every single touchpoint along the way.

This article breaks down why the Digital Markets Act, of all things, fails to fix this problem, what's actually driving the numbers behind Amazon Advertising and Zalando Marketing Services — and how brands can systematically limit their dependence anyway, without walking away from marketplace reach.

The mechanics are unremarkable — and that's exactly why they work so well. Over the years, Amazon and Zalando have systematically shrunk the real estate where organic search results appear. Search for a product on Amazon today, and above the fold you'll see almost nothing but paid placements — Sponsored Products, Sponsored Brands, video ads. Depending on the category, the first genuinely organic result gets pushed down to position four, five, or lower.

What's striking is that this effect no longer applies only to generic search terms like "sneakers" or "protein powder." Even niche keywords with low search volume — traditionally the safe territory for smaller DTC brands — now see sponsored placements crowding out organic results. The niche that used to offer shelter from advertising pressure has turned into just another auction floor. In the marketplace audits we run for DTC brands, this has become the norm rather than the exception: even products with a clear point of differentiation vanish from the first screen without ad spend behind them.

The economic logic behind this shows up clearly in the numbers: according to Amazon's 2024 annual report, Amazon Advertising generated roughly $56 billion in revenue — a segment growing faster than the core marketplace itself. Advertising is no longer a side business for Amazon; it's one of the most profitable levers in the entire company. Every square inch of a search results page that shifts from organic to paid adds directly to that revenue line.

Zalando runs the same playbook in fashion through Zalando Marketing Services (ZMS): a standalone ad business built into the platform that sells brands sponsored placements, display formats, and data-driven campaigns. The message to brands is identical on both platforms — if you want to be seen, you book media.

For DTC brands, this creates a double cost structure on a single transaction: first the sales commission or listing fee, then the ad spend layered on top just to get the customer to find the product in the first place. The platform gets paid twice — once on the sale, and once on the visibility that made the sale possible to begin with.

This mechanic raises an obvious question: why doesn't regulation like the Digital Markets Act — designed specifically to curb this kind of gatekeeper power — actually touch it?

The Digital Markets Act was billed as the EU's sharpest weapon against platform market power. The reality in retail media tells a different story—one with a structural blind spot that's becoming harder to ignore heading into 2026.

The European Commission designated Amazon as a gatekeeper back in September 2023—but named Amazon Marketplace as the core platform service in question. The obligations that followed target self-preferencing within the marketplace, merchant data usage, and ranking logic. Amazon Advertising, as a separate business unit, doesn't fall under those same obligations. The ad auction that determines visibility remains largely untouched by regulation—even though it now functionally decides who even shows up in the marketplace to begin with.

With Zalando, the gap runs even deeper: the Berlin-based company managed to dodge a gatekeeper designation entirely. The Commission determined that the relevant thresholds—active end users and market capitalization—simply weren't met. For German and European fashion brands, that means the platform effectively controlling visibility and reach in their category answers to zero DMA obligations.

Even the DMA's penalty structure misses retail media by a wide margin. The regulation allows for fines of up to 10% of global annual revenue, rising to 20% for repeat violations—massive numbers, no argument there. But that threat is aimed at interoperability, data access, and self-preferencing. Ad pricing, auction mechanics, the share of paid real estate on search results pages? None of it is covered.

The result is a notable shift: platforms are moving their market power out of the zone regulators actually watch—commissions and marketplace terms—and into the zone they barely touch: the ad auction. Instead of raising commissions, which would draw regulatory and public scrutiny, platforms shrink organic reach and sell it back through auctions. The price looks market-driven, generated by sellers' own bidding behavior—which makes it a model that's nearly impossible to challenge on regulatory grounds.

Just how much this regulatory blind spot costs in real dollars becomes clear once you look at the actual cost structures.

Here's the critical detail most budget plans miss: retail media costs don't behave like traditional marketing spend — they behave like cost of goods sold. Marketing budgets can be trimmed in a soft quarter. But turn off your Sponsored campaigns on Amazon or Zalando, and you're not just losing incremental revenue — you're losing baseline revenue, because the organic visibility that used to be your foundation simply doesn't exist anymore. Rising CPCs are quietly shifting an ever-larger cost block out of the marketing line and into what's functionally your cost of sales.

A simplified example makes the scale of this concrete: a brand sells a product for €60 net through a marketplace. After a 15% selling fee, fulfillment costs, and cost of goods, that leaves a contribution margin of maybe €18. If the ad spend share of revenue (TACOS) climbs from 8% to 15% — a shift plenty of categories have experienced over the past few years — an extra €4.20 per unit sold gets siphoned into the ad auction. That's more than a fifth of the remaining margin, gone without a single strategic decision from the brand itself. This math lines up with what we consistently see in contribution margin analyses for marketplace clients: margin erosion rarely comes from one single cost driver. It comes from the quiet three-way shift between fees, fulfillment, and the ad auction — which is exactly why it so often slips past standard P&L reporting undetected.

On top of that, there's a crowding-out effect that hits smaller DTC brands disproportionately hard: the more interchangeable a product looks within its category, the higher the ad spend needed just to stay visible at all. Large players with deep pockets can run loss-making campaigns as a market-share investment and simply absorb it. A DTC brand doing €5 million a year can't. It gets priced out of the auction long before its product ever gets a fair shot in front of the customer.

One marketplace lead at a mid-sized consumer brand put it bluntly in conversation:

"We're not optimizing for growth anymore. We're optimizing to keep the ad auction from eating the margin we'd need to fund that growth."

Ad spend as a share of net revenue — whether measured as campaign-level ACOS or account-wide TACOS — has become the actual growth ceiling for a lot of brands. It's not demand, production capacity, or logistics holding growth back. It's the point at which every additional unit sold starts destroying value instead of creating it.

At the same time, the second pillar of most DTC strategies is quietly eroding: the share of direct, platform-independent traffic keeps shrinking as more budget and attention flow into marketplace campaigns year after year. What was originally meant to complement the owned channel has effectively become the primary channel — deepening dependence on the very platforms brands set out to become independent from in the first place.

Before jumping to the conclusion that DTC-on-marketplaces is fundamentally broken, it's worth taking a closer look at that assumption.

Here's the contrarian take that doesn't land well in most strategy meetings: marketplace distribution isn't the problem. Misallocated owned-channel investment is. If you've spent years pouring 90% of your acquisition budget into Amazon campaigns while letting your own storefront, CRM, and email list starve, you don't have a platform crisis. You have a self-inflicted structural problem that's only now becoming visible because the platform is finally exercising its pricing power.

A lot of brands mistake rising ad costs for the structural end of direct selling. But the sales channel was never the core of DTC — the customer relationship was. A brand that sells on Zalando but knows its customers, actively manages repeat-purchase rates, and runs a meaningful share of the business through owned channels is in a stronger strategic position than a brand that technically sells "direct" but has to buy every single first touchpoint from Amazon.

The knee-jerk alternative — pulling out of marketplaces entirely — rarely survives a sober cost-benefit check either. Walking away from Amazon or Zalando torches reach in the short term, and first-party data or customer loyalty doesn't automatically show up to fill the gap. Customers who only ever knew a brand through the marketplace don't migrate to the brand's own shop — they migrate to the next sponsored placement. Exiting doesn't solve the dependency problem. It just trades it for a reach problem.

The real dividing line sits somewhere else entirely: between brands that treat marketplaces as their only distribution channel — and therefore have to absorb every unfavorable rate change with zero protection — and brands that treat Amazon and Zalando as one touchpoint among several in a broader channel architecture, where their own storefront, their own data, and their own customer relationships are growing in parallel. In our project work, this distinction is almost always the clearest early indicator of how hard a brand gets hit by rising auction prices — long before it shows up in the reporting.

Seen through this lens, retail media isn't evidence that DTC has failed. It's a pricing signal that puts a hard number on the case for owned-channel investment: every euro that flows into the ad auction is an argument for building parallel infrastructure where that same euro gets invested into your own customer relationship instead.

What this distinction looks like in practice is already visible in brands that are actively cutting their dependence on gatekeeper platforms.

Different real-world models prove that breaking free from one-sided dependence actually works. Nike pulled out of Amazon entirely in 2019 — a move only a brand with global pull can afford, which is exactly why it's not a blueprint for most companies. The reverse path is more instructive for mid-market brands: German DTC player Snocks started as a pure Amazon seller and only later built out its own online shop into an equally strong pillar — not as a replacement for the marketplace, but as a counterweight built on proprietary data. We regularly work with brands striking this exact balance between marketplace reach and owned channels through our Commerce & DTC practice, helping them break free from one-sided marketplace dependence — as seen in the Papas Shorts project, where targeted Shopify optimization laid the technical groundwork for platform-independent growth.

Four structural levers have proven especially effective:

Build your own loyalty program or subscription model. First-party data doesn't come from a single sale — it comes from an ongoing relationship. A subscription model for consumable products, or a loyalty program with genuine value, generates customer data, repeat-purchase rates, and forecasting stability, regardless of what the marketplace does with its auction pricing. The key is that the value has to live exclusively in your own channel: the customer needs a real reason not to just search Amazon again on their second purchase.

Segment your assortment deliberately. Not every product belongs on every channel. Placing bestsellers and high-margin items exclusively — or preferentially — in your own shop, while letting the marketplace handle new-customer acquisition with entry-level products, flips the usual logic: Amazon and Zalando deliver the first touch, and the margin gets captured in your own channel.

Expand your own search presence and content channels. Dependence on Amazon or Zalando search for that first customer touchpoint only shrinks when customers discover the brand somewhere else first — through organic search visibility, editorial content, social channels, or targeted performance marketing outside the platforms. We broke down how search logic across commerce is shifting more broadly in our piece on agentic checkout — brands still thinking exclusively in terms of marketplace search in 2026 are already missing the next shift.

Actively prepare for regulatory openings. Even though the DMA barely touches retail media, requirements like data portability and transparency obligations create operational leverage. Brands that are contractually and technically ready to pull their transaction and customer data out of the platforms and into their own systems are using the regulation as a tool — not just acknowledging it exists.

That said, these structural moves only pay off when they're paired with a clear budget discipline for retail media itself.

The core operational problem with most marketplace budgets: they're managed reactively. When auction competition heats up, budget goes up—a logic where the platform dictates the price and the brand just pays it. A margin-protecting budget framework flips that logic on its head: your own contribution margin sets the ceiling, not competitors' bidding behavior. Having guided multiple marketplace reviews, we've seen this pattern play out repeatedly: the shift from reactive to margin-protecting budget management rarely fails because of methodology—it fails because brands aren't willing to sacrifice short-term revenue to protect margin.

1. Set a TACOS ceiling per product category. Skip the blanket overall budget. Instead, set a category-specific cap on ad spend as a share of net revenue — derived from that category's actual contribution margin. If the cap gets breached, the answer isn't more budget; it's a hard look at the campaign structure itself.
2. Re-evaluate the SKU portfolio every quarter. Not every SKU deserves retail media investment. Products that can't achieve positive contribution margin after ad costs — even with heavy ad pressure — get cut from campaigns, full stop, even if that means short-term revenue drops. Revenue without margin on marketplaces isn't a win; it's a subsidized return for the platform.
3. Use DMA transparency requirements as negotiating leverage. Wherever platforms are required to disclose their ranking criteria, that creates an audit trail: How much visibility is actually only reachable through paid placement, versus content quality, availability, and performance metrics? This kind of analysis routinely reveals that a chunk of ad budget is buying visibility that better organic signals could have delivered for less.
4. Measure success by new-customer share, not revenue. Treating retail media as an acquisition channel rather than a sales channel changes the entire evaluation framework. A campaign that reaches 70% existing customers who would have bought anyway is just cannibalizing organic sales with paid ones. Metrics like new-to-brand share need to sit at the center of reporting — raw ROAS systematically hides this cannibalization.

Here's how the two control logics play out side by side in practice:

This framework means deliberately walking away from visibility in certain categories once auction prices blow past your margin logic. That feels uncomfortable when you're staring at the competitive landscape — but it's the only position from which a brand can actually negotiate with the platform. Once you've proven you're willing to walk away from unprofitable visibility, you stop being a price-taker.

The bottom line here is uncomfortable but clear: retail media has become the real instrument of gatekeeper power, while official gatekeeper regulation is busy addressing a different problem entirely. That gap isn't going to close on its own in 2026 — not through a belated DMA amendment, and not through platforms voluntarily showing restraint in how they design their auctions. Waiting on regulation isn't a strategy. It's just a slower way of losing control.

The effective response combines two disciplines: hard budget limits on the ad auction, set by your own margin math rather than by competitive pressure — paired with the parallel, disciplined build-out of first-party data and customer loyalty outside the platform. Brands that do both treat marketplaces for what they economically are: expensive but calculable acquisition channels. Brands that only do one of the two stay price-takers.

The concrete first move here won't take a week: define a TACOS ceiling per product category based on your actual contribution margins — then identify the three highest-margin SKUs that deserve preferred placement in your own shop instead of more ad budget funneled into the marketplace auction. That one analysis alone will show you exactly how much of your current retail media spend is protecting margin — and how much of it is just funding the gatekeeper.