When does Amazon concentration become a board risk?

Answer: Amazon becomes a concentration risk when a disruption on the platform could materially impair revenue, contribution, cash flow, inventory velocity or the company’s ability to reach customers. Revenue share alone is an incomplete measure. Boards should also examine dependence on Amazon for profit, discovery, fulfillment, advertising, account infrastructure and key SKUs. Concentration may be economically rational, but it should be visible, stress-tested and reflected in the company’s risk management and value-creation plan.

Why this matters

Platform concentration can remain hidden while results are strong. The cost becomes visible when policy, account status, economics or demand changes suddenly.

What the board should examine

  • Revenue and contribution from Amazon
  • SKU and category concentration
  • Inventory committed to Amazon
  • Demand-generation dependence
  • Account and operational dependency
  • Realistic alternatives if performance deteriorates

What good looks like

The board knows the company’s true Amazon dependency, has scenario-tested material disruptions, and understands which dependencies can be reduced economically rather than pursuing diversification for its own sake.

Related questions

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