Initiative Steps Already Taken to Guarantee Commission's Proposals Come to Fruition
Versatile Amazon Army at Work to Tackle Tariffs
Amazon, the colossal online retailer, is cleverly maneuvering through the obstacles posed by the U.S. government's tariffs. Apart from bulldozing its way as the mighty tiger does, it's also employing unusual tactics to wriggle out of the situation.
According to information from the "Financial Times", Amazon is hounding its suppliers to cut prices, particularly on household items and electronics, in a bid to lessen the sting of the tariffs. These negotiations are known to have started during the reign of former President Donald Trump. Other big U.S. distributors such as Walmart and Costco are pulling similar moves.
Three consulting agencies, representing brands and Amazon's suppliers, are reportedly locked in talks with the retail behemoth. These negotiations revolve around discounts averaging in the low double-digit percentage range on these items. Amazon seems to be extra firm with Chinese suppliers who, given the high tariffs on Chinese goods, are already crippled.
For goods imported from countries other than China, Amazon appears more lenient. In this scenario, Amazon shares one-third of the tariff cost with the promise of a fixed profit margin for the suppliers and manufacturers. This way, Amazon is ensured that it doesn't shoulder the loss single-handedly when a product's price plummets.
Tariffs and Amazon - An Apt Response
Amazon is actively trying to safeguard its profits by pressuring its suppliers. This traditional strategy has been in their arsenal since the first term of former President Trump, as evidenced by reports from the "Financial Times".
Some sources suggest that Amazon may have foreseen a second term for Trump and consequently prepared for it. This preparation may have included hastening shipments to beat the tariffs and canceling direct imports from China in favour of goods from U.S. inventories.
However, despite these tactical maneuvers, Amazon shoppers could see a rise in prices this summer. This increase is due to the arrival of goods that were purchased after the introduction of the tariffs. Amazon isn't planning to absorb the additional costs solely with price reductions from suppliers but also plans to transfer these costs to consumers. Even during this year's Prime Days, discounts might not be as generous as before, says the "Financial Times".
Enriching the Defensive Strategy
Amazon is employing a multifaceted approach to tackle the tariffs. Apart from negotiating with suppliers, Amazon is also:
- Collaborating with sellers to gather feedback and advocate for policy adjustments.
- Directing sellers towards alternative manufacturing hubs, like Vietnam, India, and Mexico.
- Encouraging the use of bonded warehouses and duty drawback programs to delay or recover tariffs.
- Promoting bulk shipping negotiations and freight cost-sharing strategies to reduce costs.
- Advising sellers to modify product designs, shift to smaller shipments, and optimize inventory to minimize tariff exposure.
This strategy allows Amazon to navigate the tariff maze while reinforcing its logistics and cloud infrastructure.
- In response to tariffs imposed by the U.S. government, Amazon is working closely with suppliers to reduce costs on certain products, primarily household items and electronics.
- Amazon is reportedly in discussions with three consulting agencies to negotiate lower prices from suppliers, with an average discount of low double-digit percentages.
- For goods imported from countries other than China, Amazon is sharing the tariff cost with suppliers and manufacturers, ensuring a fixed profit margin for both parties.
- To further tackle tariffs, Amazon is employing a multifaceted approach, including collaborating with sellers for policy changes, directing them towards alternative manufacturing hubs, promoting duty drawback programs, encouraging bulk shipping negotiations, and advising sellers to modify product designs to minimize tariff exposure.
