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An Amazon employee is seen fulfilling same-day orders during Cyber Monday, a peak shopping day, at an Amazon fulfillment center in Orlando, Florida on December 2, 2024.
For a decade, Aaron Cordovez has built his business selling kitchen appliances on Amazon. However, current geopolitical tensions have put him in a difficult position, as the majority of his products are sourced from China.
Cordovez, who co-founded Zulay Kitchen, is actively transitioning production to countries like India and Mexico, where tariffs, while on the rise under recent U.S. administrations, remain less burdensome compared to those imposed on Chinese imports. He estimates that this relocation process will take one to two years to finalize.
“We are making efforts to extend our inventory as much as possible,” Cordovez mentioned in communication.
In response to increasing costs, Zulay has temporarily increased the prices of several items, including milk frothers and smores roasting sticks. For instance, the price of their popular kitchen strainer rose to $12.99 from $9.99 following the announcement of significant tariffs.
A wave of price hikes has swept through Amazon’s marketplace, affecting a variety of products. E-commerce analytics firm SmartScout reports that since April 9, 930 products have increased in cost, with an average rise of nearly 29% across different categories, including clothing, jewelry, household goods, office supplies, electronics, and toys.
This ongoing trade conflict with China poses significant challenges for third-party sellers on Amazon, who contribute to approximately 60% of the company’s online sales. A substantial number of these sellers either manufacture their goods in China or depend on the country for sourcing and assembly.
Sellers are now grappling with the hard choice of either raising their prices or absorbing the additional expenses imposed by tariffs. For many, this challenge is existential, as they often operate on slender profit margins amidst escalating costs linked to storage, fulfillment, shipping, and advertising on Amazon, compounded by heightened competition.
In a recent discussion, Amazon CEO Andy Jassy remarked that the company plans to take measures to maintain low prices for consumers, which may include negotiating with suppliers. Nevertheless, he acknowledged that some third-party sellers would inevitably pass their increased costs onto customers.
This year, Amazon’s stock has fallen by 15%, tracking a broader market downturn, with quarterly earnings set to be reported soon.
Goods imported from China are now subject to a substantial 145% in tariffs, although President Trump announced ongoing discussions with China regarding potential tariff reductions. Chinese officials, however, have denied that such trade talks are currently happening.
Among the affected sellers, SmartScout identified that approximately 25% of the recent price hikes originated from Chinese-based merchants. Notably, the stainless steel jewelry company Ursteel increased prices on several items by $6.50, while the apparel brand Chouyatou raised its dress prices by $2, both of which are based in China’s Zhejiang province.
One of Amazon’s largest sellers, Anker, a Chinese electronics brand, has raised prices on 20% of its U.S. offerings, with specific products like a portable power bank jumping from $110 to $135.
Representatives for these companies have not replied to requests for comments regarding the price adjustments.
Zulay, located in Florida, mirrors the trend as U.S.-based sellers adjust their pricing strategies. Cordovez disclosed that he had to reduce his workforce by 19% and drastically cut online advertising expenses by 85% due to the financial pressures from tariffs.
Similarly, Joe Stefani, president of Desert Cactus, a company in Illinois, is exploring moving production of college-themed merchandise from China to Mexico, India, and Vietnam, with about half of Desert Cactus’ inventory sourced from China and the remainder produced domestically. Stefani noted that the import fees for their customizable license plate frames have surged from 4% at the beginning of Trump’s first term in 2016 to 170% now.
“It’s unsustainable for the tariffs to remain this high,” Stefani expressed. “Many businesses may not survive.” He anticipates that Desert Cactus will need to implement price increases on certain products, although he worries that higher prices could deter customers.
“Will someone really pay $50 for a hat on Amazon?” he pondered. “While we expect prices at events to be steep, it’s uncertain for online shopping.”
Dave Dama, co-founder of Pure Daily Care, a health and beauty brand, highlighted a drastic increase in manufacturing costs for one of his skincare products, which climbed from $10 to $25. He emphasized that most Amazon sellers will likely need to raise their prices as a consequence of the tariffs.
“If you’re selling an item for $40 and your profit margin was $7 or $8, that structure is no longer viable,” Dama remarked. “It’s become untenable.” Pure Daily Care plans to implement gradual price increases over the next several weeks on essential items to maintain their ranking on Amazon’s search results, alongside managing its visibility in the competitive marketplace.
An Amazon spokesperson reiterated that sellers establish their own prices. “We remain committed to showcasing competitive pricing as featured offers to offer customers diverse low-price options,” the spokesperson stated.
Dama indicated that his company has enough stock to last up to six months, aiming to maximize inventory usage while waiting for possible resolutions between the U.S. and China. The company is also forgoing certain sales promotions and pausing expenditures on various advertising platforms.
Dama expressed hope, stating, “We’re trying to stretch our resources as long as possible, buying time for a favorable resolution.”
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