An Amazon employee is busy handling same-day orders on Cyber Monday, one of the busiest days of the year, at an Amazon fulfillment center in Orlando, Florida, on December 2, 2024.
Miguel J. Rodriguez Carrillo | Getty Images
Aaron Cordovez has been in the kitchen appliance business on Amazon for a decade. Currently, he is facing challenges because many of his products come from China.
Cordovez, who co-founded Zulay Kitchen, mentioned that they are working diligently to transition production to India, Mexico, and other countries, where tariffs are escalating under President Donald Trump but are not as severe as those from China. He estimated that this transition might take at least one or two years to finalize.
“We’re trying to extend our inventory as much as possible,” Cordovez noted in an email.
Zulay is also increasing the prices of certain items like milk frothers and s’mores roasting sticks. The company’s well-liked kitchen strainer now costs $12.99, up from $9.99 following Trump’s tariff announcement earlier this month.
Amazon sellers are raising prices on a variety of goods, from diaper bags to charm necklaces, due to higher import expenses. An analysis by e-commerce software firm SmartScout indicated that 930 Amazon products saw price increases since April 9, averaging a 29% rise.
The hikes span multiple categories, including apparel, jewelry, home goods, office supplies, electronics, and toys.
The ongoing trade conflict with China poses a significant risk to Amazon’s third-party marketplace sellers, which make up about 60% of the company’s online sales. Many of these sellers are either based in China or depend on it to assemble and source their goods.
Sellers must now decide between raising prices or absorbing the extra costs resulting from Trump’s tariffs. This situation poses a genuine threat to many sellers, who operate on tight profit margins and have dealt with increasing expenses related to Amazon, including storage, fulfillment, shipping, and advertising, along with competitive pricing pressures.
CEO Andy Jassy mentioned to CNBC recently that the company would do everything possible to keep prices low for customers, including negotiating with some suppliers. However, he recognized that some third-party sellers would “need to pass that cost” of tariffs onto consumers.
This year, Amazon’s stock has dropped 15%, mirroring the overall market trend. The company will release its first-quarter earnings next week.
Chinese imports are now subject to tariffs of 145%. However, Trump stated Wednesday that his administration is “actively” engaging with China regarding a possible agreement to lower tariffs. Chinese officials denied on Thursday that any trade discussions are underway.
Scott Needham, CEO of SmartScout, noted that about 25% of the price increases have come from sellers located in China. Recently, Ursteel, a stainless steel jewelry producer, increased prices on four products by $6.50, while clothing brand Chouyatou raised some dress prices by $2. Both companies are based in China’s Zhejiang province.
Notably, Anker, a Chinese electronics brand and a significant Amazon seller, raised prices on 20% of its products in the U.S., including a portable charger that increased from $110 to $135, according to SmartScout data.
Zulay, located in Florida, is one of the many U.S.-based sellers increasing their prices. Cordovez shared that he had to lay off 19% of his staff and cut online advertising expenditures by 85%.
Desert Cactus, a company from Illinois, is also taking measures. Joe Stefani, the president, is exploring the possibility of relocating some of their college-themed merchandise production from China to Mexico, India, and Vietnam. Approximately half of Desert Cactus’ products originate from China, while the remainder is produced in the U.S., according to Stefani.
One popular product is a customizable license plate frame made in China. When Trump began his first term in 2016, the import and shipping costs for the frames were 4%. That rate has surged to 170%, he noted.
Stefani remarked, “The tariffs can’t remain this high.” He expressed concern for many businesses that might not survive under current conditions.
He anticipates that Desert Cactus may ultimately increase prices on some offerings, but he is concerned about how shoppers will react to the increased costs.
“Would someone really spend $50 on a hat from Amazon?” he questioned. “People expect high prices at the ballpark, but we can’t predict the same for Amazon.”
Dave Dama, co-founder of Pure Daily Care, shared that the manufacturing cost for one of his skin-care items in China surged from $10 to $25. He believes most Amazon sellers will also have to raise their prices.
“If you were selling something for $40 and making a profit of $7 or $8, with the current tariffs, those days are over,” Dama explained. “It’s simply not feasible anymore.”
Pure Daily Care plans to raise prices gradually over several weeks and only on items that are absolutely necessary to maintain their rankings and chances of winning the buy box on Amazon. The buy box is crucial for visibility when shoppers click on a product and decide to add it to their shopping cart.
An Amazon spokesperson stated that the company’s pricing guidelines are consistently upheld.
“As always, sellers determine their own prices, and we regularly evaluate how we showcase compelling offers to ensure customers receive low prices on a wide variety of items,” the spokesperson remarked.
Dama indicated that his company has enough stock for some products to last up to six months, aiming to “extend it as much as possible” in hopes of a trade resolution between China and the U.S. They are also choosing to skip certain sales promotions and discounts while putting a hold on specific ad expenditures.
