Amazon intervenes to help resist the tariff storm – only for some sellers.
Amazon will pay higher prices to its suppliers on a case -by -case basis “to” share the price impact “, according to an internal document obtained by Business Insider.
This means that Amazon will pay more from its sellers more than the prices previously contained for their products. In doing so, sellers can compensate for the cost of supplying their products in countries struck by prices.
The change reflects the urgency that Amazon requires to deal with the assault of the prices. The vast majority of sellers import their products from China, and President Donald Trump said that the prices on goods from China would increase to 125%. The sellers said that Amazon probably did not want to risk losing the products they sell.
These wholesale suppliers of their products in Amazon, who then resell them on its online market. Sellers represent around 40% of the products sold on Amazon, while the remaining 60% come from third -party merchants.
“Amazon is not willing to undergo a massive exodus of sellers at the same time,” said Bi Matt Daubenspect, director of apothecary products. “If customers do not find what they want on Amazon, they can buy elsewhere.”
These price concessions are rarely available outside the normal price negotiation cycles and are only offered during extenuating circumstances, such as the recent crisis in the pandemic or supply chain, several sellers told BI.
The offer is not available for each seller, and in most cases, Amazon requires margin guarantees, they said.
The Amazon spokesperson refused to comment.
Guaranteed margins
The internal document did not specify which suppliers are subject to the new offer. He said that Amazon is bulk purchase products at reduced prices and ordering some of the best -selling products in China in advance.
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Several suppliers have said that Amazon generally offers price concessions if the supplier accepts guaranteed margins. This means that sellers must pay an additional Amazon amount if their products fail to reach a fixed profit margin.
Corey Thomas, CEO of the Electronic Commercial Agency Amz Atlas, told Bi that a number of its customers were already in talks with Amazon on margin agreements. He warned of the sellers who took the margin agreements, because he could turn around if Amazon decides to sell their products at a price and to a lower margin, which would put the hook seller to compensate for the lost benefits.
“Negotiate very carefully,” wrote Thomas in an article separate from LinkedIn.
Sellers expect prices to increase prices for products in Amazon in all areas. If Amazon pays more to its suppliers, this cost will probably increase the final sale price. Several third -party sellers have already told Bi that they planned to increase prices on their products due to prices.
Not for everyone
Amazon does not increase prices for each supplier. Several suppliers have told Bi that their price change requests had been rejected recently.
In an email seen by BI, an Amazon employee told a supplier that the company was “unable to accept” the price increase proposal and suggested exploring other economy options. The email indicated that the general manufacturing capacity in China is “currently underused”, a factor that could lead to “potential cost reductions for suppliers”. He also said that Chinese government cost reduction measures and subsidies are available.
“Before adopting an increase in the costs of retail partners, we expect our suppliers to explore and implement all possible operational efficiency and cost reduction strategies,” said email.
Several suppliers have told BI that it was not clear what Amazon criteria follows before accepting price increase requests. It seems that Amazon wants to keep the opaque process for the moment.
“Do not quote internal policies” when the request of a supplier said, said the internal document.
Thursday, managing director of Truist Securities, wrote in a note on Thursday that it reduces the estimates of Amazon’s growth in part due to price increases focused on prices.
“Although there are several currents and counter-currents that hurt and benefit from Amazon at the same time, we believe that the net net of this is an increase in prices practically at all levels and an slowdown probably consumption expenses, which will weigh the growth of the company for the rest of the FY25 and the exercise 26 and in margins,” Squali wrote.
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