Trump's tariffs on Chinese imports could hurt one of Amazon's most successful businesses
- A new report from Bloomberg reveals how some of Amazon's marketplace sellers are suffering thanks to Trump's tariffs on Chinese imports.
- Many sellers source inventory from China but don't have the same negotiating powers as larger companies to shift costs onto suppliers.
- It's expensive to find other inventory sources, which could mean these sellers would be forced to raise prices for the consumer or to take a hit on margins.
- This could impact Amazon if sales dry up and it loses out on commissions.
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Amazon's third-party sellers are particularly vulnerable to Trump's tariffs, and it could end up hurting the e-commerce giant.
According to a new report from Bloomberg, some of Amazon's sellers are already struggling under existing tariffs, and as the prospect of more lingers, their future looks more uncertain.This is because many of these sellers source or manufacture inventory in China and will be directly impacted by these penalties.
Moreover, as these sellers are often operating as a one-man band, they have less power to negotiate with suppliers.
"The smaller companies have a significant problem," Joel Sutherland, managing director of UC San Diego's Supply Chain Management Institute, told Bloomberg. "We have an administration that says one thing today and does something else tomorrow, which poses tremendous risks."
At the moment, some sellers are stuck in limbo and working out how best to prepare for the busy holiday shopping season if new tariffs will be put in place.
"We're going to assume the tariffs are here to stay," seller Chuck Gregorich told Bloomberg. Gregorich sells China-made hammocks, patio furniture, and 2,000 other products on Amazon."We can't have this happen in a year or two and get caught with our pants down again," he said.
While Amazon has not spoken out against tariffs and was not included in a group of 600 businesses that wrote a letter to the Trump administration earlier this month urging it to end the trade war, sources familiar with the matter told Bloomberg that Amazon has agreed to pay some of its vendors up to 10% more for products affected by tariffs.
A spokesperson for Amazon did not immediately respond to Business Insider's request for comment.
But this will only help the sellers from whom it buys product wholesale to sell on its site. Other sellers who use the marketplace will have to take the hit themselves or pass on the costs to the consumer.
Amazon's Marketplace has become one of the most successful areas of its business. Earlier this year, CEO Jeff Bezos alerted shareholders that sales from its third-party sellers now make up more than half of the total sales on Amazon.com.
"Third-party sellers are kicking our first party butt," he said in the company's annual letter to shareholders.
Tariffs could hurt the sales of third-party sellers and mean that Amazon misses out on commissions and fees.