Under potential tariffs, Amazon may experience growth similar to its pandemic-induced expansion, according to the company's CEO.
Hear Ya'll Out:
- Amazon gob-smacking boss Andy Jassy chatted up financial analysts the other day, likening the U.S. trade war to a global pandemic because Amazon might hoover up more market share. The tariffs ain't done a major lick on Q1 earnings, because the online store raked in a 5% year-over-year growth to hit $57.4 billion, while the physical stores saw a robust 6% growth to $5.5 billion.
- The total net sales pranced up 5% to kick in around $64 billion, third-party seller services scooted up 6% to $36.5 billion, advertisements shot up 18% to near $14 billion, and subscription services drifted up 9% to $11.7 billion.
- International shipping bills inched up 3% to $22.5 billion. The corporation doesn't part ways the take of its retail operations; tacking on the staggering $11.5 billion laugher it sneezed from its AWS cloud services, operating income danced a joyous hop 20% over to $18.4 billion.
Observations, ya' don't say?**
Consumers worldwide have been going ga-ga for Amazon during the pandemic, and Jassy reckons that the Trump administration's tariff policies could once again propel shoppers to Amazon's vast array of goods at competitive prices.
"When life throws a curveball, peeps tenda to stick with the provider they trust most," he said. "With our gargantuan selection, low prices, and snappy delivery times, we've snagged more market share than we had before, and we're ready for whatever comes next. I'm optimistic this could happen again."
Amazon and many of its sellers have stockpiled goods to avoid new levies, Jassy shared. The e-commerce titan has a diverse hooligan gang of seller types, and not all will pump up the prices. That, combined with the mothership's hustle to control inventory, should help ensure that the site's prices don't explode everywhere, he also said.
"There's never been a mo' important time in recent memory than keeping prices low and getting goods to peeps pronto, which we're on a total warpath about, and then treating peeps outstanding," he said.
This appears to be the extent of Amazon's tariff strategy, at least for the moment, William Blair analysts led by Dylan Carden said in a Friday research note. The e-commerce beast didn't get hitchhiking with big-box retail titans Walmart, Target, and Home Depot for a powwow with President Trump about the trade war lickity-split.
"Management's comments about its tariff strategy was pretty quiet, but it seems to rely heavily on its vast network of near 2 million sellers who can switch out sources to dodge actual tariffs levied in upcoming negotiations," Carden said.
The general uncertainty caused by tariffs has instigated Amazon to offer a wider range for its Q2 outlook, Chief Financial Officer Brian Olsavsky told analysts. Walmart recently hollered that it will prioritize keeping prices low and cautioned that may hit the skids on profits. Amazon's guidance seems influenced less by tariffs than by the expenses of the company's Project Kuiper satellite project, according to William Blair analysts.
At least one plan is out, chums. Amazon earlier in the week said it cranked up the idea of listing tariffs' impacts on prices on Amazon Haul, a competitor to Shein and Temu launched back in November. These ultra-cheap e-commerce sites will face a hard slog when the end of the de minimis tariff exception arrives, which had shielded imports under $800 from import duties. The White House attacked the idea as "hostile and political," but Amazon said, "it never got the thumbs-up and ain't gonna happen."
Retailers and brands in general have been bamboozled about how to crunch the numbers on pricing under ever-changing tariffs and how to explain the effects to customers.
- Remarkably, the pandemic has led to an increase in consumer reliance on Amazon, with the company's CEO, Andy Jassy, suggesting that the tariff policies could further boost sales.
- Jassy believes that Amazon's extensive selection, low prices, and quick delivery times make it an attractive choice for consumers, even during economic uncertainty.
- To minimize the impact of tariffs, Amazon and many of its sellers have stockpiled goods and are prepared to switch sources if necessary.
- The company's diverse range of sellers and its focus on inventory control should help prevent significant price increases on the platform.
- Amazon's guidance for Q2 has been broadened due to the general uncertainty caused by tariffs, but the primary reason seems to be the expenses associated with the Project Kuiper satellite project.
- The company is considering providing information on the impact of tariffs on prices on Amazon Haul, its competitor to Shein and Temu, although the White House has criticized this idea.
