Stock sellers on Amazon stock is more difficult due to rising prices on just about everything. The continuing, self-inflicted tariffs on Chinese goods are really weighing down the market. Aaron Cordovez has spent the past 10 years selling kitchen appliances on Amazon under his private label, Zulay Kitchen. Nowadays, he is surprised by the pressures of today’s market. One of his top-sellers is a china-made, customizable immigration-removal license plate frame. This frame emphasizes the challenges that most small businesses face when they depend on imports.
Cordovez’s company is on the forefront of a strategic shift to address mounting costs from increased tariffs. First, they are moving production to low-cost production locations, such as India and Mexico. This strategic, decisive move specifically addresses the more than $1 billion annual financial crisis impact due to tariffs. In doing so, many sellers found themselves needing to drastically change their pricing approach due to.
The impact of these tariff policies can be seen not only in shifts in production but in job losses. Zulay Kitchen recently announced the layoff of 19% of its staff. This recent decision illustrates the difficult predicament that so many companies are facing in this uncertain economy. To save even more, Cordovez has cut his online advertising budget by 85% of what he’s spent on previous campaigns.
Zulay Kitchen’s runaway kitchen strainer hit is now just $12.99. This jump from $9.99 is all due to tariffs! Unfortunately, this trend isn’t isolated to Cordovez, as many other companies are feeling the same impact. Dave Dama, whose company Pure Daily Care manufactures skincare products in China, reported a staggering increase in production costs, with one product’s manufacturing price climbing from $10 to $25.
Further already, Chinese electronics brand Anker has had to raise prices on nearly a fifth of the products it sells stateside. The cost of the average portable power bank has skyrocketed to $135. That’s a substantial jump from its former price of $110.
Amazon’s new CEO, Andy Jassy, has made it clear that he intends to double down on lowering costs for consumers. He said that the company would work out supply terms with suppliers to control costs. In reality, many sellers are going through a really tough time right now. They need to find ways to transfer these additional costs to consumers while somehow not negatively impacting their sales.
Based on data compiled by SmartScout, approximately one in four price increases they recorded were started by sellers from China. Joe Stefani, president of Desert Cactus, knew he needed to raise prices on certain products. He fears that this may create “sticker shock” for consumers.
“There are so many people that just aren’t going to make it,” – Joe Stefani.
He posed an essential question that was all about consumer behavior. Would consumers be OK with paying $50 for a hat, even through Amazon, under their everyday low prices on stuff they don’t care about mindset?
“You know it’s going to be expensive at the ballpark, but on Amazon we don’t know,” – Joe Stefani.
Cordovez stressed that third-party sellers inevitably have to pass some of these rising costs onto consumers. He remains optimistic on a trade truce between China and the U.S. This contract would do a lot to alleviate that financial strain.
“If you were selling something for $40 and making a $7 or $8 profit at the end of the day, with these tariffs, those days are gone,” – Dave Dama.
Zulay Kitchen only has enough stock on hand to fill this promotion for a short time. Cordovez’s goal is to “make it last as long as possible” before needing to raise prices again or make major changes to his product mix.
Sellers must navigate a difficult environment created by tariffs and evolving supply-and-demand forces. Amazon is constantly scanning competitors price changes to undercut. In response, an Amazon spokesperson said that prices were set by individual sellers. Customers can be assured that the company routinely re-examines how to best present competitive offers.
“As always, sellers set their own prices, and we regularly monitor how we highlight great prices as Featured Offers to provide customers with low prices across a wide selection,” – Amazon spokesperson.