Amazon has a massive advantage over most retailers.
Its size gives it a level of buying power that’s unprecedented. Basically, only Walmart sits in a similar position and even players like Target and Costco don’t have the same ability to dictate terms to suppliers.
Normally, Amazon controls its own fate. It can tell suppliers to lower prices, make demands on packaging, and otherwise set its own terms.
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That does not make it immune to what’s happening in the world. Amazon (AMZN) suffered with supply chain issues during the Covid pandemic and it had periods where certain items were out of stock.Â
Amazon also had times where it offered a version of the item you wanted through a third-party seller, but maybe not the way you wanted it. That included off-brands, slower delivery times, and other changes.
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Part of that was by choice. For a few months during the darkest days of the pandemic, Amazon prioritized some items over others based on unprecedented consumer demand. Â
In other cases, though, the supply chain failed. Amazon ran out of toilet paper just like every other retailer. And, was the overall economy deals with the uncertainty of President Donald Trump’s tariffs, even Amazon is not immune to their impact.
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Amazon CEO shares tariff uncertainty
Amazon CEO Andy Jassy shared his worries and plans during the company’s first-quarter earnings call.
“It’s hard to tell what’s going to happen with tariffs right now. It’s hard to tell where they’re going to settle and when they’re going to settle. And so, a lot of what we’re thinking about short and medium term actually turns out to be what we think about long-term too, which is, how do we actually have the broadest possible selection for customers at the lowest possible prices?” he shared.
Jassy made it clear that prices remain his company’s focus.
“And there’s maybe never been a more important time in recent memory than trying to keep prices low, which we’re heads down, pretty maniacally focused on, and then get things to people quickly and take care of customers. And that is the heart of what we’re doing,” he added.
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Jassy also shared some of Amazon’s strategies for dealing with the uncertainty of tariffs.Â
“You can see different initiatives that we’ve taken within those priorities. We’ve done some forward buys of inventory where we’re the first-party seller. Our third-party sellers have pulled forward a number of items so that they have inventory here as well,” the CEO shared. “We’re encouraging that because we’re trying to keep prices as low as possible for customers.”
Jassy believes that Amazon’s size matters
Jassy shared some insight into why Amazon has an edge over most rivals.
“I think also, when you have as broad selection as we have, and we have much broader selection than other retailers, it means that when you’ve got this continuity, like we may potentially have, you’re better able to help customers find what they want, no matter what those trends are,” he said.
That does not mean that Amazon won’t have problems or have to raise prices on some items.
“And I mentioned in my opening comments about what happened in the pandemic, and you can bet there are going to be things that we don’t anticipate that customers really value and want that are different. It could be as simple, by the way, as just favoring other brands that maybe people didn’t know about before, but where they have a more favorable price equation for customers,” he said.
Amazon, he noted, can also leverage its huge network of third-party sellers.
“Another thing that people forget is that when you’ve got 2 million-plus sellers, they’re not all going to take the same strategy if there ends up being higher tariffs. I mean, there are going to be plenty of sellers that decide to pass on those higher costs to end consumers, but they’re going to — we have a lot of sellers in lots of different countries, and not all of them are going to pursue the same tack,” he explained.
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