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On Amazon’s first-quarter analyst call, CEO Andy Jassy highlighted the company’s broad selection of products, competitive pricing, and fast delivery as key factors that would help Amazon navigate uncertain economic conditions that may result from the trade war, just as it did during the COVID-19 pandemic.
“Given our really broad selection, low pricing, and speedy delivery, we have emerged from these uncertain areas with more relative market segment share than we started and better set up for the future,” Jassy said. “I’m optimistic this could happen again.”
Customers “choose the provider they trust most” in uncertain times, and “unexpected” trends develop during such periods that Amazon can capitalize on, according to Jassy.
“Think about the pandemic when items like masks and hand sanitizer became big sellers,” said Jassy. “When you have the broadest selection like we do and 2 million plus global sellers like we do, you’re better positioned to help customers find whatever items matter to them at lower price points than elsewhere.”
Regarding items sourced from China, the CEO expects Amazon to benefit from the many sellers on its platform who source directly from China and avoid intermediary costs.
He elaborated, “Retailers who aren’t buying directly from China are typically buying from companies who themselves are buying from China, marking these items up, rebranding, and selling to U.S. consumers. These retailers are buying the product at a higher price than Chinese sellers selling directly to U.S. consumers in our marketplace, so the total tariff will be higher for these retailers than for China direct sellers.”
A 2024 Jungle Scout survey found that 71% of Amazon sellers have at least one product made in China.
Jassy added that while some third-party sellers will raise prices to offset tariff costs, others may absorb the costs to gain market share, helping Amazon maintain variety and competitive prices. Jassy said, “When you’ve got larger diversity like we have, we have a better chance of some of those sellers deciding that they’re going to capture share, and they’re not going to pass on all or any of those tariffs to the customers.”
Finally, Jassy noted that while Amazon sells many discretionary items, a third of its mix in the first quarter was “everyday essentials,” or items less likely to see a pullback in spending should the economy weaken. He added, “Even if you exclude Whole Foods Market and Amazon Fresh, Amazon is one of the largest grocers in the U.S. with over $100 billion in gross sales last year. People are buying a lot of their everyday essentials at Amazon.”
Regardless, Amazon officials provided a wide range for second-quarter guidance due to the tariff uncertainty and their impact on consumer spending.
“It’s hard to tell where they’re going to settle and when they’re going to settle,” said Jassy of the tariffs. “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?”