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Amazon is seeking to cut what it pays suppliers for goods it sells on its ecommerce platform, as the tech giant moves to reverse concessions intended to limit the shock of US President Donald Trump’s tariffs.
The $2.6tn Seattle-based group has sought discounts from suppliers ranging from low single digits to as high as 30 per cent, according to several vendor consultants — who negotiate on behalf of multiple brands and suppliers.
Amazon had accelerated talks with some suppliers by several weeks and in individual cases had sought to impose a January 1 deadline, the people said, in a flurry of dealmaking ahead of a Supreme Court ruling on the legality of the US trade levies expected this week.
Amazon said in a statement that its annual vendor negotiation cycles had not changed and said there was no rigid deadline for talks. It said that it had started talks with some suppliers following a reduction in tariff rates for Chinese imports at the end of October.
The world’s largest ecommerce platform last year agreed to increase the price it paid to some suppliers for tariffed goods in return for them guaranteeing minimum margins. This meant that brands would take the hit if an item’s sale price on Amazon’s marketplace fell.
But Amazon now wanted to claw back those concessions made last year, the people said, with the group arguing that US tariffs have been less sweeping than first feared after Trump walked back some levies and cut a series of trade deals.
“Amazon is moving aggressively to recoup any lost profit,” said Kara Babb, a consultant and former Amazon vendor manager.
The technology giant was seeking to shift the risk of further trade volatility on to its suppliers by asking them to agree to take responsibility for the paying of any duties on goods they sell, the people added.
Amazon has said it will accept smaller discounts from suppliers if they agree to be on the hook for paying tariffs, and spend more on marketing and promotions, they added.
“The narrative from Amazon to brands is that a lot of their worst fears have not materialised,” said Martin Heubel, a consultant who helps suppliers negotiate deals with Amazon.
The US president’s raft of levies on trading partners, launched in April last year, upended global trade relations and threatened the razor thin margin on which Amazon operates its vast ecommerce business.
Amazon sells goods directly and host third-party retailers, who account for more than 60 per cent of sales on its platform.
The group’s negotiations with suppliers for the goods it sells itself are taking place under a cloud of uncertainty as companies await a ruling from the US’s highest court on whether the administration has the authority to impose tariffs under the International Emergency Economic Powers Act.
Trade lawyers and diplomats have warned that Trump could launch a wave of new tariffs using powers under alternative legislation if the Supreme Court rules against his current levies.
Amazon has not joined any litigation brought by businesses and interest groups against tariff measures, including a lawsuit by more than 1,000 retailers, including Costco, seeking to reclaim duties.
The tech group’s vendor managers — who handle negotiations with brands — have not explicitly referenced the case in talks but have hastened talks in a move consultants argue is aimed at getting ahead of future.
Brands and their advisers have argued that Amazon’s stance in its latest negotiations threatens the profitability of product lines as it does not take into account the rising cost of goods stemming from supply chain disruption and higher raw material and labour costs.
Amazon said: “We work closely with vendors to understand all the cost pressures they’re facing — tariffs, supply chain, raw materials, labour — and factor those into negotiations.”
