Andy Jassy, Chief Executive Officer of Amazon, has acknowledged the onset of price adjustments on Amazon's extensive online marketplace as the effects of tariffs instituted under the previous U.S. administration begin to manifest in retail costs. Speaking at the World Economic Forum in Davos, Switzerland, last month, Jassy highlighted that consumers are increasingly observing these pricing impacts.
"This year, there are numerous considerations for shoppers, yet one prominent issue, particularly for major retailers like Amazon, is the mounting pressure on consumer pricing driven by the Trump administration's tariff strategy," Jassy stated during an interview with CNBC.
Amazon's marketplace encompasses an expansive product range, with hundreds of millions of items offered by approximately two million sellers. Jassy underscored that the company and many third-party vendors had anticipated tariff-related cost challenges by proactively purchasing inventory before tariffs took full effect. This approach, commonly referred to as forward staging, was intended to ease price volatility and extend a period of relative price stability.
"A significant portion of our third-party sellers engaged in forward staging within our fulfillment network to manage uncertainty around tariff implementations," Jassy explained. However, with the depletion of these pre-tariff inventories, the increased costs associated with tariffs are now beginning to become apparent in consumer prices.
Jassy noted divergent responses among sellers facing tariff-driven cost increases. Some are choosing to transfer the additional expenses directly to consumers, resulting in higher product prices, while others opt to absorb the increased costs themselves as a means to sustain customer demand during economically sensitive times.
Amid these dynamics, Amazon is working closely with its distribution and sales partners to keep prices as competitive as possible. Jassy emphasized that maintaining low consumer prices has been a longstanding priority for the company, particularly in times of economic or trade-related uncertainty.
He pointed out the inherent limitations within retail operating economics that constrain the ability to internalize higher input costs. "Retail operates on typically mid-single-digit operating margins, so when costs rise by around 10 percent, the options to absorb these increases without affecting prices are quite limited," Jassy elaborated.
Customer behavior remains resilient, according to Jassy, with ongoing spending activity albeit with shifts in purchasing patterns. Shoppers appear to be trading down to lower-priced alternatives, seeking bargains, and exhibiting increased caution regarding more expensive discretionary purchases.
Improvements in Amazon's delivery capabilities have also influenced consumer habits, contributing to heightened purchases of everyday essentials through the platform.
"Overall, Amazon's consumer base has maintained relatively steady performance," Jassy commented, adding an element of cautious observation about future developments given the evolving economic environment.