The trade war with China is not making it easy to do business if you are an Amazon retailer. The smaller the retailer, the harder it is getting. Now is the time to buy goods for the lucrative season running up to Christmas. The orders to Chinese manufacturers have to go out now, and pricing these goods is going to be a nightmare, unless one has a crystal ball. The more retailers try to offset the cost of these tariffs, the less they are going to sell.
Many online retailers are one-person shows. They don't have the resources to weather uncertain business storms, and don't have the negotiating power that huge corporations have. In an article by Bloomberg, Joel Sutherland, Managing Director of the Supply Chain Management Institute at the University of San Diego said, “The smaller companies have a significant problem. We have an administration that says one thing today and does something else tomorrow, which poses tremendous risks.”
How It Can Hit Amazon
More insulated than most online retailers due to their size, Amazon could get hit if sales slow and cut into the commissions and fees they charge users on its online store. A lot rests on if the U.S. and China can come to terms. On 28-29 June, Trump will be meeting up with Chinese President Xi Jingping for the G20 summit in Osaka, Japan. Both sides have agreed to resume trade talks after a stalemate that lasted weeks. Chuck Gregorich, who sells China-made hammocks, patio furniture and 2,000 other products on Amazon said, "We're going to assume the tariffs are here to stay. We can't have this happen in a year or two and get caught with our pants down again."
Gregorich, like other importers, tried to move up orders early last year to beat a 1 January 2019 tariff hike on Chinese imports from 10%-25%. He spent $400,000 more on shipping only to see the tariff hike delayed. He is now looking to shift 30% of his production to Vietnam and elsewhere. Many other Amazon sellers are following suit, or at least considering it.
Sailing The Seas Of Uncertainty
There are no crystal balls, and the future remains uncertain. Shifting one's business strategies is probably the only way to navigate the sea of tariffs between China and the U.S. Scouting for factories in India, Central America and Vietnam might be the best bet. Of course, this could all blow over in a few months.