Amazon Launches New Round of Price Negotiations with Suppliers to Hedge Against Tariff Fluctuations, Seeking Cuts Up to 30%

Ebrun Exclusive, January 17: According to foreign media reports, Amazon is seeking lower supply prices from its vendors to prepare for potential future tariff fluctuations. Multiple industry insiders revealed that Amazon has recently initiated a new round of price reduction negotiations with suppliers, with requested cuts ranging from single-digit percentages to as high as 30%. Furthermore, Amazon is accelerating negotiations with some suppliers, moving up timelines by several weeks and, in some cases, even attempting to set a January 1st deadline. Industry analysts believe this move is a clear risk mitigation strategy, coinciding with the impending U.S. Supreme Court ruling on the legality of tariffs from the Trump era.

In response, Amazon stated in a provided declaration: "Our annual vendor negotiation cycle has not changed. Negotiation start times naturally vary by category, and there is no strict negotiation deadline." Amazon added: "As part of our standard process, we consistently communicate with our broad and diverse partner base on the platform, supporting them as they adapt to a changing business environment while ensuring a vast product selection and competitive prices for customers." The company also noted that its business structure is diverse with varying cost systems, and vendor negotiations are based on multiple factors, taking into account the cost and operational pressures suppliers face.

Reports indicate that last year, Amazon agreed to increase procurement prices for some suppliers affected by tariffs in exchange for guarantees on "minimum margins." The Financial Times reported that this arrangement meant if product prices were reduced on Amazon's platform, the resulting profit loss would be borne by the brands themselves. However, insiders reveal that Amazon is now attempting to roll back these previous concessions, citing that the actual impact of tariffs has lessened as the White House pushes for tariff reductions and reaches some trade agreements. "Amazon is taking a more aggressive approach, trying to reclaim previously lost profits," said Kara Babb, a former Amazon vendor manager now working as a consultant, in an interview with the Financial Times.

Analysts suggest Amazon's strategy aims to partially transfer the risk of future trade fluctuations to suppliers by requiring them to agree to assume tariff responsibility for the goods they sell. Nonetheless, some suppliers disclosed that during negotiations, Amazon also makes certain concessions; for instance, if a supplier agrees to share tariff costs and increase marketing expenditures, the platform might accept a smaller price reduction.

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