Amazon CEO Andy Jassy reassured investors on the company’s first-quarter earnings call on Thursday, expressing optimism that the retail giant could emerge from the current tariff environment stronger than before.
“Given our really broad selection, low pricing, and speedy delivery, we have emerged from these uncertain eras 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.”
Amazon’s Resilience Through Uncertainty
Jassy pointed to the COVID-19 pandemic as an example of how Amazon’s broad product selection and competitive prices helped customers “find what they want” despite ongoing economic uncertainty. During the pandemic, many shoppers turned to Amazon for both essential and non-essential goods, boosting the company’s profits and stock price significantly.
These remarks followed Amazon’s first-quarter earnings report, where the company surpassed expectations but issued a lower-than-expected operating income forecast for the current period. The company projected operating profit to range between $13 billion and $17.5 billion, below the consensus estimate of $17.8 billion, citing tariff and trade policies as one of the factors that could affect its guidance.
Amazon CFO Brian Olsavsky acknowledged that ongoing uncertainty surrounding President Donald Trump’s tariffs led to a wider forecast range. “We generally have a wide range, but just the general uncertainty that we’re seeing and uncertainty of consumer demand and everything else is causing us to increase the range a bit,” Olsavsky explained.
Amazon, along with some third-party sellers, has worked to preemptively stock up on items to mitigate the impact of the tariffs and maintain lower prices, Jassy said.
Impact of Chinese Goods on Amazon Pricing
With up to 70% of goods on Amazon coming from China, many of these products face higher import costs due to tariffs. Jassy pointed out that while some sellers may pass these additional costs onto consumers, others might not. “We have a lot of sellers in lots of different countries, and not all of them are going to pursue the same tactic,” Jassy explained. “So I think 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 all or any of those tariffs on to customers.”
Jassy emphasized that Amazon is “heads down” and “pretty maniacally focused” on maintaining low prices for consumers. However, he acknowledged the difficulty in predicting the eventual outcome of the tariffs. “It’s hard to tell what’s going to happen with tariffs right now,” he said. “It’s hard to tell where they’re going to settle and when they’re going to settle.”
Author’s Opinion
While Jassy’s optimism about Amazon navigating tariff uncertainty is reasonable, it’s important to remember that the shifting global trade landscape presents risks that are difficult to predict. Amazon’s ability to adapt and maintain competitive pricing has been commendable, but as reliance on external factors like tariffs grows, the company must continue to innovate and diversify its strategies to shield itself from future shocks. Keeping consumer prices low is crucial, but sustained growth will depend on how well Amazon manages these external pressures.
Featured image credit: Fortune
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