Amazon (AMZN) Sellers Set to Lower Ad Spend and Hike Prices in Wake of Tariff Turmoil
Sellers on e-commerce site Amazon (AMZN) are considering cutting their advertising spend, hiking prices and slashing Chinese exposure in response to President Trump's tariff hikes.
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Price Hike Will Hit Sales
According to a note from Five-star TipRanks-rated TD Cowen analyst John Blackledge, one large home goods seller he has recently spoken to plans to lower advertising spend to 'limit our stock inventory on platforms including Amazon.' Blackledge said the company spends around 15% of its Amazon sales on advertising but could cut that in half if inventory begins running low.
Again in response to concerns over higher tariff costs, the seller is planning to raise prices on its goods affected by tariffs beginning as soon as next month. In one example, the company told Blackledge that it was looking at increasing prices by as much as 10%. This would, it feared, lead to a 10% to 15% decrease in unit sales as a result, driving its revenue down by up to 5%.
Reducing Chinese Supply
The seller also plans to source 85% of new orders from outside of China by the end of the summer this year. This would mark a huge shift from 2024 when just 25% of orders came from countries other than China and from just 5 years ago when it sourced 95% of its inventory from China.
This follows the staggering 145% tariff charge on Chinese imports into the U.S.
Indeed, the seller told Blackledge that it had 47 containers in China, but it was planning on keeping them there until the 'tariff environment becomes more reasonable.'
The seller did provide some optimism, however, by declaring that its revenues declined 10% year on year in the first quarter of this year. That may not sound great but it is an improvement on the 15% decline in the fourth quarter of last year.
That could signal some improvement in consumer confidence, building on the uplift in U.S. retail sales earlier this week.
Is AMZN a Good Stock to Buy Now?
On TipRanks, AMZN has a Strong Buy consensus based on 45 Buy and 1 Hold rating. Its highest price target is $306. AMZN stock's consensus price target is $253.33 implying an 46.76% upside.
See more AMZN analyst ratings
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