Amazon sellers curb Prime Day discounts with tariffs taking bite

Los Angeles Times

6 hours ago

Amazon.com Inc.'s Prime Day is slamming into President Donald Trump's trade war, with ever-shifting tariffs prompting some brands to sit out the summer sale and some shoppers dropping hints they plan to pull back.
The event, which began Tuesday and lasts four days, could provide prognosticators a glimpse of how much consumers are spending and what they're buying amid mixed signals about the strength of the US economy.
'Prime Day will provide an early indication on consumer appetite, especially in categories like apparel, electronics and TVs, where price drops are expected to be the deepest,' said Vivek Pandya, lead analyst at Adobe Inc., which expects Amazon and other US retailers to generate $23.8 billion in online sales during the four-day event.
Trump rattled global markets in April when he announced 'Liberation Day' tariffs on 180 countries and territories, including China. Levies of as much as 145% have since been reduced or delayed to give time for negotiations, but uncertainty lingers like a dark cloud. Trump restoked the unpredictability Monday with warnings to countries including Japan and South Korea that he would impose tariffs if trade deals weren't reached by Aug. 1.
Economic indicators have so far portrayed a resilient US consumer, but the long-term outlook could be muddied by short-term shopper savviness — such as buying automobiles before tariffs take effect. Consumption declined slightly in May. Consumer sentiment increased in June. Prime Day could help clarify the signals for the rest of the summer.
'Prime Day will be quite a test,' said Romain Fouache, the CEO of Akeneo, which sells software used by online merchants. The firm conducted a survey of 1,000 US shoppers showing that 1 in 4 respondents planned to skip Prime Day due to tariffs while 57% said they would more closely monitor prices.
It's not just shoppers sitting out the sale. Some online merchants, who provide about 60% of the products sold on Amazon's web store, say they can't afford to offer discounts this year because they're trying to boost prices to offset the increased costs from tariffs.
Take Dan Peskorse, whose Upstream Brands sells aluminum trays that make decorative ice cubes for the cocktail connoisseur. He usually sells his products at cost on Prime Day to promote the brand. But with them subject to 50% tariffs, he's not offering any discounts for the first time.
'We're just gonna see what happens this year,' said Peskorse, whose St. Louis-based company generates about $4 million in annual sales, mostly on Amazon. 'There's just no room in the budget for Prime Day discounts.'
Unilever Plc's Blueair, which makes air purifiers and humidifiers, had to reduce the number of products it offers for sale during Prime Day this year due to tariffs, CEO Andy Lu said. The sale is a good way to promote his products, including filters that cost as much as $300 and typically feature a Prime Day discount of about 30%.
'We want to be cautious to see how this economy plays out for the rest of the year,' Lu said. 'This Prime Day has so much meaning as an indicator for brand owners and operators.'
Amazon declined to comment about how tariffs affected this year's event. Executives have said shoppers are trading down to less expensive products, and CEO Andy Jassy has said tariffs have not driven up prices 'appreciably.'
'We're working with our broad, varied range of valued selling partners in our store to support them in adapting to the developing environment while maintaining low prices and broad selection for customers,' a company spokesperson said in an emailed statement.
Amazon launched Prime Day in 2015 to attract new subscribers, who pay $139 a year for shipping discounts, video streaming and other benefits. Some 196 million US shoppers had Prime subscriptions as of March, up 9% from the previous year, according to Consumer Intelligence Research Partners.
Amazon expanded the event to four days this year, up from two in 2024. It otherwise follows a familiar format of offering discounts of up to 50% off Amazon gadgets like Echo speakers and Fire TV streaming devices as well as such popular brands as Levi's and Shark. The extra days could help Amazon draw more shoppers and better compete with longer events offered by competitors, such as Walmart Inc.'s six-day Deals that also began Tuesday and Target Corp.'s 'Circle Week,' which kicked off on Sunday.
US shoppers will spend nearly $13 billion on Amazon over the four-day event, which represents 75% of all online spending those days, according to EMarketer Inc. That's up from 59% last year when Prime Day was just two days, according to the firm.
But prolonging a sale also has risks. 'You don't have that sense of urgency that Prime Day seemed to be built around,' said Katie Thomas, head of the Kearney Consumer Institute. 'The longer sales period might lead to cart abandonment.'
Soper writes for Bloomberg.