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USA Today
23-06-2025
- Business
- USA Today
Amazon bets on premium beauty to offset Trump tariffs ahead of Prime Day
Amazon's AMZN.O defense against tariffs for its coming Prime Day? Luxury goods. President Donald Trump's tariffs have spurred some Amazon sellers who source products from China and other heavily tariffed countries to bow out of the company's Prime Day, one of its biggest sales events of the year, to protect their margins. Amazon Prime Day is now a four-day shopping event exclusively for Amazon Prime members, taking place this year from July 8 to July 11. The Seattle-based e-commerce company is hoping that recent sales growth in high-margin cosmetics in its Amazon Premium Beauty category will cushion the impact of tariffs on Prime Day sales revenue and consumer sentiment. "Beauty has become, in the past few years, more of an essential item in consumers' minds," even in hard financial times, said Anna Mayo, vice president of NielsenIQ's Beauty Vertical unit. Amazon Premium Beauty was initially shunned by luxury cosmetic players who feared the platform would harm their image when it was launched in 2013. But those days are gone. Now, the online retailer is promoting products from top beauty and haircare brands including Estee Lauder's EL.N Clinique, Olaplex OLPX.O and L'Oreal's Urban Decay. During last year's Prime Day event, U.S. shoppers spent $14.2 billion, up 11% year-over-year, according to Adobe Analytics. In case you missed it: Amazon is refunding some customers for purchases made as far back as 2018 Top cosmetics brands can charge high prices and often do not offer steep discounts on Prime Day compared with electronics, apparel and home goods. This year, Adobe Analytics expects beauty product discounts to have "milder" discounts of 10% to 17%, whereas electronics deals are expected to range from 14% to 22% off, said Vivek Pandya, lead analyst at Adobe Digital Insights. That, coupled with the ease of shipping small packages of most products, means that Amazon Premium Beauty merchandise has higher margins than other products sold on Prime Day. Amazon 'doesn't make a huge margin in most of the categories of stuff that it sells online,' said Renee Parker, co-founder of consultancy firm Invinci and a former Amazon executive. "They are making a lot of money on premium beauty products because ... (they're) small and expensive, and you can ship a ton of them.' Vitamins and supplements are successful for similar reasons. Amazon Premium Beauty sales gathered steam after the e-commerce giant began clamping down on counterfeits and top beauty companies needed new ways to reach customers, said Alfonso Emanuele de Leon, a beauty industry veteran and partner at FA Hong Kong Consultancy. Amazon was previously viewed as a pariah by luxury beauty brands because of the cheap merchandise on the website, but is no longer perceived that way, said Emanuele de Leon. 'Huge acceleration' Sales at Amazon Premium Beauty rose by nearly 20% to $15 billion between April 2024 and April 2025, outpacing the 14% growth for beauty products outside the specialized e-commerce store, according to NielsenIQ. It also outpaced the year-over-year growth of 5% for online store sales in the first quarter, NielsenIQ said. L'Oreal Chief Executive Nicolas Hieronimus said during the company's annual meeting in April that having products on Amazon led to a "huge acceleration" in expanding its U.S. market share. Estee Lauder has launched 11 brands on Amazon's U.S. site since March 2024. More than 75% of Estee's finished goods sold in the U.S. originate from the U.S. or Canada and are therefore protected by existing trade agreements, Roberto Canevari, Estee Lauder's global supply chain executive vice president, said at a conference in June. Lauren Gordon, vice president of Amazon at Estee Lauder, said that Prime Day and Amazon's other "high-traffic shopping moments" give the company a chance to "attract both new and existing customers." Melis del Rey, general manager for health and beauty for Amazon U.S. stores, said her team has been "very proactive" in working with premium brands to determine tariff impacts. "At a high level, most of the premium brands' sourcing strategies are local, and therefore, the (tariff) impact is less imminent," del Rey said. Amazon Premium Beauty is an invite-only program for brands shipped and sold by Amazon and third-party sellers. The department has grown to more than 10,000 products, and brands' eligibility is determined on a case-by-case basis. According to Amazon Seller Central, sellers pay a standard fee of 15% to participate in the program. Amazon does not disclose its terms with brands shipped and sold by Amazon, including Dyson and Estee Lauder's Aveda. Adding prestige brands including Unilever's ULVR.L Dermalogica has helped the company compete with beauty retailers Ulta Beauty ULTA.O and Sephora, which is owned by LVMH and also attract older, higher-income shoppers at a time when TikTok Shop is scooping up younger customers. Reporting by Arriana McLymore in New York City; Additional reporting by Dominique Patton in Paris; Editing by Nick Zieminski and Matthew Lewis
USA Today
18-06-2025
- Business
- USA Today
Amazon CEO Andy Jassy: Generative AI will reduce workforce in coming years
Amazon CEO Andy Jassy: Generative AI will reduce workforce in coming years Show Caption Hide Caption Amazon drone makes unplanned landing at Arizona apartment complex Johnia 'Nay' Brooks records video of one of Amazon's new Prime Air MK30 drones after it made an unplanned landing at a Tolleson apartment complex. Provided by Johnia 'Nay' Brooks Rollout of generative AI and agents will reduce Amazon's AMZN.O total corporate workforce in the next few years, Andy Jassy, CEO of the online retailer said in a note to employees on Tuesday. Artificial intelligence is reshaping the global workforce by automating routine and repetitive tasks, and industry leaders expect this to prompt a reduction or transformation of certain roles across industries. Despite uncertainties, many experts agree that AI will not lead to mass unemployment, but rather to a reshuffling of the workforce. "As we roll out more Generative AI and agents, it should change the way our work is done. We will need fewer people doing some of the jobs that are being done today, and more people doing other types of jobs," Jassy said. In case you missed it: Amazon is refunding some customers for purchases made as far back as 2018 Amazon had more than 1.5 million full-time and part-time employees at the end of last year. The company also hires temporary workers and independent contractors as needed. The company is using GenAI across internal operations to enhance efficiency and customer experience, Jassy said. He added that Amazon is using AI to optimize inventory and forecasting in its fulfillment network, upgrade its customer service chatbot and improve product detail pages. "Amazon is communicating a message we have been increasingly hearing from other technology companies – AI is progressing so fast in improving productivity that the need for hiring will diminish over time," said D.A. Davidson analyst Gil Luria. "The main roles being enhanced right now are in software development, and that is where we are seeing the most pronounced slowdown in hiring." Microsoft has emphasized that AI will boost productivity, but it has also laid off thousands of employees, while Google too has reportedly laid off hundreds of employees in the past year. Other tech companies are increasingly using AI to write code for both their products and internal operations. Reporting by Akash Sriram and Harshita Mary Varghese in Bengaluru; Editing by Alan Barona
Reuters
06-05-2025
- Business
- Reuters
IBM CEO makes play for AI market and more US investment
May 6 (Reuters) - IBM (IBM.N), opens new tab on Tuesday made a play for more sales in the crowded artificial intelligence field, touting tools that could help customers manage a fleet of AI agents for their key business applications. In an interview, Chief Executive Arvind Krishna said he saw an opening to provide software that integrates customers' AI agents from other providers -- among them Salesforce (CRM.N), opens new tab, Workday (WDAY.O), opens new tab and Adobe (ADBE.O), opens new tab -- and lets them build their own agents for untapped use cases, with IBM's help. "We help our clients integrate. We want to meet them where they are," he said, ahead of IBM's annual Think conference sessions on Tuesday. IBM's tools to help customers create their own agents, a process it said would take under five minutes, draw on the IBM Granite family of AI models, as well as alternatives from Meta Platforms (META.O), opens new tab and Mistral, Krishna said. Krishna said that customer interest in using different AI models for different tasks would build demand for IBM, which last month reported that it has built a $6 billion "book of business" on ChatGPT-like generative AI. A small cloud provider relative to Amazon Web Services (AMZN.O), opens new tab and Microsoft (MSFT.O), opens new tab, IBM has tailored its tech to clients wanting multiple clouds or their own infrastructure to manage their data. "All of these capabilities will only accelerate that rate of growth on those numbers," he said of IBM's new tools. IBM also announced in April that over the next five years, it would invest $150 billion in the United States, where it has manufactured mainframe computers for more than 60 years. It will make quantum computers in the United States as well, Krishna said. "Between mainframe, artificial intelligence and quantum computing, we think there's going to be a very healthy market that behooves us to invest and lean in," he said. Krishna added that the technology focus and reduction in regulations from President Donald Trump's administration would set the economy up for growth.
Reuters
12-04-2025
- Business
- Reuters
Exclusive: Alphabet, Nvidia invest in OpenAI co-founder Sutskever's SSI, source says
SAN FRANCISCO, April 11 (Reuters) - Alphabet (GOOGL.O), opens new tab and Nvidia (NVDA.O), opens new tab have joined prominent venture capital investors to back Safe Superintelligence (SSI), a startup co-founded by OpenAI's former chief scientist Ilya Sutskever that has quickly risen to become one of the most valuable artificial intelligence startups months after its launch, a source familiar with the matter said. The funding illustrates renewed interest from the big tech and infrastructure providers in making strategic investments in the startups developing cutting-edge AI that requires massive amounts of computing power. Alphabet, which has its own AI models, earlier in the week announced a deal by its cloud computing arm to sell SSI access to tensor processing units (TPUs), its in-house AI chips. SSI, which sources say was recently valued at $32 billion in a round led by Greenoaks, is one of the highest-profile startups working on AI model research, thanks to Sutskever's stellar track record in predicting the next big thing in AI development. Like many of its competitors, it has a huge demand for chips. Reuters could not determine the exact terms of Alphabet's and Nvidia's investment in SSI. Spokespeople for all three companies declined to comment. The twin moves by Alphabet's corporate and cloud division with high-profile AI labs including SSI and Anthropic show the tech giant's evolving AI hardware strategy. Google originally reserved TPUs for in-house use. The deal to sell SSI chips in significant quantities to support its frontier AI research exemplifies the company's ongoing strategy to expand sales to external customers, Darren Mowry, a managing director in charge of Google's partnerships with startups, said in an interview with Reuters this week. "With these foundational model builders, the gravity is increasing dramatically over to us," he said. AI developers have historically preferred Nvidia's graphics processing units, which hold more than 80% of the AI chips market. But SSI is so far primarily using TPUs rather than GPUs for its AI research and development, two sources said. Google offers both Nvidia GPUs and its own TPUs through its cloud service. Its own chips are intended to excel at specific AI tasks and are more efficient than general-purpose GPUs. These chips have been used to build large-scale AI models, such as Apple (AAPL.O), opens new tab and Anthropic, an OpenAI competitor that has received billions of dollars of funding from Google and Amazon (AMZN.O), opens new tab. Google and Nvidia also face a challenger in Amazon, which is building its own competing processors called Trainium and Inferentia. Amazon has said as far back as 2023 that Anthropic would develop its technology on those chips. The tech giant announced in December that Anthropic would be the first customer to use a massive supercomputer powered by hundreds of thousands of its own chips. In the meantime, Anthropic continues to use TPUs for its AI development and has not decreased spending on Google's chips, two sources said. It is increasingly common for major cloud providers to invest heavily in AI startups that not only build foundational models but also serve as significant customers of their infrastructure. For instance, Amazon and Google have both invested in Anthropic, while Microsoft (MSFT.O), opens new tab has placed substantial bets on OpenAI. Nvidia has also backed OpenAI, as well as Elon Musk's xAI.
USA Today
10-04-2025
- Business
- USA Today
Exclusive: Chinese sellers on Amazon to hike prices or exit US as tariffs soar
Exclusive: Chinese sellers on Amazon to hike prices or exit US as tariffs soar SHENZHEN, China, April 10 (Reuters) - Chinese companies that sell products on Amazon AMZN.O are preparing to hike prices for the U.S. or quit that market due to President Donald Trump's unprecedented tariff hikes, sellers and the head of China's largest e-commerce association said. Trump said on Wednesday he would raise tariffs on Chinese imports to 125% from the 104% level already in effect, escalating the high-stakes confrontation between the two world's largest economies. "This isn't just a tax issue, it's that the entire cost structure gets entirely overwhelmed," said Wang Xin, the head of the Shenzhen Cross-Border E-Commerce Association, which represents more than 3,000 Amazon sellers. "It'll be very hard for anyone to survive in the U.S. market," she told Reuters, noting the tariffs could also lead to customs delays and higher logistics costs. "So for all of us in the cross-border e-commerce business today, this is truly an unprecedented blow." More: Trump pauses tit-for-tat tariffs for 90 days, ups China's levy to 125% Some sellers are looking to increase prices in the U.S. while others are looking to find new markets, Wang said, in comments backed by five Shenzhen-based Amazon sellers interviewed by Reuters on Thursday. China is home to around half of Amazon's sellers, with over 100,000 Amazon businesses registered in the southern city of Shenzhen alone, generating annual revenues of $35.3 billion, according to e-commerce services provider SmartScout. China also hosts the manufacturing bases of other major e-commerce platforms like Shein and Temu. Imports and exports involving cross-border e-commerce were worth 2.63 trillion yuan ($358 billion) last year, according to China's State Council. No other country comes even close to U.S. consumption power, significantly limiting the production the rest of the world can absorb and raising the risk of intensifying price wars among Chinese exporters squeezing profitability. More: What Trump's 90-day tariff pause means for your wallet Of the five sellers who spoke to Reuters, three said they would look to raise prices for their exports to the U.S., while two planned to leave the market entirely. Dave Fong, whose products range from schoolbags to Bluetooth speakers, said on Thursday he has raised prices in the U.S. by up to 30% and would let inventory levels fall and lower spending on Amazon advertising fees, which once took up 40% of his U.S. revenue. "For us and anyone else, you can't rely on the U.S. market, that's quite clear," Fong said. "We have to reduce investment, and put more resources into regions like Europe, Canada, Mexico and the rest of the world." Brian Miller, who has sold on Amazon from Shenzhen for seven years, said he did not see a reason to develop new products in the current environment and anticipated he and other sellers would need to raise prices steeply when current inventories run out in one or two months. More: iPhones, Shein and toys among top-traded items potentially impacted by US-China tariff war Building blocks for children that sell on Amazon for $20 that cost his company $3 to produce would now cost $7 including the tariff. Maintaining margins would require raising the price by at least 20%, and prices for higher-cost toys might see 50% increases, he said. "I don't see a scenario, if things don't change, that serving the U.S. from China is viable any more and manufacturing that serves the U.S. will have to be transferred to other countries like Vietnam, or Mexico," Miller said. Given the severe impact on China's small enterprises and manufacturers, the tariffs risk leading to a rapid acceleration in China's unemployment rate, Wang said. ($1 = 7.3450 Chinese yuan) (Reporting by David Kirton; Editing by Jamie Freed)
