Citing data from e-commerce data company “Traject Data,” the Wall Street Journal (WSJ) reported on the 21st that the price of 1,200 items, including deodorants, protein shakes, and pet supplies, out of about 2,500 low-cost daily necessities sold by Amazon rose 5.2% as of July 1 this year compared to January 20. This is in contrast to rival Walmart’s average 2% cut in prices for the same items during the same period.
Amazon’s increase in product prices is interpreted as a preparation for the aftermath of U.S. President Donald Trump’s tariffs. According to the WSJ, Amazon significantly raised the prices of its low-priced products on February 15. It moved quickly when President Trump signed an executive order on the 13th of the same month suggesting the application of tariffs to most U.S. trading partners.
Amazon’s business model, which is centered on online, also seems to have had an impact. “Amazon is difficult to make a profit in the low-cost product line, where there is little margin left due to shipping costs,” said Corey Thomas, an overall Amazon supplier consultant. On the other hand, he added about Walmart, “We can compensate for the damage caused online because high-priced products are sold together at offline stores.” As one-third of the products sold at Amazon are low-priced products, it can be interpreted that the company may have chosen to raise prices to preserve profitability.
Amazon’s position is that the price of the product range surveyed by WSJ is less representative. The company told WSJ, “The average price of the product did not increase or fall significantly.”
SAM KIM
US ASIA JOURNAL
