Amazon CEO Andy Jassy sought to calm investors after the tech titan released a second-quarter guidance that brought into question the impact tariffs could have on the e-commerce giant.
“We haven’t seen any attenuation of demand yet. To some extent, we’ve seen some heightened buying in certain categories that may indicate stocking up in advance of any potential tariff impact,” Jassy said in a Thursday earnings call. “We also have not seen the average selling price of retail items appreciably go up yet. Some of this reflects some forward buying we did in our first-party selling, and some of that reflects some advanced inbounding our third-party sellers have done. But a fair amount of this is that most sellers just haven’t changed pricing yet.”
Jassy said the company had been encouraging its sellers to pull forward goods so they could have inventory on hand in the U.S., thus keeping prices down.
The comments came weeks after a report indicated that Amazon had canceled orders for multiple products made in China. More than 70 percent of sellers and brands on Amazon say they source their products from the country, according to a survey from Amazon seller software platform Jungle Scout.
In the call, Jassy spoke favorably of sellers that source directly from China.
“As it relates to China, retailers who aren’t buying directly from China are typically buying from companies who themselves are buying from China, marking these items up, rebranding and selling to U.S. consumers,” Jassy said. “These retailers are buying the product at a higher price than Chinese sellers selling directly to U.S. consumers in our marketplace, so the total tariff will be higher for these retailers than for China direct sellers.
Addressing the concerns that the tariffs on China would be passed onto consumers, Jassy admitted it would be a mixed bag of sorts.
“When you’ve got 2 million-plus sellers, they’re not all going take the same strategy if there ends up being higher tariffs. There are going be plenty of sellers that decide to pass on those higher costs to end consumers,” said Jassy. “Not all of them are going to pursue the same tack. 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 on all or any of those tariffs to the customers.”
For the second quarter, Amazon beat the Street on both top- and bottom-line estimates, with the company seeing net sales soar 9 percent to $155.7 billion on net income of $17.1 billion—another quarterly record.
Forward-looking operating income expectations ranged between $13 billion and $17.5 billion, with second-quarter sales expected to jump between 7 percent and 11 percent.
The average analyst estimate for Amazon’s operating income came in at $17.8 billion, which is the probable catalyst for company stock falling as much as 4 percent after the report.
Amazon was a target of the White House upon a report earlier this week suggesting that it would display the added costs of tariffs on its website for customers.
Shortly after White House press secretary Karoline Leavitt called the reported decision a “hostile and political act,” the e-commerce giant put out a statement saying the idea is “not going to happen,” and that the only consideration would have been for the low-cost Amazon Haul business.
The earnings report also came out a day after Amazon unveiled a $4 billion investment in its delivery network across rural America. The plan is supposed to expand the network’s rural footprint to more than 200 delivery stations and is estimated to create over 100,000 new jobs both across in the warehouse and on the road.
When the expansion is complete in 2026, Amazon said it will triple its rural network, enabling the delivery of over 1 billion more packages per year to customers in more than 13,000 zip codes spanning 1.2 million square miles. Average delivery times upon the scaling of the delivery network are expected to be cut in half.
During the earnings call, Jassy said that more items were delivered same-day or next-day than any other quarter in history.
The faster delivery times are the biggest signs that the cost-cutting initiatives that have dominated the logistics landscape at Amazon continue to be a success for the company as it aims to get more products in front of consumers quicker.
Shipping costs grew 3 percent to $22.5 billion, down from the 10 percent growth experienced in the first quarter of 2024. These costs include inbound and outbound shipping expenses, such as costs related to transportation, sortation and delivery centers, as well as the costs to receive products from suppliers.
Fulfillment costs, which primarily consist of the expenses incurred in operating and staffing fulfillment centers, physical stores and customer service centers, declined 22 percent to $497 million.
Third-party sellers at Amazon generated 7 percent sales growth to $36.5 billion.
Amazon’s fastest-growing businesses, chief profit driver Amazon Web Services (AWS) and advertising, grew 17 percent and 19 percent, respectively.
