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By Deborah Mary Sophia and Arriana McLymore
(Reuters) -Amazon on Thursday tried to temper investor concerns about the impact of the Trump administration's tariffs on its e-commerce business, but the company may have few options left to ensure small third-party sellers stay put in the face of crushing levies.
U.S. President Trump has imposed 145% duties on imports from China, a move that has left companies including Amazon, Walmart and Apple scrambling to reassess supply chains and find ways to keep costs down.
Amazon said it has not seen any softness in demand yet, nor much increase in average selling prices of retail items. There had been some "heightened buying in some categories," it said.
On a post-earnings call with investors, CEO Andy Jassy said the company was working with its sellers to move orders to the U.S. earlier to avoid further tariffs on merchandise.
"Our third-party sellers have pulled forward a number of items so they have inventory here as well ... we're encouraging that because we're trying to keep prices as low as possible," Jassy said.
But stocking up was only a band aid, analysts said. As shoppers step up purchases to avoid tariff impacts, the company and its sellers may struggle to avoid price increases in the coming months as they blow through inventory and place new orders.
"I can't imagine that they stocked up on more than six months' worth of inventory," said Gil Luria, analyst at D.A. Davidson.
"If we get past the next six months and we're still as uncertain as we are today ... then Amazon will have to take actions that are less palatable. It's gonna have to let some higher prices flow through, take some lower margins structurally, have to push its merchants to absorb lower margins."
For Apple and Amazon - and other companies including Qualcomm, Samsung and Intel that are exposed to everyday consumers - tariffs have become the crisis that could set them back in a race against rivals Microsoft and Alphabet's Google.
Amazon shares dipped about 1% on Friday. Apple stock fell nearly 4%, as the iPhone maker on Thursday estimated that tariffs would add about $900 million in costs to the quarter ending in June if rates do not change. Apple CEO Tim Cook outlined big changes to the company's supply chain.
Amazon's AWS cloud business, which powers its profits, is usually a bulwark against swings in its e-commerce business, but that segment's performance in the first quarter disappointed the Street after Microsoft's Azure cloud business well outperformed expectations.