With brief, occasional, italicized and sometimes gratuitous commentary…
Amazon news, on a number of fronts…
• CNBC reports that Amazon CEO Andy Jassy, in an interview with the network, said that “President Donald Trump’s sweeping tariffs are starting to be reflected in the price of some items, as sellers weigh how to absorb the shock of the added costs.
“Amazon and many of its third-party merchants pre-purchased inventory to try to get ahead of the tariffs and keep prices low for customers, but most of that supply ran out last fall.”
“So you start to see some of the tariffs creep into some of the prices, some of the items, and you see some sellers are deciding that they’re passing on those higher costs to consumers in the form of higher prices, some are deciding that they’ll absorb it to drive demand and some are doing something in between,” Jassy said. “I think you’re starting to see more of that impact.”
According to the story, “Amazon is trying to ‘keep prices as low as possible’ for consumers, but in some cases, price hikes may be unavoidable, Jassy said Tuesday. ‘At a certain point, because retail is, as you know, a mid-single digit operating margin business, if people’s costs go up by 10%, there aren’t a lot of places to absorb it,’ Jassy said. ‘You don’t have endless options,’ he added.”
Probably not much chance that Amazon will do what it reportedly was considering last year, which is to delineate in pricing where tariffs have had an impact and by how much.
• The Chicago Sun-Times reports that Amazon has received final approval from the village board of Orland Park, Illinois, to build what it refers to as a “first of its kind,” 230,000 square foot big box store, built on a 35-acre plot of land, that it says “will offer shoppers general merchandise, household items and groceries. An Amazon Prime membership won’t be required to shop there and it will offer pickup areas and online order integration. There will also be about 800 parking spaces … Amazon doesn’t yet have a name for its retail concept but said in a statement that it expects to open in late 2027 at the earliest.”
The Wall Street Journal offers further reporting:
“About half of Amazon’s proposed big-box store in Orland Park, Ill., will sell groceries, general merchandise such as diapers and paper towels, and food prepared on site. The other half would be used for fulfillment of online and in-store orders, Amazon said.
“The e-commerce giant has spent years trying to translate its online dominance into bricks-and-mortar success. It has yet to hit on a consistently winning formula. Amazon has closed dozens of branded stores and more than half of its Amazon Go convenience stores.”
To put the size of the format into context, the Journal writes, an average Walmart is 173,000 square feet, an average Target is 121,993 square feet, and an average Costco is 144,710 square feet.
I’ve been mildly surprised by the degree to which some media outlets are treating this announcement as the second coming, saying that this represents Amazon’s ultimate weapon against Walmart and is likely to change everything.
All of which is hyperbole.
Let’s be clear. Amazon has tried a lot of bricks-and-mortar formats. Bookstores – gone. Fashion stores – gone. Amazon Go convenience stores – a ghost of what was originally envisioned. Amazon Fresh stores – at their best, largely uninspiring locations that feel like dark stores that just happen to permit customers to come in. Whole Foods continues to succeed, but I’ve found that almost all of them seem to have one thing in common – serious out-of-stock issues that suggest a lack of understanding – or prioritizing – of the customer experience.
I’ll be as excited to see this store as anyone, but I’ll only believe that this represents anything new and transcendent when I see it. Plus, even if it works, it is only one store. Only. One. Store. Walmart probably isn’t too worried.
This feels like a solution looking for a problem; Amazon has to avoid this turning into another dark-store-allowing-customers-in experience.
I do think that the residents of Orlando Park are about to get a rude surprise, as this store creates all sort of infrastructure problems that will take years to resolve, if indeed they can be resolved at all.
Too cynical?
• The Information also has an interview with Jassy in which he said “that with many AI-powered shopping tools, ‘the experience hasn’t been great yet,’ because they get product information or pricing wrong. But he said he expects that to improve over time, though any partnerships will require the right ‘value exchange’ between agents and retailers.
“In recent months, OpenAI and Google have been making a push into chatbot shopping as well as new product ads – putting them on Amazon’s retail turf. When it comes to advertising, Jassy said that Amazon’s advantage is in keeping ads relevant for shoppers, based on their behavior, something he said ‘is not simple to do’.”
In addition, Jassy said, “I think that we’re excited about agentic commerce. I think that it has the chance to make it easier for customers to find what they want. If you know what you want, it’s pretty hard to find a better experience than popping onto Amazon and searching and finding it.
“But the one place still where physical retail has some advantages, in my opinion, is the ability to go in, not know what you want, ask questions, refine those questions, have somebody point you to different things. And I think agents are going to help customers with that type of discovery. And it’s part of why we’ve invested so much in Rufus, which is our shopping assistant, which has really gotten quite good.
“And I think that over time that we will work with other third-party agents as well. I think today the experience hasn’t been great yet. You know, I think that a lot of these third-party agents, they don’t have your buying history, they don’t have what you like, a lot of the information about pricing and the product is off.
“But over time, I do believe that will get better. I also think there needs to be the right value exchange between the agents and between the retailers themselves, but I am optimistic that those will work out. We’re having conversations with lots of people and I’m very bullish on agentic commerce.”
• In the UK, Amazon announced “the launch of Amazon Now, a new ultra-fast delivery service offering thousands of groceries and household essentials in about 30 minutes or less. The service is being tested in select postcodes in Southwark in London, with plans to roll out further in the coming months … Amazon Now is available seven days a week through the Amazon app and website, offering thousands of products across 35 categories delivered in about 30 minutes or less.
“Customers in eligible postcodes can shop from a wide selection of items, including January staples like protein snacks, low and no alcohol drinks, vitamins and supplements, as well as everyday essentials like milk, eggs, fresh fruit & veg, toothpaste, pet treats, nappies, over-the-counter medicines, and more.”
Thirty minutes or less? Really? I was in London about a year and a half ago, and one of the things that really stood out for me was how awful the traffic was.
To be fair, Amazon says that “delivering packages faster isn’t a matter of moving faster within facilities or in transport, but through Amazon’s continuous innovation across its operations network – including placing products closer to customers, meaning they have less distance to travel and can get there quicker.”
If Amazon has figured out how to live up to this value proposition 100 percent of the time – because what’s the point of making a promise that you can’t live up to – I’ll be anxious to see what it is. Because traffic is traffic. And wishing doesn’t make it so.
The post Amazon News: Tariff-Related Price Hikes, New Big Box Store, & More appeared first on MNB.
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