Declining Dollar Hits Amazon Forcing It To Raise Prices

Thrifty Shoppers Turn To TikTok And Away From Amazon. Declining Dollar Hits Amazon Forcing It To Raise Prices

In the emerging business of ‘social shopping,’ TikTok dominates the social and is spending big to improve the selling. Amazon dominates selling, and is working on the social.

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TikTok made a name for itself in the U.S. as a viral video-sharing sensation. Now it’s trying to get its 150 million U.S. users to think of it as a shopping destination.

Amazon, meanwhile, is trying new tactics to maintain its dominance in e-commerce. It has added social elements to its app to entice younger shoppers, and it is building up a network of influencers who hawk items on and off its website.

As a result, the two companies are on a collision course as they vie for position in a huge market.

Researchers at Insider Intelligence estimate social e-commerce will grow into a $100 billion market by 2025, from $67 billion this year.

To succeed, each company will need to copy elements of the other’s success. TikTok, owned by Beijing-based ByteDance, wants customers to trust it as a safe and reliable place to buy products, the way many already trust Amazon.

And Amazon is trying to persuade users to hang out on its app like they do on social-media services.

TikTok launched its shopping feature, called TikTok Shop, last month and is currently selling about $7 million worth of products like hairbrushes, teeth-whitening tools and fall-themed sweatshirts with leaves and pumpkins every day in the U.S., with a goal of reaching $10 million a day by the end of the year, according to people familiar with the matter.

Amazon’s global online store sales—a measure of the products Amazon sells directly—was roughly $603 million a day last year.

TikTok is spending heavily to build a logistics operation, poaching Amazon employees and trying to lure third-party sellers by offering them a bigger cut of sales than Amazon, according to sellers. More than 60% of Amazon’s retail sales come from third-party sellers.

“This is a big change of how people shop and so we want to make sure we’re getting it right,” said Marni Levine, a new TikTok e-commerce executive in charge of U.S. small-business operations who came from Facebook’s parent company, Meta Platforms.

She declined to comment on whether TikTok sees Amazon as a competitor. An Amazon spokeswoman said social shopping “has grown tremendously over the past five years” for the e-commerce giant.

Customer Trust — Advantage: Amazon

Amazon has spent years building up trust among consumers, thanks to a relentless focus on customer experience, including increasingly speedy deliveries and a lenient return policy. TikTok still has to earn that kind of trust.

Deanna Arora, a 26-year-old in Seattle, recently made her first purchase on TikTok Shop. She bought a $9 detangling hairbrush that influencers had been posting about and spent much of the time it was in the mail wondering if it was real or a rip-off, despite scouring reviews of the seller in the app.

“I would have trusted the reviews more on Amazon, but clearly I was so entranced by TikTok,” she said of her purchase. It’s that type of excitement that TikTok is trying to turn into profit.

After the hairbrush arrived, she said she still didn’t know if she had received the genuine product or a knockoff, and that there was no good way to tell the difference.

TikTok says it has ways for users to verify the authenticity of products purchased on the platform.

Before the U.S., the company launched TikTok Shop in the U.K. in 2021, and created a “partner network” of third-party agencies that sellers could use to promote products. The shopping feature wasn’t a hit.

Grace Humphrey, who worked as a content creator for one such agency, said she was paid to make 15 videos a day, and that she was instructed to speak highly of all the featured items, from Apple watches to a bunion corrector.

“The whole point of the whole thing was to build up trust with the U.K. and get as many sales as possible,” said Humphrey, who now runs her own social-media marketing agency.

But the videos, which felt stilted and forced, had the opposite effect: They made users more suspicious.

“That was their biggest issue,” she said. “People willing to trust how legit they are.”

Internally, TikTok Shop U.K. was considered a flop, according to people familiar with the matter. TikTok is now trying to revive the business there with new features and more reliable vendors.

Last month, the company launched the shopping feature in the U.S. It vets sellers’ identities and relies on established, independent influencers to promote products they choose.

User Engagement — Advantage: TikTok

TikTok’s biggest advantage is its ubiquity in the U.S. The roughly two hours a day on average that U.S. users spend on TikTok leaves other companies jealous.

On Amazon, U.S. customers spend an average of about 9.7 minutes a day, according to market-research firm data.ai, which tracks usage on Android devices.

In a bid to keep users engaged for longer and to create shopping experiences that would appeal to younger users, Amazon has been integrating more social features into its app.

One, called Inspire, shows users a TikTok-style feed of photos and videos featuring products customers can purchase through the app.

Amazon recently began to allow shoppers to upload content themselves on the Inspire tab and also added a “share” button that allows users to share the content and products they see.

The company said customers have viewed over one billion Inspire posts since the feature launched last year.

Amazon this week also revealed that it is testing another social-type feature in its app, one that allows users to get feedback on products they’re interested in from people they know.

Getting customers to care about new social features like Inspire, however, is a tough task, said Daniel Buchuk, a researcher with Watchful Technologies, which tracked Amazon’s testing and launch of the Inspire tab.

Most Amazon customers are used to going to the app and website to shop for items they already have in mind, he said—not to browse an endless feed of products.

The company has created a way for social-media influencers to promote Amazon products and earn commissions from sales they generate through personalized “storefronts.”

The challenge for Amazon is that this approach relies heavily on influencers posting on platforms like TikTok and Instagram.

Influencers say Amazon’s efforts like the Inspire function haven’t grown attractive enough to focus on.

Delivery Logistics — Advantage: Amazon By Miles

TikTok has a long way to go to build a logistics apparatus that can rival Amazon.

Krystal Sprouse, a regular Amazon shopper, recently heard about a vinyl edition of Taylor Swift’s album “Reputation” for sale on TikTok’s new shopping platform for $26, a bargain for a record that can be hard to find and sometimes sells for double the price.

Her shopping experience wasn’t nearly as seamless as on Amazon. The package from TikTok took a week to deliver and was damaged when it arrived.

She’ll probably try TikTok Shop again, she said, but she’s not in a hurry.

“I’m impatient, so I prefer to have the option to have Amazon deliver the next day,” said Sprouse, who is 31 years old and lives in Richmond, Va.

Amazon has spent years building infrastructure that can ferry packages almost anywhere in the country in two days or less.

Last year, it delivered more than 13 million packages on an average day in the U.S., according to data the company provided.

Sellers say TikTok is telling them they must ship products to customers within three days of receiving an order or face delays in receiving payment.

The company is also putting all new sellers on a probationary period and requiring them to maintain low rates of refunds and negative reviews.

Furthermore, TikTok is building its own distribution networks to be able to ship items itself, something no other social-media platform has done.

TikTok’s U.S. e-commerce operations have recruited workers with experience in supply chains and logistics, including executives from Amazon and eBay. Its U.S. team has grown to more than 300 people.

When TikTok started rolling out the program, it prioritized recruiting sellers from Amazon; as of last month the app had 200,000 sellers.

Amazon’s U.S. marketplace has an estimated one million active sellers.

Influencer Army — Advantage: TikTok, But Amazon Is Slowly Gaining

The two companies are also fighting over influencers.

Amazon has made strides since 2017 when it launched an influencer program, luring creators with financial incentives.

For some, the payouts have become enough to replace a normal full-time job, as it did for Michelle Lei, who quit her role as a software engineer last year to become a full-time Amazon influencer.

She said she can earn thousands of dollars a month, including one-off commissions from brands.

She promotes home-decor products on sale at Amazon through her TikTok and Instagram channels.

The number of views of TikTok videos promoting Amazon Prime Day sales has doubled every year since 2019, to over 400 million for this year’s event in July, according to research firm Marketplace Pulse.

Amazon recently started offering influencers more analytics and tools to make it easier for them to track online traffic and sales, and now hosts retreats for influencers.

But influencers are TikTok’s bread and butter.

Kayla Ruliffson, 20, promotes makeup and skin-care products to her 100,000 TikTok followers. She first came across TikTok Shop while she was making a video about a skin-care product in July.

The app prompted her to tag the product, then linked to a place to buy it in the app.

Ruliffson said she made $3,000 within a few days.

A month later, she uploaded a video promoting a teeth-whitening tool on TikTok Shop.

With that video, she said she earned more than $20,000. Her payouts from Amazon had never totaled more than $1,000 a month before.

Updated: 10-13-2023

Amazon Prime Day Flashes Warning For Retailers

Lower sales for rivals suggest consumers are skittish heading into the holiday season.

Amazon.com Inc. crowed over this week’s Prime Day sales, boasting that the two-day discount promotion “outpaced” last year’s event.

Such a flashy description suggests the unofficial kickoff to the holiday season has set up the broader retail industry for a bright few months.

But independent data from credit card transaction data provider Facteus paint a much more muted sales picture, with Amazon making slight gains and the broader retail industry falling behind.

The lackluster spending is a troubling signal for the sector, which was hoping for a rebound after a year of sluggish consumer spending.

Instead, retailers are facing a disappointing end to the year with few choices other than to take on risky promotions to keep their heads above water — a strategy that will widen the gap between the haves and have-nots of the sector.

The Prime Day event that concluded Wednesday, a sequel to Amazon’s big sales promotion in July, is being closely scrutinized for signs of how the retail industry will fare during the holidays.

Prime Day has morphed into a sector-wide bonanza, with retailers from Walmart Inc. to Macy’s Inc. running competing events in both summer and fall.

While not as big as the post-Thanksgiving Black Friday weekend, it does give retailers clues about consumers’ mood. When sales in October are humdrum, it isn’t a good sign.

Amazon brought in an estimated $144.53 in average spending per customer for the retailer, amounting to a 2% increase from last year’s tally, according to Facteus.

But for other retailers running competing discounts this week, sales fell by an estimated 1% compared with last year, according to Salesforce.

Those are sales losses Amazon competitors can’t afford. Retailers entered the fourth quarter under a lot of pressure. A slowdown in consumer spending on nice-to-have goods has dealt a blow to top-line growth.

Best Buy Co. Inc., Dollar Tree Inc. and Target Corp. all have narrowed their guidance for the rest of the year, saying inflation has put a crimp in consumers’ shopping habits.

Gap Inc.’s Old Navy brand said demand over the summer was noticeably weaker among its lower-income customers. Home-improvement rivals Lowe’s Cos. Inc. and Home Depot Inc. both saw sales declines and shoppers foregoing large DIY projects for smaller ones.

Macy’s said its shoppers have become more intentional about how they use their disposable income, leading to slower sales growth.

Retail rivals Amazon and Walmart are entering the season on stronger footing. A behemoth like Amazon can better afford to offer discounts.

It has an estimated 167 million Prime customers in the US alone, people who typically pay $139 a year to join the company’s leading subscription program and can be counted on to shop with Amazon year after year.

Walmart has the advantage of being a renowned discounter and the country’s largest grocer by sales volume.

The company has seen solid sales growth even as its brick-and-mortar peers struggle under weakened consumer spending. It also has invested in its e-commerce business, with the rollout of a competing subscription program called Walmart+, and leads in online grocery sales.

Smaller retailers have no choice but to continue offering deals to vie for shoppers who increasingly put price ahead of brand loyalty.

Three in five consumers who plan to shop this winter say they want to spend the least amount of money possible, according to market research firm Mintel. This type of environment sets up retailers for risky discount wars as they fight for customers.

For some companies, price wars come at a high cost. Discount retail chain Big Lots Inc. reported a slight dip in its gross margin rate last quarter due to increased discounts.

Dollar General Corp. expects a $170 million hit to operating profit in the back half of the year due to increased markdown activity.

Foot Locker Inc. told investors in August it expects gross margins for the year to decline in part due to steeper discounts. A discount war could be what drives a bigger wedge between smaller retailers betting on promotions and retail heavyweights.

At Amazon, Chief Executive Officer Andy Jassy has been relentless in cutting costs across the business. In the last year, the company, which accounts for 40% of US e-commerce sales, has streamlined its distribution business around eight regional centers.

That helped reverse its US e-commerce operating income swing to a gain in its most recent quarter and should allow the company to withstand bumps in the holiday period.

There is one bright spot for the rest of the industry: Retailers are entering the holiday season with more balanced inventories, which means they likely won’t be scrambling to offload surplus goods.

That should help boost margins for retailers, who bring in about a third of their annual revenue during the holiday season.

While a steady job market certainly soothes consumers’ nerves, it might not be enough to offset the queasiness they feel about inflation. In all likelihood, retailers are facing a less-than-sparkling holiday season.

Updated: 4-29-2025

Amazon Should List The Cost Of Tariffs As Part Of The Price

The retailer should have stuck with a proposal to display how import taxes affect the prices of its products.

President Donald Trump’s tariff policy triggered a brief, dramatic and instructive retail scandal on Tuesday.

Quite aside from the economic case against imposing a tax on imports, which is as strong as it is universal, the incident shows the practical difficulties of tariffs.

After a report that Amazon would display the cost of tariffs on their products, White House Press Secretary Karoline Leavitt said doing so would be a “hostile and political action.”

Less than an hour later, Amazon issued a statement that though one of its teams discussed “the idea of listing import charges on certain products,” it was “never a consideration for the main Amazon site.”

A company spokesman later clarified that the idea “was never approved and is not going to happen.”

That’s too bad. The idea is a good one that is catching on with other retailers. And Amazon itself already lists state sales taxes separately at checkout. So why not include a tariff, which is just another form of taxation?

It’s hardly surprising that the Trump administration would prefer that consumers not know how much tariffs are costing them; the president has long insisted that the cost will be borne by foreign countries. But historically tariffs are at least partially paid by consumers.

And taxes have long been listed separately in America (unlike in Europe, where the VAT is automatically added to the sticker price).

Listing a tariff tax alongside a sales tax would be more consistent with how pricing usually works and is better for consumers.

I am a fan of pricing transparency, even though most people hate it. Europeans who shop in the US often complain that the price they end up paying at the register is higher, due to taxes, than the one they see on the tag.

Americans don’t like seeing extra charges, either, which is one reason former President Joe Biden tried to end the practice by eliminating so-called junk fees for things like concert tickets and hotel rooms.

One of the main arguments against this practice is that it makes customers feel like they are being cheated. No one likes having to pay a baggage fee to an airline, for example.

But the deeper argument is that these “fees” are an illusion: Without them, people would still pay the extra $30 or $50, it would just be in the cost of the ticket. Airline customers would still be annoyed at the higher price, but they would be less informed.

The problem is not the fees — it’s that, too often, they are a surprise. Ideally all fees and taxes would be listed upfront, before a customer agrees to a purchase.

This is exactly what Amazon would have done. Listing a separate tariff fee would not only be more fair, but also more transparent.

As an economist, I also cheer another benefit: A separate line item may help people become more aware of tax incidence — that is, who ends up paying a tax.

Too many people assume someone else will pay any proposed taxes, and politicians love to indulge this fantasy to escape accountability. While they’re at it, maybe retailers can include the cost of corporate taxes, too.

If anything, the Trump administration should encourage a tariff fee — because it may drive consumers to buy goods made entirely in America, which are not subject to the tax.

And isn’t that one of the stated goals of the president’s tariff policy?

Updated: 6-13-2025

Amazon And Walmart Weigh Issuing Own Stablecoins, WSJ Says

Takeaways:

* Amazon.com Inc. And Walmart Inc. Are Among Large Multinational Companies That Have Recently Discussed Issuing Their Own Stablecoins In The US.

* Expedia Group Inc. And Airlines Have Held Similar Deliberations, With Stablecoins Being Crypto Tokens Typically Pegged To A Currency Like The Dollar, Making Them Better Suited For Payments.

* Any Moves By Amazon, Walmart, And Other Global Retailers To Set Up Their Own Blockchain-Based Payment Rails Could Hit Credit Card Issuers’ Revenues, With Banks Around The World Also Moving To Issue Stablecoins.

Amazon.com Inc. and Walmart Inc. are among large multinational companies which have recently discussed issuing their own stablecoins in the US, the Wall Street Journal reported, citing unidentified people.

A Walmart spokesperson declined to comment. Amazon representatives didn’t immediately respond to requests for comment.

Expedia Group Inc. and airlines have held similar deliberations, the WSJ said. Stablecoins are crypto tokens typically pegged to a currency like the dollar, making them better suited to using for payments than more volatile coins.

Donald Trump’s return to power in the US and legislation making its way through Congress have sparked renewed enthusiasm for stablecoins, which advocates say could dramatically cut the cost of payment and speed up transfers.

Tether Holdings SA’s USDT, by far the biggest stablecoin, has seen its circulation swell to $155 billion.

Visa Inc. and Mastercard Inc. fell, with Visa slipping as much as 7.1% and Mastercard dropping as much as 6.2%. Both declines were the biggest for the shares of companies since April.

Any moves by Amazon, Walmart and other global retailers to set up their own blockchain-based payment rails could hit credit card issuers’ revenues.

Banks around the world, concerned that the lucrative business of handling payments and transfers could be at risk, are also moving to issue stablecoins.

Deutsche Bank AG and Banco Santander SA are among lenders considering such tokens, Bloomberg News has reported.

Updated: 7-20-2025

After Pledging To Keep Prices Low, Amazon Hiked Them On Hundreds Of Essentials

While Walmart cut prices on low-cost goods, Amazon raised them.

In January, a can of Campbell’s New England Clam Chowder cost less than $2 on Amazon. This month, that same soup cost $2.58 on Amazon—a 30% increase.

In the five months since President Trump first announced sweeping tariffs, Amazon quietly raised prices on low-cost products such as deodorant, protein shakes and pet care items, a Wall Street Journal analysis of nearly 2,500 items found.

In April, Amazon said it would hold the line on prices. The Journal’s analysis of prices from e-commerce data firm Traject Data found that while Amazon’s price rose on 1,200 of its cheapest household goods, competitor Walmart lowered prices on the same items by nearly 2%.

The divergent strategies show how major retailers are reshaping prices on popular products as uncertainty about tariffs drags on.

Amazon said the products tracked by the Journal weren’t representative of the company’s prices overall. “We have not seen the average prices of products offered in our store change up or down appreciably,” the company said in a statement. “Our commitment to offering low prices—not relative percentage changes—is what delivers the most value to our customers.”

Manufacturers of several of the products that became more expensive on Amazon say they haven’t raised the prices they charge retailers. Even domestically made goods, such as the “Made in U.S.A” Campbell’s soup, saw increases.

Imported goods and products with mixed origins—domestically assembled with imported components—faced even steeper hikes.

Take the stackable metal basket from Ohio-based Dayglow LLC, which imports from China and other countries. Before mid-February, Amazon sold it for $9.31. By late April, Amazon had lifted the price to $19.99.

Dayglow hasn’t changed the prices it charges Amazon despite paying more on its imported goods, according to Nick Morrisroe, the company’s CEO. “Any container I had that was coming took a cost increase basically overnight,” he said of steel tariffs that came into effect last month.

The lowest-cost goods on Amazon saw one of their largest single-day increases on Feb. 15, two days after Trump signed an order suggesting tariffs would apply to most U.S. trading partners.

Many of the products tracked by the Journal are “everyday essentials” on Amazon—a category that represents one of every three units sold on Amazon in the U.S. during the first quarter of 2025, the company said.

Amazon struggles to turn a profit on these products because shipping costs erase the already-thin margins, said Corey Thomas, an Amazon vendor consultant. Walmart can afford to lose money on similar online sales because customers often buy more profitable items in stores, he added.

Prices fluctuate for various reasons, including seasonal discounts, competition and inflation, which accelerated last month. Amazon said the products analyzed by the Journal were out of stock more frequently on competitors’ websites.

Some more-expensive items in the Journal’s analysis decreased in price as new versions were introduced. Prices fell during Amazon’s Prime Day sales event that ran between July 8 and July 11 and have since rebounded, though they remain below their July 1 levels.

Trump’s recent delay of the tariff deadline to Aug. 1 also gives retailers time to stockpile products before higher rates go into effect.

Retailers say they have tried everything to keep a lid on price increases, including pressuring suppliers and dropping free perks at offices. Target said it gives priority to other cost-control measures before raising prices, while Walmart said the data reflects its reputation for affordable pricing.

The broader retail response to tariffs has been relatively muted. Prices for imported goods are up about 2% since March, according to research from Harvard economist Alberto Cavallo and members of the Harvard Business School’s Pricing Lab.

“The lack of clarity may be causing retailers to implement price changes more cautiously and incrementally,” Cavallo said.

Many brands and retailers have used coded language when discussing pricing strategies with investors, fearing political backlash.

Earlier this year, Amazon backed away from a plan to display tariff impacts on its bargain website Haul after the White House called the plan a “hostile and political act.”

Trump warned businesses in May to “EAT THE TARIFFS” after Walmart said higher tariffs would result in higher prices.

For Morrisroe, whose company faced potential 145% tariffs on Chinese goods already in transit when the plan was announced, that directive carried real weight. “Had they stayed at 145%, we would have been shutting down here,” he said.

Instead, his company paid the 30% tariff after Trump reduced the rate. Dayglow is now negotiating with manufacturers, searching for suppliers outside China and considering raising prices.

For now, Morrisroe said he’s doing exactly what Trump asked—eating the tariffs.

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