The content is from an Amazon seller in China.
As a small - scale seller on the Amazon US site, I've been overwhelmed by the recent tariff hikes. So, I've put together some analysis to clear my mind and chart a way forward.
Background
Currently, the tariffs on the Amazon US site have surged to 145%. The shipping cost via Matson's sea freight has increased from around $13 - 16 to the current $24 - 27. The air freight cost has gone up from about $50 to $62 - 65 per kilogram, which is an increase of approximately $13 per kilogram (this is an approximate price for shipments over 12 kilograms; larger orders may have different rates).
Moreover, the US policies are highly uncertain. There is a possibility that the situation could further deteriorate, potentially making it impossible to operate on the US site in the future. On top of that, the trade war is bound to cause inflation in the US, reducing consumers' disposable income and dampening their purchasing desire.
Problems
The skyrocketing logistics costs in the US and the uncertain tariff policies have significantly increased the probability of inspections. As a result, delivery times are substantially extended, forcing sellers to lengthen their inventory - preparation cycles. Coupled with tariff fluctuations, the risks have multiplied. If Americans' incomes are affected or inflation worsens, leading to a decline in orders or intense price competition, the situation on the US site will quickly deteriorate.
Benefits
Due to the tightened US T86 policy, the direct - mail small - package route from China has been blocked. This will further reduce the impact of low - price competition from platforms like FBM, TEMU, and SHEIN, potentially enhancing the competitiveness of FBA.
How to Cope with High Tariffs
Product - related Strategies
Product Diversification and Upgrading: Instead of focusing solely on products with thin profit margins, consider diversifying product lines. Look for products with higher value - added features or unique selling points. For example, if you're currently selling basic household items, you could explore smart home products. These often have a higher price point, which means they can better absorb the impact of tariffs. Additionally, invest in product R & D to make your products more differentiated. This can justify a higher selling price and maintain profitability.
Tariff - Free or Low - Tariff Product Selection: Research and identify products that are subject to lower tariffs or are tariff - exempt. Some product categories may be less affected by the current trade war policies. For instance, certain types of medical supplies or educational materials might have more favorable tariff rates. Shifting part of your product portfolio towards these items can help mitigate the tariff burden.
Cost - Saving Strategies
Supply Chain Optimization: Re - evaluate your supply chain to find cost - saving opportunities. This could involve sourcing raw materials from different regions with more favorable trade terms. If possible, look for suppliers within free - trade areas or those who can offer better pricing due to local incentives. Negotiate better deals with your existing suppliers by increasing order volumes or signing long - term contracts.
Logistics Cost Management: Explore alternative logistics options. Instead of relying solely on traditional air or sea freight, consider combining different shipping methods. For example, use sea freight for the majority of your goods and then switch to local express delivery for the final leg. This can sometimes be more cost - effective. Also, look for logistics providers that offer volume - based discounts or special packages for cross - border e - commerce sellers.
Market - and Platform - related Strategies
Explore New Markets: As the US market becomes more challenging, start exploring other international markets. Amazon has platforms in many countries, such as Canada, Australia, and some Southeast Asian countries. These markets may have lower tariffs and less intense competition. Analyze the market demand, consumer preferences, and regulatory environment in these regions to find new growth opportunities.
Leverage Amazon's Tax - related Incentives: Amazon may offer certain tax - related incentives or programs for sellers. Stay informed about these and take advantage of them. For example, some regions may have tax - free thresholds for small - scale sellers or special tax - deduction policies for specific product categories. Make sure you meet the requirements and utilize these benefits to reduce your overall tax liability.
Whether to Stick with the Cross - border E - commerce Industry
In recent years, it's a fact that the domestic economic environment has been sluggish, as evidenced by large - scale government subsidies. There is already insufficient domestic demand and overcapacity. The US occupies a large market share. If the US market becomes inaccessible following the current trend, it will further exacerbate overcapacity, leading to layoffs and closures in many cross - border e - commerce companies and factories. Although cross - border e - commerce doesn't account for a large proportion of China's GDP, it's an industry close to ordinary people. Price hikes in raw materials or chips seem distant to the general public, but if numerous supply chains in coastal areas face layoffs and closures, a large number of employees will be affected.
Overall, not only is the cross - border e - commerce industry facing a tough time, but many domestic industries are already in a more severe slump. The domestic e - commerce market is also highly competitive. If one can earn over 10,000 yuan in the cross - border e - commerce industry, it's unlikely to get such a high salary by changing careers. Therefore, currently, cross - border e - commerce still seems to be the best option. Although it's getting tougher, finding a breakthrough to earn US dollars is still more profitable than earning yuan.
Whether to Stick with the Amazon Platform
Currently, the mainstream cross - border e - commerce platforms include Amazon, as well as TEMU, eBay, AliExpress, etc. The operation logic of Amazon's US and European sites often follows the single - link small - 爆款 (small - scale hit product) model. That is, by focusing on one product link, it's possible to achieve high sales volume, with a high upper limit on sales, thus ensuring profits. Other platforms, such as TEMU, adopt a multi - link, small - profit - but - high - volume model. For those accustomed to the boutique operation model on Amazon, switching to a multi - link, low - profit - per - package model doesn't seem appealing. (I'm not very familiar with other platforms.) Given the habits of operating on Amazon, switching to other platforms may not solve fundamental problems. The US policies don't specifically target any one platform, but the blocked small - package direct - mail model is more detrimental to the development of other small platforms.
Temu is essentially a new platform. When there are not many product links on it, a new product can generate certain orders and profits. However, in the long run, as the platform fills up with links, profits will be extremely compressed by the platform until there is no profit left, or advertising costs will be required. This is an inevitable stage in the platform's development. So, it seems that the platform's golden age has passed. Therefore, currently, the Amazon platform still appears to be the best choice.
Whether to Stick with the Amazon US Site
The current US tariff policies are extremely unfriendly. In my opinion, we should focus on products that are currently profitable and can cover the increased logistics costs due to tariffs. We can continue to operate these products and keep an eye on future policies. For products that require mold - opening, R & D, are heavy - weight, or rely on small - profit - but - high - volume sales, it's advisable to put them on hold for now. Otherwise, any tariff changes may lead to a loss of profits. With the increase in logistics costs and inspection rates, the risks of the US site are rising rapidly, and there's a possibility of losing all the earnings.
At the same time, we should also explore other Amazon sites to see if there are suitable products and profit opportunities. The European site is likely to see an influx of US site sellers in the future. With various certifications and tax laws, the profits on the European site are likely to be significantly affected, and advertising costs will also increase. The same goes for the Japanese site.
In conclusion, for products that can still make a profit on the US site, we should hold on. For those with a poor return on investment or a long inventory - preparation cycle, we should suspend them and wait for policy changes. Meanwhile, we should explore other sites to diversify risks. Although other sites are not affected by tariffs, competition will intensify, and profits will be further compressed. Essentially, profit is determined by the supply - demand relationship. If the US site becomes unavailable, it will have a knock - on effect on the entire business.
Full - text Summary
Currently, it seems that tough times are ahead. However, many domestic industries and platforms are already in a slump. In an economic downturn, the situation is inevitably deteriorating. But overall, Amazon still seems to be the optimal choice, and changing careers may not lead to a better situation.
The Amazon platform remains a relatively good option. However, for the US site, we need to choose products with lower risks based on the actual situation, and put other products on hold. We should also explore other sites to diversify risks and wait for policy changes to make strategic moves.
Outlook
If Trump were to introduce the following policies, it might be necessary to completely abandon the Amazon US site. Given Trump's personality, it's not entirely impossible. (This is purely a personal speculation, without in - depth consideration of feasibility.)
Strictly investigate low - tax declarations.
Require sales platforms to verify the tax information on customs declarations before allowing sales or withdrawals.
Impose VAT on the Amazon US site, similar to the European model.
If other countries want to enter the US market with reduced tariffs, they must impose taxes on Chinese products. For example, if a country wants a 10% tax reduction in the US, it needs to increase the tax on Chinese products by 20%.
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