Economic News

eMarketer Explores Effect of Tariffs on Ecommerce Companies

Of all the recent economic stories that have developed in recent months, perhaps the most notable has been the on-going controversies around trade policy and tariffs. Aside from the typical political debates that tend to erupt whenever either party makes a move, the tariffs have been especially divisive as they’ve managed to restore jobs in some sectors at the sacrifice of other sectors. Along those lines, one vertical that seems especially susceptible to recent changes in trade policy has been ecommerce. This led eMarketer to take a look at the tariffs are impacting or are likely to impact the top 10 ecommerce retailers.

First, when we talk about the top 10 ecommerce sites, who are we referring to? As you might expect, Amazon is #1 by a large margin. Not only will the site sell $258 billion in 2018 but will sell 7.5 times more than the second place Ebay. The rest of the top 10 is populated mostly by brick and mortar retailers with online presences, save Wayfair in tenth place and QVC in seventh. These includes Apple, Walmart, Home Depot, Best Buy, Macy’s, and Costco.

Something interesting about both Amazon and Ebay is that a great amount of their sales come via third-party sellers, with 68% of Amazon’s total sales coming from marketplace sellers and Ebay being all but dependent on these types of transactions. The recent tariffs — especially those placed on imports from China — are beginning to hit these small retailers who might utilize Chinese goods to create their products and may need to raise prices as their margins shrink.  Meanwhile a report from Teikametrics found that the number of Amazon sellers based in China who are selling directly to U.S. consumers has doubled in the past six months.

When most people think about tariffs, they might only envision taxes placed on finished products they buy at the stores. However, many of the increased costs that come with tariffs are the result of raw materials suddenly becoming more expensive. For example, eMarketer notes that parts used to build televisions and computers are among those on the list for import tariffs, meaning that such electronics could soon cost more to produce. In turn, the Best Buys, Apples, and Walmarts of the world face rising prices that could turn some buyers away. Similarly tariffs on other materials like fabrics and leathers could spell higher prices on clothing, furniture, and more, impacting a number of those top ecommerce sites.

At this point, despite some companies already experiencing direct effects from tariffs, it seems many of these ecommerce retailers are dealing with more uncertainty than anything. That said a couple of the top 10 companies have addressed tariffs in recent earnings calls, with QVC President and CEO Mike George saying they had a “fairly modest impact.” Of course it’s still early and updates on the trade front seem to be arriving with each passing day. Because of this it may be a while before we truly have a full picture of how these retailers and others are being affected by the ups and downs of this administration’s trade policies.

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