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Amazon to display tariff costs for consumers

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Re: Amazon to display tariff costs for consumers

#231

Post by ceejayoz »

Aurornis wrote: post #181
iterance wrote: post #135

Earlier quoted context omitted.

Supply and demand is one driver of economic pricing, but not the only driver. Efficient pricing is a complex topic and not as black-and-white as it seems. As demand falls, the price may be expected to fall, but there is an inelastic limit set by material, labor, transport, and taxation cost. A company may elect to decrease their profit margin per sale to offset increased costs, but there is only so much margin to eat…

This is just semantics. If it becomes untenable to supply a good at a given price, the supply for that good decreases. Then supply and demand reach equilibrium. Supply and demand doesn’t mean that either or both supply and demand remain constant. Both supply and demand change depending on the price.

> Both supply and demand change depending on the price.

But that's a massive oversimplification. It's like saying programming is "just typing". Technically, sure; accurate, no. There's latency in the real world. Bad actors. Information asymmetries. Regulations. Monopolies. Stuff you can't do without and can't even always decline (ambulance ride for an unconscious person). Fake news about a supply crunch changes demand without changing supply for a while.

Re: Amazon to display tariff costs for consumers

#232

Post by lordloki »

Workaccount2 wrote: post #201

Electronics components vendors have recently implemented this. There is a notice next to some parts that they will be subject to tariff charges. When you go to checkout there is an additional cost line with those charges. I recently had to buy some transformers, and had no other choice but to get bent over. The price more than doubled at checkout.

Sounds like they're using the excuse of the tariffs to overcharge. They would pay the tariffs on their wholesale costs when they import. If they're then passing the same tariff % to the customer at their retail price then they're ripping you off.

Re: Amazon to display tariff costs for consumers

#233

Post by ceejayoz »

xienze wrote: post #227
pentamassiv wrote: post #207

Earlier quoted context omitted.

Sure it can. It works perfectly fine in many other countries.

There's a slight difference between having one tax rate at the country level and having numerous differing state and local sales tax rates. You don't even know what to charge the customer until you know their exact location.

Other countries have states and cities, too.

(And in the fast food example, the customer's home location doesn't matter. The store's does.)

Re: Amazon to display tariff costs for consumers

#234

Post by xienze »

niam wrote: post #45

I wonder if they keep this after Trump's gone, especially for countries whose tariffs were high before Trump. I as a customer would prefer they did. My uninformed guess is that this hurts the bottom line in at least the short term if customers are less likely to purchase an item which sports high tariffs (even if they might otherwise buy the item if the precise tariff were hidden). And the long term benefit to global…

> I wonder if they keep this after Trump's gone, especially for countries whose tariffs were high before Trump. I as a customer would prefer they did.

They won't. It's clearly meant to target Trump specifically. It's not as though there were absolutely no tariffs of any kind on various products before this year, so ask yourself why they're so concerned about showing tariffs NOW and not say, any time in the past.

Re: Amazon to display tariff costs for consumers

#235

Post by ethbr1 »

ceejayoz wrote: post #231
Aurornis wrote: post #181

Earlier quoted context omitted.

This is just semantics. If it becomes untenable to supply a good at a given price, the supply for that good decreases. Then supply and demand reach equilibrium. Supply and demand doesn’t mean that either or both supply and demand remain constant. Both supply and demand change depending on the price.

> Both supply and demand change depending on the price. But that's a massive oversimplification. It's like saying programming is "just typing". Technically, sure; accurate, no. There's latency in the real world. Bad actors. Information asymmetries. Regulations. Monopolies. Stuff you can't do without and can't even always decline (ambulance ride for an unconscious person). Fake news about a supply crunch changes deman…

Most relevant in modern global economies: lack of available alternatives.

One of the primary reasons for combination in low-margin markets is to gain pricing power. And even if there are 2-5 entities in a given market, informal price collusion is far from unheard of.

If OP wants an intro to the determinants of price elasticity, starting here would be a good idea: https://en.m.wikipedia.org/wiki/Price_elasticity_of_demand

Re: Amazon to display tariff costs for consumers

#236

Post by CobaltFire »

fallinghawks wrote: post #123
gherkinnn wrote: post #109

Earlier quoted context omitted.

I expect businesses to bump prices. Bump em because of tariffs, bump em some more to pad the margins because what is an extra 5%, bump em even when they're not affected by tariffs because everyone else is doing so, and delay un-bumping them once tariffs fall again.

Back when the price of crude oil was in the news a lot, if a rise was announced, gas stations would immediately hike prices, even though it takes like a month for the oil to be refined into gas and delivered to the station.

Interestingly I’ve seen the exact opposite happen and cause major problems.

In Japan the US Military buys fuel and sets the price at its on base stations according to what they purchase it for. On several occasions when I lived there this resulted in the Base CO having to address everyone and tell them if they don’t buy the fuel (that is now significantly cheaper outside the gate) then the Exchange cannot buy new fuel, and they may have to shut the station down permanently.

It never came to that; everyone just went and paid the higher price for a tank and the issue was resolved.

My point is that trying to price a commodity that moves prices like that by a lagging indicator is a great way to capture business on one side and a great way to go bankrupt on the other.

Re: Amazon to display tariff costs for consumers

#237

Post by xienze »

ceejayoz wrote: post #233
xienze wrote: post #227

Earlier quoted context omitted.

There's a slight difference between having one tax rate at the country level and having numerous differing state and local sales tax rates. You don't even know what to charge the customer until you know their exact location.

Other countries have states and cities, too. (And in the fast food example, the customer's home location doesn't matter. The store's does.)

But do they have the same kind of state and local sales tax rules that we do? Again, _you can't know the price to display if you don't know where exactly in the country the package is going_. It is not possible to display the "final price" in US online stores ahead of checkout unless the user is already logged in AND the shipping address is the same as where the user lives.

The juice is not worth the squeeze for online retailers. Users are used to seeing the final amount at checkout and you know, it's really not that hard to mentally estimate (which is actually usually an overestimate).

Re: Amazon to display tariff costs for consumers

#238

Post by flutas »

Eextra953 wrote: post #188

I'm not sure why so many comments think this is a bad idea. I think it's a great idea and should be adopted by all retailers. We already do the same thing with sales tax. Tarriffs are close to sales tax in there effect to consumers so it makes sense to show it up front. It lets customers see just how much more they have to pay due to the, ever changing, tariffs. Good for Amazon.

In a roundabout way it also lets you know what products are manufactured in countries other than China, allowing you to choose them over the Chinese equivalent.

Re: Amazon to display tariff costs for consumers

#239

Post by seanmcdirmid »

ceejayoz wrote: post #117
gherkinnn wrote: post #109

Earlier quoted context omitted.

I expect businesses to bump prices. Bump em because of tariffs, bump em some more to pad the margins because what is an extra 5%, bump em even when they're not affected by tariffs because everyone else is doing so, and delay un-bumping them once tariffs fall again.

Yup. My grocery store raised bananas from 49¢/pound to 55¢/pound this week, with a sign about 10% tariffs… but the tariff would be on their wholesale costs, not the shelf costs. They're probably paying 1-2¢/pound extra. People have a hard enough time understanding who pays tariffs. Stores'll be able to muddy the waters this way pretty much at will.

We haven't had 49 cent bananas in my market for a longtime, so I'm wondering if they were adjusting for tariffs as well as just general inflation at the same time (but the sign wouldn't be honest in that case).

Re: Amazon to display tariff costs for consumers

#240

Post by Eisenstein »

Aurornis wrote: post #136
ceejayoz wrote: post #117

Earlier quoted context omitted.

Yup. My grocery store raised bananas from 49¢/pound to 55¢/pound this week, with a sign about 10% tariffs… but the tariff would be on their wholesale costs, not the shelf costs. They're probably paying 1-2¢/pound extra. People have a hard enough time understanding who pays tariffs. Stores'll be able to muddy the waters this way pretty much at will.

Grocery stores have famously low margins. Everyone thinks they’re cash cows, but they have some of the thinnest profit margins of common consumer businesses. Stores often sell common staples like bananas, generic milk, and other basics at close to cost. They’re the things that get people in the door. They make their profit on things like cereal, deli meats, packaged goods, and other non-staple items that people also…

I thought they made a lot of their money selling the desirable shelf space.

"Many grocers earn more profit from agreeing to carry a manufacturer's product than they do from actually selling the product to retail consumers."

* https://en.wikipedia.org/wiki/Slotting_fee

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