👉 Background: Amazon, the e-commerce behemoth that started in 1994, has grown from books to pretty much selling everything. We're talking cloud infrastructure (AWS), streaming services (Amazon Prime Video) to book readers (Kindle) as well as its trusty AI sidekick (Alexa).

‍👉 What happened: Late last week, investors were waiting with baited breath to hear about how the tariffs had impacted Amazon’s last quarter. The good news was that it didn't hurt its earnings at all. In fact, Amazon’s ad business grew 19% this quarter, making it one of the fastest-growing arms of the company.

‍👉 What else: Amazon reported quarterly revenue of more than $155 billion USD which beat investor expectations. However, its share price dropped because of the concern around the tariffs and taxes. Amazon provided some comfort to investors - it claimed it's trying to keep its prices stable for as long as possible by forward-buying.

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‍What's the key learning?

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‍💡Forward buying is when companies purchase large volumes of stock in advance - a bit like panic buying for companies. They do it to lock in current prices and ensure there’s enough supply at that price.

💡Right now there is a genuine risk of 145% cost increases for Amazon thanks to the tariffs. Typically, forward-buying is a tactic used by inventory managers to reduce volatility such as currency changes or concerns around supply of goods. But in 2025, it’s also a trade war survival strategy.

💡Get this: approximately 50% of Amazon’s products are likely to be affected by these whopper tariffs. So, Amazon is forward-buying to hedge its bets so that they can sell goods at pre-tariff prices for a little longer.