Zach Schock

My community has $15b of yearly sales on Amazon with 800+ members. These are small businesses. They employ real Americans and support local communities. They do not have large margins to absorb shocks. Every year Amazon squeezes them more and supports overseas Chinese sellers instead of local American businesses. Now Amazon is hitting sellers with even more of a squeeze all back to back: 1.Amazon has moved many sellers to DD+7 Meaning funds are held until 7 days after delivery, not simply paid out on the old cadence. 2.Amazon just added a 3.5% fuel/logistics surcharge on fulfillment fees. 3.To top it off now Amazon Ads charges will be pulled directly from disbursements rather than floating on a credit card. That combination matters. Amazon already forces sellers into an environment where ads dominate visibility. So now the same platform that pressures brands to spend more on ads is also tightening payout timing and pulling more cash out before sellers ever see it. For a very large business, this is just a minor annoyance. But for a small business making payroll just got 50x harder. Less cash on hand means: less inventory more stockouts more debt more strain on small teams and ultimately a worse customer experience This is not “supporting small business.” It is starving the brands that create so much of the value customers come to Amazon for. @WSJ @business @nytimesbusiness @BusinessInsider @ReutersBiz @CNBC @APBusiness If you’re covering Amazon, local communities hit by a hard economy and large companies trying to squeeze hardworking Americans hit me up.

After selling on Amazon for over 10 years, Amazon has suddenly decided they need to hold $56,000 of our money for chargebacks. "Amount held in reserve to ensure that you have enough funds to fulfill any claims or chargebacks." Not to beat a dead horse (and then turn it into tacos which I then eat over and over on social media), but check out how they take 50% of every dollar we sell on the platform. Add advertising into the mix and remember that something like 10-20% of our sales don't use FBA and it's really something to behold. Am I complaining? What's the point. At this point, it's just interesting. How much water can they squeeze out of a stone before the stone breaks and becomes sharp shrapnel in their hand?

@tjernlund Where does the money come from to buy their houses?

Boomers are sitting on roughly $18T to $19T in home equity, about half of all U.S. housing wealth, just parked there. There has to be a way for them to safely tap that value without the baggage of a cash-out refi or predatory products. Smarter equity access is a massive unsolved problem. When they finally sell their houses, so much cash is going to enter the money supply

@BillDA Imagine the corruption for things that don't need to be made public.

How is this not insider trading

@tjernlund What happens if names aren’t released?

Just placed biggest bet of my life

@iansells Ski trip in Japan lol

I just did a bucket list river rafting trip for 6 days through the Grand Canyon. What’s on your bucket list?

@tjernlund Meetings

Did we ever figure out what the 7,500 employees that Elon fired at Twitter were doing all day?

@BillDA @AndyBaldacci Now is the time, or after rates drop?

@AndyBaldacci S&P equities is still a relatively inflation protected asset! Much better than cash or bonds. My thinking here (from the original 2021 tweet) is more about buying real estate (now’s the time to upgrade your home) and operating/cash flowing businesses.

This opportunity may be coming again if Trump gets his rate cuts. The market is starting to figure it out - this chart means the difference in expected 2 year rates and 10 year rates is widening. Get ready to buy (more) inflation protected assets with cheap fixed rate debt.

@Molson_Hart @peterdeptrai Yes, I’ve already done this and will survive and thrive.. but I’m still curious

@peterdeptrai @SchockZach Yes Prediction is the wrong idea The right idea is asking yourself « what do I need to do so that no matter what happens, I will survive and thrive »

5 educational comments about the U.S. product development and wholesale toy industry: 1. Mid-sized toy companies are paradoxically more risk-averse than small toy companies, which explains why they are more likely to cancel their orders. 2. Mid-sized toy companies are more likely to be private equity owned (and thus heavily indebted, which is one reason why they’re canceling their orders) than small toy companies. Those companies which are not private equity owned tend to have fueled their growth through lots of acquisitions. When you go to a hypermarket like Walmart, it may appear that many different companies supply the shelves. In reality, a relatively small number of companies own lots of brands. As an example see the list of Spin Master (a large toy company) acquisitions in the next post. 3. Paradoxically, without change, the tariffs will destroy the U.S. toy industry and in long term lead it to be dominated by foreign companies. U.S. toy companies’ sales are concentrated in the United States, while their suppliers’ sales are diversified across many countries. When the U.S. market for toys undergoes stress, the diversified players thrive because they can maintain their revenues outside the USA. Because of their diversification, Chinese factories have the capacity to scale the value chain and replace their U.S. buyers. 4. U.S. toy companies exist for a reason. They (we) do design, engineering, logistics, and marketing. These are good, sometimes high paying, jobs that the United States should strive to keep. In fact, they are the jobs China wants. These jobs, particularly combined with the ease outsourcing remote work, stand to be permanently lost. 5. My company, which manufactures mainly in Vietnam, Indonesia, and China (with most of our packaging being made in the United States), has not delayed nor cancelled its orders. And we will not go out of business in the coming weeks/months. We will survive by expanding our international business and shifting production out of China.

@peterdeptrai @Molson_Hart I agree, but I would still find Molson’s perspective valuable.

@SchockZach @Molson_Hart Prediction can be a dangerous business. Perhaps planning to survive as long as possible. That's what I'm trying to do for mine.

@Molson_Hart Do you have a prediction for how long this will take to resolve (into at least a reasonable tariff %?)

The White House has put itself and the country in a bad situation but doesn’t realize it yet. Around April 10th China to USA trade shut down. It takes ~30 days for containers to go from China to LA. 45 to Houston by sea, 45 to Chicago by train. 55 to New York by sea. That means that there are no economic effects of what was done on April 10th until about May 10th. Around that time (it’s already started to happen) trucking work is going to dry up. Warehouses will start doing layoffs because no labor is needed to unload containers and some products will be out of stock, reducing the need for shipping labor. All this will start in the Los Angeles area. After about 2 weeks, it’ll start hitting Chicago and Houston. Let’s say the White House, after 3 weeks, changes its mind, on May 31st. “This isn’t working out like we thought it would. Tariffs back to 0.” Let’s say China says “bygones be bygones, we’ll go back to how things were”. Let’s say every factory in China that got screwed by their orders being cancelled says the same thing “no problem, we’ll make and ship”. The problem is, even under the most favorable conditions of China and the factories restarting economic ties as though nothing happened, it will be at least another 30 days before economic activity is revived. And that’s just in LA. In Chicago/Houston, you’ll need to wait another 45 days. New York, at that point, will still be getting containers from before April 10th, they will then have 50 days (May 31 minus April 10) of zero economic activity at the ports, in trucking of Chinese goods, in warehousing. The whole situation is a bit like lockdowns. Once you shut down, it takes a long time to get economic activity back to where it was, if you ever can. And again, this assumes, that China and its factories, which make things you can’t buy elsewhere, will start right back up again as though nothing happened, which is unlikely. It’s almost like we’re speeding towards a brick wall but the driver of the car doesn’t see it yet. By the time he does, it’ll be too late to hit the brakes.

@Molson_Hart Feels like it but most of the time nothing really happens.

Maybe I'm too "online" but this moment is beginning to feel like late January 2020... Buckle up!

@Molson_Hart What if this is just a tactic in a larger plan of negotiations with Mexico and Canada and fentanyl is a convenient excuse to improve the tariffs?

brief thoughts on the tariff situation: 1. businesses need certainty. without certainty they will not make investments. for example, i said that we would buy some machines to do some manufacturing in the usa. after analyzing all the costs, we couldn't make the numbers work so we gave up. however, i said that if we got tariffs i'd look at it again, but currently we have tariffs but there is no clarity on what products there are tariffs (or for how long), so we cannot invest. 2. there needs to be a long-term slow-moving plan for industrial policy. if you say "X% tariffs in 2 days" you will kill a lot of businesses if that X is large. now, you might say "well fuck those businesses they shouldn't be importing from that country anyways". if you have that thought, you probably have no idea what you're talking about, but let's say you're right. regardless of the morality of those businesses being destroyed, you will get a major economic recession which, with contagion, can get really bad. a better way to do tariffs might be "we will have 10% tariffs in 2029, 2.5% in 6 months, 5% in 18 months, 7.5% in 30 months etc." This allows businesses time to adjust 3. what is the goal? we need a goal. is the goal to stop fentanyl? I like it, but...maybe we could, I dunno, just raid the open-air drug markets instead of taxing Canadian lumber? Is the goal to reindustrialize America? Then why these 3 countries alone? I don't get it. Is the goal to negotiate for something? What? Tell us the goal and how it benefits us please. I'm not condemning tariffs. I'm not even complaining. I don't care. My business is set up to adapt to this and we will be fine (others will not). And I'm willing to give any new administration the benefit of the doubt, but, whatever it is trying to do, it'd be great if we got: 1. Certainty 2. Time to react 3. A plan 4. A stated goal Instead of chaotic constant new announcements. I am in this industry and have been for many years and I cannot figure out what is going on and have not been able to figure it out for multiple days now, and that is not a good sign and something that should be corrected immediately. PS for those wishing to follow along what is happening my go to follows have been @typesfast and @aaronrubin

@Molson_Hart This is crazy. Time to buy the testing equipment and hire a lab tech.

I promised to test 5 extra virgin olive oils for seed oils. Here's what happened: 1. I, with the help of my team, bought the below 5. 2. I didn't want to send them to Italy because I didn't trust lab results from Italy, so we sent them to Germany which was $$$$$ 3. The samples went to an accredited famous brand European lab that you would all recognize 4. When we got our test results the lab then said that...they were not tested in an accredited lab 5. Further, they refused to interpret the results as to which olive oil was adulterated with seed oils (after promising to). This was both frustrating because we had paid a lot (like $5k+ all in) and because...it was really shady 6. We did get a bunch of data which, since the lab has refused, I attempted to interpret but all the olive oils are in range, kind of suspiciously so because the ranges are super wide 7. I thought Germany was far enough from Italy to get a good honest result but I seem to have been mistaken. If I were doing it again, I would send the olive oil WITHOUT the packaging so they didn't know where I got it, but I didn't think this weird stuff would happen. 8. This lab owes me some money after promising to do one thing and then not doing it (they also promised to do an ECN24 test, and then said "their machine was broken"). And, again, this is not some random company. This is a big name European lab. Really weird. My final thoughts: - I would be real careful about the olive oil you buy - I don't have a way to figure out what olive oil is real and fake - I've heard that olive oil is having a horrible harvest this year. If prices don't rise and supply doesn't fall, I'd be even more suspicious about what is going on here - I pick A LOT OF BATTLES in my life, and while this one is interesting, it's just not one I want to subject myself to, so I am going to be quiet about which result went to which bottle and which lab it was - I recommend BUTTER! It is harder to fake, cheaper to make, and tastes better than EVOO Sorry guys, I spent a lot of money and time on this, but....yeah...this is some weird shit I don't want to touch as I have bigger fish to fry (in tallow)

@AdamChudy @michaelpatron0 I have never found 2-3 locations cheaper than 5. Is this a central US warehouse thing?

@michaelpatron0 too many people must have been finding 2-3 locations was their cheapest option. Now its 5 or nothing.

This is 100% a new way for Amazon to bend over sellers and just more BS to push us further off the platform. Amazon is not a safe place to run a business in 2025.

@chris_fba4u @jonmidas1 Yet deep down you know what it means.

@jonmidas1 I’ve no idea what this email means, it’s as clear as mud!

Amazon announces they will end partial shipment splits

@ai_for_success Step on it

Scary, isn’t it? This Chinese robotics company has created a robotic dog that can sprint 100 meters in under 10 seconds. Now imagine this thing chasing you, what are you gonna do?