#235 Higher Prices Hit 2026 | Here’s What You Need to Know

All right, folks. Walmart just reported that inflation on general merchandise jumped from 1.7% to 3% in one quarter. That's just one quarter. And their CFO said directly, tariff-related costs lifted prices across many categories. Amazon CEO Andy Jassy told CNBC that tariffs are creeping into prices and sellers are passing costs to consumers. Adobe tracked online prices across the entire internet. They jumped 4% in January. That's the largest one-month increase in the 12 years they've been tracking e-commerce prices. So tariffs Tariffs aren't theoretical anymore. They're showing up in earnings calls and actual numbers. And here's what's happening. Most sellers are doing one of two things: panicking and raising prices, all right, retroactively or actively, or ignoring completely and hoping costs don't hit them. Operators are doing something different. They're testing prices and elasticity. They're tracking contribution margin. They're modeling scenarios. They're watching consumer behavior right there in the system. And they're building businesses that can survive no matter what Washington does next. Welcome back to the High Voltage Business Builders Podcast. I'm Neil Twa. This is the Friday Welcome to the TWA Weekly Review. In this episode, we're gonna cover the headlines from this week that actually matter for e-commerce, what most sellers do when they see tariff news and why it doesn't work, and the 3 frameworks you need to build a business that holds up under pressure. All right, so last week we talked about Trump's 108-minute State of the Union address. We broke down the tariff headlines, the Supreme Court ruling, and what actually matters for operators. We covered how to interpret policy headlines through an operational lens instead of just reading by noise. If you missed that episode, go back, listen to the previous one. It's the context for this week's episode. What we will be covering today, because last week was an understanding of the headlines and this week is about what do you actually do. So let's start with what actually happened last week. These headlines dominated the e-commerce news and you should know about them. The first one, tariff impacts are hitting real numbers. First, they're no longer theoretical. They're showing up in earnings calls with actual numbers. As I mentioned, Walmart reported their Q4 earnings last week that merchandise inflation had jumped up 3% from 1.7% the quarter before. As mentioned, CEO— no, CFO John David Rainey had said the tariff-related costs are going up on many categories. And Jassy went on to CNBC and said tariffs are creeping into prices. Here's the kicker. Adobe tracked online prices across the entire channel and across the entire internet, and they jumped 4% in January, the largest one-month increase in the 12 years we've been tracking e-commerce prices. DataWeave analyzed pricing at Amazon, Walmart, and Target. Amazon prices are up an average 13% year to date. Target's are up 6%. Walmart's up 5%. Columbia Sportswear, Levi's, and others announced high single-digit percentage price increases for spring and fall merchandise. And according to the Federal Reserve Bank of New York, US businesses and consumers bore 90% of the tariff costs in 2025. Second headline, consumer behavior has been shifting. They're responding to higher prices by changing how they buy. Amazon reports customers are trading down to lower-priced items and bargain hunting. They're hesitating on higher-priced discretionary purchases. And Bank of America surveyed customers saying 62% are stressed and spending Due to tariffs and inflation, Walmart's CFO noted some pressure on the lowest income cohort. Translation: the people who can least afford price increases are feeling it first. The third one was platform policy updates that came on. The Supreme Court, as you know, struck down 75% of Trump's tariffs on February 20th. The shocks went up. Amazon went up. Stocks were doing up 2%. Etsy went up 8%. Then Trump reinstated a 15% baseline tariff under a different authority that expires in July. And de minimis is still dead. So no dropshipping for y'all. And despite the Supreme Court ruling, packages under $800 still faced tariffs. All right. So those headlines, tariffs hitting retailers and consumers changing behavior, is a policy creating a bit of uncertainty. Now here's the question. What do most sellers do when they see this? And here's what most sellers do. They panic about tariffs and raise prices retroactively. Now I talked to a seller last week who saw the Walmart earnings news and immediately raised all his prices 10%. No testing, no analysis, just panic. His conversions dropped 30% overnight. Now he's trying to figure out what the problem was with the price increase or something else. Well, clearly we know what happened. They ignore consumer behavior until sales drop. Another seller told me, my customers aren't price sensitive. They buy quality. Then his sales fell 20% month over month. Turns out his customers are price sensitive when they are stressed out about money. They assume policy changes don't apply to them. De minimis doesn't affect me. I don't import low value items, but their supplier does. So their COGS went up anyways, and they didn't see it coming. The pattern is always the same. React to headlines, hope for the best, ignore the downstream effects. Operators do something a little bit differently. So let's translate these headlines into operational decisions. Headline, right? Prices are up 4 to 13% across platforms. Competitors are raising prices. The question is, should you? Here's what an operator does. Don't react to the headlines. Look at your specific situation. Are you— what are you importing? Where are you importing it from? What's your actual landed cost increase? Are your competitors raising prices? Check their listings. Are conversions holding? Can you absorb a temporary gain with market share? And what is your cash, you know, cash position? Test price elasticity systematically. Pick up your SKU, raise it up 5%, track conversions for 7 days. Okay, still converting. Test 7%. Find the ceiling before you just hit it blindly. Document everything you need to know. At 5% increase, conversion dropped 2%. At 10%, it dropped 12%. That's not guessing. That's real data feedback. And here's the key: test one variable at a time. Don't raise prices and change your main image and change your keywords all in the same week. You don't know what moves the needle. That's what sellers do, not operators. Headlines: shoppers are trading down and bargain hunting. Your impact: $49 price point might lose $39 to a competitor if yours is a better quality. So A/B test your value messaging. Don't just say premium quality. Show cost per usage, something like lasts 3 times longer than cheaper alternatives. Quantify the value, make the math easy for them. Consider a value tier option. So if you're selling a $49 product, can you offer a $34 version with fewer features? Capture the trade-down customer. If you're not cannibalizing your own premium SKU, you're capturing demand that wouldn't have gone to the competitor when you consider this kind of strategy. Test bundle strategies, test units at $85 instead of one at $49. Better You know, per unit economics, higher cart value. Even if people are price sensitive, they'll spend more if they perceive better value. So watch the keyword data. And if people are searching cheap or budget, they're telling you what they want. So adjust your PPC targeting, adjust your listing copy, and meet them where they are. So the 15% tariff, it expires in July. Supreme Court striking things down doesn't really change much. It's policy changing. The impact, you can't plan Assuming stability. So here's the operator move: 15% current, 25% if likely Section 301 stacks, 35% worst case. So what's your margin in each of these scenarios? Can you survive worst case for 6 months? If you can't, you need to change something now. Source differently, raise prices, cut costs. Okay, that is coming up in the next few months. So build pricing flexibility into your listings. Use tiered pricing so you can adjust without Relisting parent-child variations, multipacks at different price points. This gives you room to maneuver when tariffs shift. That's diversifying sourcing options like, of course, from Mexico, Vietnam, even maybe domestic. You don't have to switch, but you need those options. If tariff hits 35% in China, you may have no backup plan. You're stuck if that's the only way you're in it. And reserve cash. If you're running lean on tariff spikes, you're in trouble. Build a buffer now. 3 months of operating costs, 6 months you can swing it. You see the difference? Sellers are going to react. Tariffs are up, raise prices. What do I do? What do I do? They get bad advice in small groups of people who are also commingling ideas and thoughts without real leadership. Operators interpret tariffs are up. Let me test elasticity, check competitor pricing, model scenarios, and make a decision based on my specific margins. So here's the framework you need to build a resilient business that will survive these kinds of volatilities. First, price testing, not price guessing. Most sellers guess at pricing. 10% seems reasonable. I checked camel, camel, camel. Operators test systematically. Pick up your top SKUs, raise it 5%, track conversions for 7 days. Still converting? Test 7%, find the ceiling. Again, that is not guessing. That is data. We just did this on a product that was $99. We decided to test it at $129. And guess what? After 7 days, it's actually converting more. We went from $99 to $129. Okay. So here's the thing. Price elasticity isn't permanent. And by the way, if it didn't convert at $129, what would we do? Drop it back to $99? No, we would drop it back to like $120 or maybe $119. We're trying to find that ceiling. You see where I'm going here? What works in March right now may not work in June. We're gonna see what's gonna happen here, but consumer behavior shifts and competitor pricing changes. So we're gonna keep testing quarterly. Very important. Okay.

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The second one is contribution margin over gross margin. I've covered this before, but gross margin is the revenue minus cost of goods. Contribution margin is revenue minus cost of goods minus variable costs, tariffs, shipping, platform fees, ads. And if your gross margin is 46%, but your contribution margin is 10%, then a 5% tariff increase just cut your profitability in half. So track contribution margin by SKU. Not just by product line, and you'll find products that look profitable but aren't once you account for the variable costs. So here's how to calculate it again. Revenue, $100. Cost of goods, $30. Gross margin, $70 or 70%. Now subtract tariffs at $4.50. That's 15% on a $30 cost of goods. $15 roughly in FBA fees. Your ad spend, $20 or so. Let's say a 20% ACOS. Payment processing, if you're on the merchant side, would be $3 or zero. If you're on Amazon, so your contribution margin is between $27.50 and roughly $30. That's 27 to around 30%. That's the real number. That's what you actually get to keep. So if tariffs go from 15 to 25%, your contribution margin drops from 27 to 29% down to 24, roughly up to 27. That's about a 12% reduction in profit, not 10%, roughly 12%. Most sellers miss this because they're only looking at the gross margin. Okay. You shouldn't be doing this. Go back and listen to that again if you missed it. So 3, consumer behavior is an early warning system. Don't wait for sales to drop to realize that buying behavior has shifted. Watch the trends, search for cheap and discount, and look at the spike in the category. That's an early warning signal that you can look at, right? You can see this maybe in toolsets. So if you want to take that search term reports within your own account, track that conversion rate weekly. A 5% drop isn't just noise. It's a little bit of a signal. If conversion was, you know, your conversion was 12% last week and it's 11.4% this week, something obviously changed. Is it price sensitivity, competitor activity, market shifting segments, Amazon algorithmic shifts? You need to find that out, right? You need to monitor review sentiment, right? If people are saying overpriced, not worth it, you're losing on value perception. That is fixable. So adjust the messaging. Bundle differently, show cost per use. If the data to adjust before you lose 20% of sales is very, very important to get ahead of that. So here's the truth. Hard seasons make prepared operators. The sellers who panic at tariff headlines will be gone in 2 years. Operators who build systems now— pricing, testing, contribution margin tracking, behavior monitoring— will have businesses that can't be shaken. Survive this with your margins intact and you'll have unreplicable skills. All right, let's bring this home. This week's headlines were dominated by tariffs hitting real prices, consumers changing behavior, and policy creating uncertainty. Most sellers reacted. They hoped costs wouldn't rise. They panicked. They ignored risk. But hey, it's 2026. This is what happens, apparently. So operators are interpreting. They're translating the headlines into operational decisions. Tariffs mean test pricing systematically, track the landed cost, possibly diversify suppliers. Consumer behavior shifts means A/B testing and messaging, testing bundles, watching keyword trends. And policy uncertainty means model scenarios, build cash reserves, and stress test budgets. And they build a resilience using these 3 frameworks: price testing, not price guessing; contribution margin focus, not just gross margin; consumer behavior as an early warning system. So here's the bottom line: you can't control macro headlines. Trump's going to announce tariffs, SpringPoint's going to change rules, prices are going to shift. We're going to end up in places fighting wars that maybe should have been done 47 years ago. But you can control your business systems and you can test pricing. You can track contribution margin. You can diversify suppliers. You can build cash reserves. Operators build resilience. Sellers chase signals. That's the message. And if this helped you how to interpret headlines instead of reacting to them, yay! Share it with someone else who needs to hear this too. Let's all stop reacting to everything, okay? And always remember, get started imperfectly and something perfect will happen along the way. Neil Twa, thank you again for joining me on another episode of the High Voltage Business Builders Week in Review. I will see you next Friday for our next update. Ask you this: if you're serious about building an e-commerce business starting on Amazon FBA, what if myself and my team worked with you one-on-one to execute the steps outlined in the podcast while helping you discover what the heck to sell, how to make sure it's profitable, and how to successfully launch a brand? Plus, how to do it under a consulting plus performance-driven model where I put a $10,000 skin-in-the-game guarantee for those that show up and are serious about building a real business done with us? If yes, text keyword profit to +1-417-413-4209. That's 1-417-413-4209. And I will personally respond with a few simple questions. If you're not in the US or Canada, please visit voltage dm dot com. That's voltage dm dot com. Click get started and book a no-pressure discovery call with me or a member of my team to learn more about the Business Builders one-on-one coaching and mentoring for CEOs, entrepreneurs, and those looking to build an empire or retire using the power of e-commerce. Once again, thank you for listening, and be sure to tune in next week for a brand new episode of the High Voltage Business Builders podcast.