Cason Crane, founder of specialty coffee company Explorer Cold Brew, recently purchased bulk inventory of coffee (from Ethiopia) and glass bottles (from China) in anticipation of tariff-related price increases. Explorer is a DTC brand founded in 2020, which sells a variety of caffeine levels online—including on Amazon and more recently at Whole Foods stores.
“I’ve bought the maximum amount that I can feasibly store to get us through the next roughly six months,” Crane told Retail Brew. To do so, he had to use the limited funds he had to procure inventory. “Very few small businesses are sitting on a ton of cash right now. I’ve had to tie up my cash in inventory,” he said.
Crane is also considering other contingency plans including sourcing coffee from different origins and developing alternative bottle supplier relationships in Mexico and India. Despite these precautions, Crane has had to contend with the possibility that tariffs could still harm his business. “This has the potential to cut our margin by two thirds, cut our gross profit margin 60%, which will be potentially unsustainable,” he said.
Crane’s coffee brand joins a host of online businesses in the US that rely on overseas goods to sell via e-commerce channels including Amazon. Businesses like Crane’s, along with other smaller retailers, have been stressed about how these tariffs might affect their businesses.
Zoom out: Earlier this month, President Donald Trump paused his baseline tariffs of 10% on nearly 100 countries with the exception of China. Given that manufacturing changes can’t be made overnight, e-commerce sellers are struggling to figure out next steps. For some, there’s inventory sitting in China that manufacturers are trying to get out. Plus, the tariff train has set off ripple effects on consumer spending and some founders say they expect sales to remain flat this summer.
For fulfillment company ShipMonk, at least three clients selling apparel have delayed Q1 product launches indefinitely due to the confusion around tariffs, Kevin Sides, the company’s president, told Retail Brew.
“There’s a high degree of concern,” Sides said. There are two big worries. First off are the tariffs and duties itself hitting brands impacted directly, Sides said, adding, “the second level of concern is the knock-on effects of consumer spending with all of this.”
Food brand Seed + Mill, which sells items like halva and tahini imported from Israel, has seen a dip in walk-ins at its flagship store in Chelsea Market in New York City. According to Seed + Mill Co-founder and CEO Rachel Simons, while physical store sales are only one part of her business, it has been relatively “quiet” since January.
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“Our business in the retail space is very driven by tourist traffic,” Simons said. “And I think tourists are both economically a little bit nervous, and with the economy feeling very destabilized with Trump and the politics, I think a lot of tourists are not sure they want to come to the US as much as they used to.”
Simons went on to say that despite being on the luckier side—Israel has only been slapped with baseline 10% tariffs—can be the difference between profit and loss when aggregated annually: “Our margins are really small; 10% in a very small margin is a lot.”
Rise in bonded warehouses: This entire period of uncertainty has also led to the rise of bonded warehouses and free trade zone (or FTZ) warehouses—that allow retailers to store goods without paying import duties or taxes for up to five years or until they’re sold or moved.
Due to tariffs, ShipMonk has also had to switch its business model for the first time to become a bonded warehouse facility. At the start of 2025, ShipMonk hired a consulting firm that specializes in getting companies approved as a bonding facility, and operates one bonded facility in Texas with two more warehouses likely to get clearance in the next few months.
The way Matthew Hertz, founder and CEO of Third Person, an AI-powered platform for e-commerce brands to connect with fulfillment partners, sees it, the benefit of bonded warehouses is that brands don’t need to pay duties upfront. “So, it’s not necessarily a savings mechanism,” he said. “It’s a cash flow mechanism that helps defer payments until you actually make the sale.”
On a positive note, Simons said, while this feeling of uncertainty is overwhelming, it is important to stay adaptable.
“I think everybody feels very destabilized, but I also know that we all just have to take one step after another,” she said. “If there are some positives, it really has forced us to look at every aspect of our business, tighten our belts…And that’s never a bad thing.”