In normal times, Amazon will happily deliver almost any item to your doorstep, no matter how frivolous. These are not normal times. Millions of Americans are now largely confined to their homes as a result of the coronavirus pandemic, and many of them have turned to Amazon for household staples, groceries, and medical supplies in large numbers. To keep up with surging demand for essential goods, Amazon announced Tuesday that it would no longer accept other items at its warehouses until April 5.
The unprecedented action will immediately affect millions of third-party sellers and vendors, who have come to rely on Amazon's warehouses to get their products into the hands of consumers. Amazon customers can expect greater availability of things like soap and dog food, and potential shipping delays when it comes to less pressing items like clothing and electronics.
“We are seeing increased online shopping, and as a result some products such as household staples and medical supplies are out of stock,” reads an announcement on Amazon’s official forum for sellers. “With this in mind, we are temporarily prioritizing household staples, medical supplies, and other high-demand products coming into our fulfillment centers so that we can more quickly receive, restock, and deliver these products to customers.” Last week, news outlets like Vice reported that Amazon had virtually no supply of goods like toilet paper left on its virtual shelves.
The new policy is only one facet of Amazon’s sweeping response to the coronavirus outbreak. The retail giant announced yesterday that it would also be hiring an additional 100,000 workers in the US to meet rising demand, and would temporarily raise pay for all employees in the US, Canada, and the United Kingdom by at least $2 an hour through the end of April. Over 125,000 people already work in Amazon fulfillment centers in North America. Last week, the company expanded its sick leave policy, and set up a relief fund that aims to provide an initial $25 million to independent delivery drivers and seasonal workers affected by the pandemic.
For now, Amazon is still delivering nonessential products that are already stocked in its warehouses. It just won’t accept replenishments from vendors and sellers for the next three weeks. If you want to purchase, say, a hula hoop, you'll still get it as long as Amazon has them in stock. Third-party sellers can also continue taking orders, but can no longer rely on Fulfilled by Amazon, the retail giant’s service for storing, packaging, and shipping. Around 94 percent of Amazon merchants use FBA for at least some orders, while 64 percent exclusively rely on the service, according to the analytics firm Jungle Scout, which tracks data for Amazon sellers.
“FBA was created to help sellers not have to deal with logistics,” says James Thomson, a former Amazon employee and partner at Buy Box Experts, a firm that consults with Amazon sellers. Thomson worries many small businesses that rely on FBA may need to shutter as a result of Amazon’s decision. “Most of them have no contingency plan,” he says.
“We understand this is a change for our selling partners and appreciate their understanding as we temporarily prioritize these products for customers,” a spokesperson for Amazon said in a statement.
Amazon already accounts for 39 percent of all online orders in the US, according to the market research firm eMarketer. With many people stuck indoors, it’s now likely shouldering an even greater share of sales than usual. To manage the increase, Amazon may be trying to lessen the number of items available through its Prime subscription service, which guarantees free two-day shipping for hundreds of thousands of products. One way to do that is to limit what goods can come into warehouses and wider logistics network. “What Amazon did today is all about making sure it can deliver on its Prime promise,” Thomson says. Some Prime orders have already been delayed due to the coronavirus outbreak, according to CNBC.
It's unclear how quickly Amazon shoppers may notice a change, but it could be several weeks. Vendors and merchants likely have at least some items still in stock in Amazon warehouses. How quickly they run through that supply will determine when consumers see increased shipping times or dwindling availability. “Eventually you will notice more and more items not being Prime eligible as April 5 approaches,” says Will Tjernlund, a consultant for Amazon sellers. The hope is that in the meantime, with Amazon’s logistics network freed up, customers can order necessary items like hand sanitizer, diapers, and food, and have them delivered fast.
Third-party sellers, who are often small business owners, may feel the effects of Amazon’s new policy more quickly, especially if they were expecting to send goods to Amazon's warehouses in the coming days or weeks. Many merchants lack the infrastructure and warehouse space necessary to run their own independent shipping operations, says Chris McCabe, another former Amazon employee who now runs a consultancy for sellers. “Sellers need to plan for the long haul here and develop other channels to sell through,” he says.
For some merchants, that might mean turning the dining room table into a de facto post office, and enlisting kids home from school to package orders. But that kind of makeshift operation isn’t feasible for sellers who typically fulfill thousands of orders a day, or who don’t have physical access to their products. They will likely see their sales tumble, and may be unable to get orders to customers at all. Like many other retailers, third-party Amazon sellers will be hit hard by the coronavirus outbreak, and not just as a result of Amazon’s actions. Many Americans are shifting their spending away from goods like apparel to groceries and household necessities.
It’s just not sellers who are being impacted by the pandemic, but also Amazon workers. Even with an increase in pay, some say they are worried about putting their health at risk by continuing to go to work, according to BuzzFeed News. An Amazon spokesperson says the company is going to “great lengths to keep the buildings extremely clean and help employees practice important precautions such as social distancing and other measures.” They added that employees are welcome to use paid and unpaid time off if they wish not to come in.
In addition to product shortages, Amazon has faced supply chain issues in China, where the coronavirus originated. It has also navigated price gouging of items like face masks and hand sanitizer, and a flood of dubious Covid-19 books in its bookstore. The pandemic shows that even Amazon, a wealthy logistics juggernaut run by the richest man on Earth, isn’t fully immune to the shockwaves of a global health crisis. The measures it takes to cope will have ripple effects that play out for months, if not longer.
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