amazon covid 19 crisis ecommerce-supply-chain

The world is holding its collective breath to see what the lasting effects will be from the current Covid-19 pandemic. Millions of jobs are at stake or already lost and trillions of dollars have disappeared from the world markets. Online retailers should be well-positioned to weather the storm yet supply chain issues, panic buying, and strict lockdown laws across most of the world have placed massive strain e-Commerce companies. Even the world’s largest online retailer is feeling the strain with long delays in essential items, issues with price-gouging and concerns around the safety of its drivers and warehouse staff.

The Oracle of Seattle

Prescient Bezos though sold $3.4bn of Amazon Shares in early February. Maybe it was luck or maybe the man at the head of the world’s largest retailer was beginning to see the first warning signs from China with regards to resupply as the infection spread out from Wuhan.

What is more worrying is that if a company the size of Amazon, renowned for its massive fulfillment network, vast warehouses and efficient fleet of delivery trucks can take strain then what does it mean for the rest of the online merchants?

Supply Chain Under Pressure

The cases of invected warehouse staff are increasing daily and will only get worse in the coming weeks. There is evidence that the virus stays active for 24 hours on cardboard and even longer on plastics and steal. Making sure that the warehouse & merchandise stays disinfected will be a mammoth task but one that cannot be ignored for the safety of staff and customers.

Covid-19 has been found to stay active on cardboard for up to 24 hours

And yet retail customers are flooding the site daily in an effort to order basic goods such as groceries and other essentials yet standard delivery is unavailable in many areas across the US.

  • toilet roll
  • eggs
  • beef
  • milk
  • hand sanitizer
  • bottled water
  • ibuprofen
  • face masks

In all this Amazon plays an important part in keeping consumer’s cupboards filled. With lockdowns being implemented in more countries across the globe each day, online sales will be critical in helping millions put food on the table. One can only imagine what will happen if more issues begin to pop up in our vital delivery networks over the next couple of weeks.

I got a glimpse of this whilst talking over Skype with a family member in the island-bound country of Mauritius, where they have been placed on complete lockdown. Only one family member is only allowed to go to the shops once every seven days. There are only a few online stores trading on the Island and almost all of them have suffered from downtime due to the increased load. We often forget in the good times how easy we have it with prime memberships and one-day deliveries.

Crackdown on Price-Gouging

Price-Gouging is when a seller increases the prices of goods, services or commodities to a level much higher than is considered reasonable.

Amazon has been tough on sellers trying to take advantage of the current crisis by shutting down anyone overcharging for essential items(by 1,600% on some items). Over 4000 accounts have been suspended in the process. It released the following statement:

“Making clear to all of our sellers our longstanding policies that ensure fair pricing. Monitoring our stores 24/7 through both automated and manual means and aggressively removing bad actors and offers. Collaborating with federal, state, and local law enforcement agencies and policymakers to hold price gougers accountable. Staying focused on our customers and protecting their interests.”

The clean-up is sure to continue in the coming weeks.

Amazon Sellers in the Crossfire

Arbitragers have been the biggest losers during this period of turmoil as they have no control over replenishment and cost. The conditions are changing daily making it almost impossible for these types of sellers to respond in time.

Building a business with Amazon has been lucrative for many sellers over the years but the current heavy-handedness will give some pause for thought. If you are not in control of your own platform, sales and pricing then it is possible to ask if you even have a business.

There is however evidence that Amazon itself was increasing pricing in the early days of the epidemic:

“When we looked at the data, we saw price increases from both Amazon and third-party sellers,” said Greg Mercer, founder, and CEO of Jungle Scout. That company tracks Amazon sales data and sells it to third-party vendors.

Mercer says Amazon not only earned commissions from those sellers accused of price gouging but it also more than doubled its own prices on essential goods as the COVID-19 pandemic grew between early January and mid-March.

At one point earlier this month, Amazon listed a four-pack of its own brand of toilet paper for $72.

Source: abcactionnews.com

Bringing It Home

Our connected world has in a way created the very problem we are currently facing. Supply Chains stretch across the planet, across multiple regions. The closing of borders has placed a significant strain on merchants across the globe. It may be time to bring that supply chain back home and source more products locally whilst the crisis unfolds. The shipping lanes are still running but the congestion at the ports is causing backlogs.

This will only become worse as the sickness spreads to the crews of the container ships. Already we have seen the cruise ships devasted by the virus and now the aircraft carrier Theodore Roosevelt crew has become another statistic with the navy’s first at-sea outbreak. If the world’s most powerful navy is not immune then who is.

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