Amazon May Not Have Enough Goods From China For Prime Day, Report Says
Monday, February 24th 2020, 10:45 pm
By: CBS News
Apparently not even Amazon — the world's largest online retailer — is immune to the effects of the rapidly spreading coronavirus disease.
The contagious disease, officially called COVID-19, has closed factories and slowed the production of everything from Apple iPhone parts to drug ingredients in China used by U.S. pharmaceutical makers. Now, Amazon, which sells everything from paper towels to power tools, is also concerned it could run out of stock on many of its China-made products, according to a New York Times report.
Amazon tends to stock fewer goods in warehouses than other retailers do, relying on a so-called "lean inventory" business model that could make it more susceptible to coronavirus-related supply issues. Even those goods that are assembled elsewhere but rely on parts that come from China could be at risk.
As a safeguard, the retailer is now ordering more Chinese-made products that have already been shipped to the U.S., according to the Times' report.
Amazon did not immediately reply to CBS MoneyWatch's request for comment.
"Out of an abundance of caution, we are working with suppliers to secure additional inventory to ensure we maintain our selection for customers," an Amazon spokeswoman told the Times. "We are monitoring developments related to the coronavirus and taking appropriate steps as needed," the company later added, according to the report.
Amazon has ordered six to eight weeks' worth of some products made in China versus its usual two- to three-week stash, the Times reported, citing consultants who work with brands that sell through the platform.
Those same suppliers are also in effect stockpiling inventory by cutting back on advertising and marketing efforts on the Amazon platform, efforts that presumably decrease demand for the goods.
Amazon is also reportedly concerned it will not have sufficient inventory for its mid-summer Prime Day event — and is communicating with third-party sellers to determine how the coronavirus could interrupt their supply chains.
It emailed a beauty brand Wednesday asking if it expected to have its top five products in adequate stock this summer, according to the report.
"Amazon is trying to establish an inventory risk for your business moving forward and specifically for Prime Day," the Times said of the email's content. "We appreciate your feedback by TODAY."
The deadly virus continues to spread and has so far infected more than 79,000 people, more than 77,000 of them in China.