The world was shaken to its core when COVID-19 hit it where it hurt the most. In just a couple of months, the whole world was brought to its knees and scrambling to seek shelter from this global pandemic. The world business reached a standstill and even the online businesses weren’t safe from its clutches.
Amazon is USA’s biggest e-commerce marketplace and almost everyone in the country relies on Amazon to deliver their daily essentials and luxuries to their doorstep. Some might think that a retail giant such as Amazon will not be affected by COVID-19, but the reality is much different than what we all thought.
In 2019, over one-third of the USA’s online sales involved Amazon purchases and the company only grew. While Amazon has a past of overcoming hard times, it has never come across something as tremendous as COVID-19 pandemic.
No retail business is safe from the economical downfall that COVID-19 is bringing with it and Amazon is no different. If you look at the signs and their current market trend, you will notice that Amazon is being affected by this pandemic just like any other business.
Here is how Amazon is being affected by COVID-19 and there is nothing they can do to but pray for an end to this nightmare.
An Interrupted Supply Chain
Currently, Amazon is receiving huge orders for household essentials. There is a huge demand for groceries, household goods, face masks, hand sanitizers and other medical supplies. While under normal circumstances, it would mean more revenue for this retail giant, however, these are not normal times.
There is a huge stress on supply chain and the online retailer is facing some major troubles. This is an issue because usually, Amazon’s modus operandi is to deliver their items quickly and right on time. It means that their warehouse never has a massive stock of any product.
As most of the people are buying things in panic, Amazon’s inventory depletes before their manufacturers have enough time to re-stock the products. Shipments are being delayed all over the world and the logistics disruption is causing major issues for the retail company.
While the company is trying their best to shuffle its logistics and giving priority to essentials, every other order is being delayed for obvious reasons. However, this is enough to cause distress among the loyal customers of Amazon.
Third-Party Sellers Play a Big Role
There is a big chance that third-party sellers will become a part of Amazon’s downfall. As mention above, every business has taken a hit because of this global pandemic and small to medium size businesses that rely on Amazon to sell their products are no different.
Amazon acts as a point of contact between these sellers and the customers. Almost over 50% of all sales made on Amazon are through third-party sellers. They were a huge part of the company’s success as it sky-rocketed a couple of years ago.
From a simple charcoal grill to a home air purifier, the majority of products on Amazon are by a third-party. But since these things fall under the “non-essential” category, their sales have been pushed back. However, these are the items that make the bread and butter of Amazon.
The decision to cut back on the delivery of products by third-parties has affected about 53% Amazon sellers. This has been a huge issue for not only these vendors but also for Amazon as it relies on these vendors to bring in the money they need to operate on such global scale.
As these sellers cannot use Amazon anymore to earn their livelihood, they are looking for other online platforms where they can sell their products to people. While this is all good for the sellers, it is the responsibility of the purchaser to research products thoroughly before purchasing them.
For example, if they are trying to purchase a charcoal grill from a retailer from a different website, they need to look up a descriptive article about charcoal grills and other hazards to make sure they aren’t bringing a harmful item into their home.
Unable to Deliver on Their Promise
Buyers go to Amazon to get their packages delivered quickly. The retailer thrived on fast delivery and before this global pandemic, it delivered on this promise without a single flaw. Their Amazon Prime subscription brought in a ton of money to the company with its promise to deliver products for free in just two days.
Amazon Fresh subscription got the buyers fresh produce and groceries to their homes the same day while the Amazon Dash subscription offered superfast delivery of items before they even have time to run out. Thanks to supply chain breaks, panic buying and restrictions imposed by COVID-19, Amazon is having a hard time delivering on their brand promise of fast delivery.
Many of the Amazon Prime deliveries are taking more than a month to deliver, which is not what the buyer paid for when they subscribed to this service. Add in the fact that most people are just turning to Amazon to deliver their items because they heard the retailer delivers on time is just adding insult to injury.
The Impact of COVID-19 on Amazon
Up until now, 10 of the Amazon warehouses have been affected by COVID-19. Workers in these 10 warehouses have tested positive for the disease and many of the workers were driven into self-isolation. Many of the warehouses have been closed for deep cleaning, so there is a major concern over the health of these employees.
Considering the fact that the whole world is currently facing an economic slowdown, people are losing jobs and businesses are collapsing everywhere. The buying power of people around the world is decreasing and many economies may not be in good shape to start up their steady stream of purchases when this pandemic ends.
The signs aren’t good for any business, regardless of its size. Amazon being a retail giant has a few saving graces that might tide it over, but will it be enough to secure its position as a leader after COVID-19 ends?
