The world is currently in a panic amid a breakout of coronavirus that has spread rapidly to every continent with the exception of Antarctica. As I am writing this, there are 111,362 confirmed cases of the virus worldwide. The coronavirus originated in Wuhan, China, which has prompted widespread quaratine measures throughout the country including the government-mandated closure of most factories. This is bad news for Amazon Sellers who rely on these manufacturers for inventory. Even as some factories start production back up again, they are reporting to their customers that they are only operating at limited capacities due to low staffing. So while the rest of the world is worried about getting through the outbreak of coronavirus without being infected, Amazon Sellers have the added worries of keeping their businesses afloat amid the repercussions the coronavirus has created.
How Coronavirus is Impacting Amazon Sellers
Amazon itself has suffered from the outbreak of coronavirus. With people scrambling to protect themselves from being infected, bad actors have used Amazon to price gouge products like hand sanitizer, face masks, gloves, etc. Amazon has suspended thousands of seller accounts that have posted products like these that were priced ridiculously high in the hopes of making a quick buck off fearful people who are willing to pay anything for these products. Amazon has reported that it is going to work with state attorneys general to prosecute those they deem as “the worst offenders.” Amazon is also cracking down on products that are falsely claiming to cure the coronavirus. An Amazon executive reported to a Congress House subcommittee that over a million fake products have already been removed from the marketplace.
The outbreak of coronavirus started gaining speed around the time of the Chinese New Year, during which there are 15 days of celebrating and factories are shut down as a result. This along with the outbreak has placed Amazon Sellers in a tight spot with their inventory. Those sellers who are at risk of running out of inventory will likely face harsh consequences like losing search rankings for their listings. Even if sellers have had their orders successfully completed by their Chinese manufacturer, there is also the possibility that their shipment(s) may be stuck in on a ship that cannot leave port or at sea as ships are forced into “floating quarantine zones” and not allowed into other ports until they are deemed free of infection.
How Amazon Sellers Can Survive Coronavirus
While there are some things that can be done to help mitigate some of these risks, some sellers may not have the resources to make drastic and quick changes. One option some sellers have been exploring is moving their manufacturing out of China and into another country. For larger sellers who have the means (both capital and time) to switch their supply chain, this is a good option as it is unknown when manufacturing and shipping will be able to rebound fully. However, sellers that are smaller and are not capable of affording a huge shift in their supply chain or do not have time to execute that shift until they go out of stock, there are other ways to safeguard their business.
Amazon reached out to sellers in an effort to help them minimize negative effects on their businesses during the outbreak. One suggestion they offered was to set their account to ‘vaction status’ which will help protect their listings from losing ranking in search results. If a product is running low or goes out of stock, Amazon’s alogrithim will bump the listing down in search results. They also suggested that sellers cancel any orders that sellers are no longer able to fulfill.
It is not recommended to raise your product prices in order to slow down sales if you are at risk of running out of inventory. Raising your prices will likely get you kicked out of the buy box and it can be difficult to win it back. If you are running advertising, you should reduce your spend significantly to help slow sales down.
If you need help navigating fulfillment of your products from the manufacturer to the US, you could look into hiring a sourcing agent. Sourcing agents are people who are in China and can negotiate with the manufacturer on your behalf to help get your products shipped out faster. This can be particularly helpful for navigating tariffs, import/export duties, taxes, etc. Plus, with their expertise they may be able to help reduce the costs associated with getting your products out of China once the shipment is ready to go.
There are rising concerns about how coronavirus will impact Prime Day, which is usually in July, and whether it will be as successful this year given the fulfillment issues many sellers are facing. Amazon depends heavily on its third-party sellers having products available for purchase during this ‘Black Friday in July’ sales event. If there are a lot of listings with low or no stock due to production issues in China factories, there is little hope that Prime Day will be as big as past years for Amazon. This is another reason to consider other countries for your manufacturing needs. If Chinese manufacturers are not up and running within the next several weeks, those sellers who need to place orders for Prime Day in April or May will likely not have enough time to get products made, shipped to Amazon, and through allf the processing in time. It’s been reported that some factories are running, but that number is still very low and their production levels are severely limited.
It’s hard to say for sure what the long term effects of the coronavirus outbreak will be, both for Amazon Sellers and the world. It has had devastating effects on the stock market, which experienced such a significant dip yesterday (Monday, March 9th) that the New York Stock Exchange’s circuit breakers halted trade only a few minutes after the opening bell. This is designed to help investors take a few moments to breathe and process what’s happening rather than trading in the midst of panic. Clearly the coronavirus is causing widespread issues and nervousness, both in regards to people’s health and the economy. Amazon Sellers need to work to protect their businesses during this time of uncertainty and unrest. Utilizing options like ‘vacation status’ could make a big difference for those suffering from low inventory until production in China resumes.