Amazon’s Warehouses Store Only Vital Supplies; Likely to Hit Third-Party Sellers

Amazon.com Inc. (Amazon), the US-based world’s leading tech and e-commerce giant will clean up its inventory space in various warehouses in the US, the UK, and other European countries to prioritize the supply of some essential items until April 5, 2020. Amazon’s latest move was aimed at storing more vital items, amid the threat of the virus spreading, such as medical and household goods which have been recently in high demand.

Vital Supplies or Essential Items

The e-commerce service provider would be focusing more on those vital items whose demands had been in surge due to the impact of the virus epidemic. Nevertheless, the company will continue selling its non-essential items that were already stocked in its warehouses including smartphones or toys, which are likely to be running out of stock very soon.

Amazon has listed several categories as essential products, prevailing the existing virus pandemic and nature of customers’ demands, which included baby products; health and household items; beauty and personal care; grocery; industrial and scientific; pet supplies; as well as books.

The tech giant informed its sellers on Tuesday, March 17, 2020, that the online shopping demand kept increasing over the months and the demands for essential items from customers have increased significantly on online shopping.

Considering the new development, Amazon informed sellers that it would prioritize certain categories, household staples and medical supplies, and these products must be made available to “quickly receive, restock, and ship these products to customers.” The company released a statement saying, “We understand this is a change for our selling partners and appreciate their understanding as we temporarily prioritize these products for customers.”

Cutting Ads Revenue and Impact on Third-party sellers

The latest decision of Amazon will have a major impact on merchants who dealt with lucrative services including advertisement in the e-commerce platform. Moreover, the limitation of Amazon’s storehouse will hurt those third-party sellers who provided other non-essential services; they have to either shift their products to other e-commerce platforms or deliver the products to customers directly with using their own websites.

Amy Roskelley, the owner of Utah-based Health Beet, said she paid Amazon around $1,000 monthly to promote her flatware products but now she could not add inventory to Amazon’s warehouses due to the new policy of the company. She added, “It’s hard for me to justify spending money if I don’t have enough inventory to fill” customers’ orders.

A China-based seller, Zengxie Pang said, “Our factories just resumed production, but now we can’t ship to warehouses until April… We are already seeing a rising demand for kitchen supplies and they will likely run out of stock, as well as other products people use when they’re stuck at home.” Third-party sellers compose more than half of the total sales of the tech giant.

A Baird Equity Research analyst, Colin Sebastian said in a statement that Amazon’s two-day shipping guarantee would be slowed up and non-essential items sellers would be badly affected. Citing the harsh impact of the new decision of Amazon on third-party sellers, Sebastian said, “This change will likely force some third-party sellers currently dependent on Amazon to shift sales to other marketplaces (eBay, Wish, Walmart, Facebook Marketplace, etc.), or onto their own websites.”

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