• Amazon will only stock essential household and medical items to free up space in its warehouse, in a bid to meet the increased demand during the coronavirus pandemic.
  • It considers essential items to be baby products; health and household items; beauty and personal care; grocery; industrial and scientific; pet supplies and books.

Amazon.com Inc (AMZN.O) will only receive vital supplies at its U.S. and UK and other European warehouses until April 5, its latest move to free up inventory space for medical and household goods in high demand as a result of the coronavirus outbreak.

The change does not mean Amazon will stop selling non-essential items like phone cases and toys for now, only that products may be more likely to run out of stock in the next few weeks or that sellers have to ship directly to consumers.

The move reflects how the global spread of the virus has created challenges for retailers, from supply chain to delivery.

In a note sent to sellers on Tuesday, Amazon said it is seeing increasing online shopping demand. As its household staples and medical supplies are running out of stock, it will prioritize certain categories in order to “quickly receive, restock, and ship these products to customers.”

An Amazon package is seen on a delivery truck in New York City, New York, U.S.,Coronavirus china virus health healthcare who world health organization disease deaths pandemic epidemic worries concerns Health virus contagious contagion viruses diseases disease lab laboratory doctor health dr nurse medical medicine drugs vaccines vaccinations inoculations technology testing test medicinal biotechnology biotech biology chemistry physics microscope research influenza flu cold common cold bug risk symptomes respiratory china iran italy europe asia america south america north washing hands wash hands coughs sneezes spread spreading precaution precautions health warning covid 19 cov SARS 2019ncov wuhan sarscow wuhanpneumonia  pneumonia outbreak patients unhealthy fatality mortality elderly old elder age serious death deathly deadly
The site will not stop selling non-essential items, but they are likely to run out of stock.
Image: REUTERS/Jeenah Moon

Amazon defined several categories as essential products that can continue shipping, including baby products; health and household items; beauty and personal care; grocery; industrial and scientific; and pet supplies. Books are included as well.

“We understand this is a change for our selling partners and appreciate their understanding as we temporarily prioritize these products for customers,” Amazon said in a statement.

The company said the new protocol applies to its retail inventory as well as to the products of third-party sellers on its platform.

Overview of the Amazon fulfillment center in Baltimore, Coronavirus china virus health healthcare who world health organization disease deaths pandemic epidemic worries concerns Health virus contagious contagion viruses diseases disease lab laboratory doctor health dr nurse medical medicine drugs vaccines vaccinations inoculations technology testing test medicinal biotechnology biotech biology chemistry physics microscope research influenza flu cold common cold bug risk symptomes respiratory china iran italy europe asia america south america north washing hands wash hands coughs sneezes spread spreading precaution precautions health warning covid 19 cov SARS 2019ncov wuhan sarscow wuhanpneumonia  pneumonia outbreak patients unhealthy fatality mortality elderly old elder age serious death deathly deadly
The move will free up space for essential household and medical supplies.
Image: REUTERS/Clodagh Kilcoyne

The move follows Amazon’s recent announcement that it will hire 100,000 more workers, as the world’s largest online retailer is trying to meet growing online shopping need from people who stay home amid the coronavirus outbreak.

LESS AD REVENUE?

The news may hurt demand for lucrative services that Amazon offers to merchants, like advertising.

Amy Roskelley, owner of Utah-based Health Beet, said she pays Amazon around $1,000 a month to promote her flatware products that help consumers portion their meals. Now that she can’t add inventory to Amazon’s warehouses, she plans to cut ad spend in half.

“It’s hard for me to justify spending money if I don’t have enough inventory to fill” customers’ orders, she said.

Roskelley is considering other ways to reduce her dependence on Amazon, too, whether shipping directly to customers or driving traffic to her own website.

“I have been concerned that they’ll shut down Amazon’s warehouses and won’t ship out at all, and that would just devastate me,” she said.

Amazon has yet to indicate any such closures. Still, the months-long outbreak is posing challenges to the Seattle e-commerce company’s operations.

An Amazon delivery person walks in Times Square following the outbreak of Coronavirus disease (COVID-19), in the Manhattan borough of New York City, New York, U.S., Coronavirus china virus health healthcare who world health organization disease deaths pandemic epidemic worries concerns Health virus contagious contagion viruses diseases disease lab laboratory doctor health dr nurse medical medicine drugs vaccines vaccinations inoculations technology testing test medicinal biotechnology biotech biology chemistry physics microscope research influenza flu cold common cold bug risk symptomes respiratory china iran italy europe asia america south america north washing hands wash hands coughs sneezes spread spreading precaution precautions health warning covid 19 cov SARS 2019ncov wuhan sarscow wuhanpneumonia  pneumonia outbreak patients unhealthy fatality mortality elderly old elder age serious death deathly deadly
Demand on delivery has increased and Amazon has relaxed its two day delivery guarantee to up to seven days.
Image: REUTERS/Carlo Allegri

Merchant Zengxie Pang said Amazon’s change came just as the China-based seller’s factories had resumed production.

“Now we can’t ship to warehouses until April,” Pang said. “We are already seeing a rising demand for kitchen supplies, and they will likely run out of stock.”

Chief executive of personal massager company LuLu, Michael Gawrychowski, said his supplier in China woke him in the middle of the night with news of Amazon’s change.

“People are freaking out,” he said. Gawrychowski immediately sent a request for a 25,000-unit shipment. That was rejected, but a second request went through, he said.

Amazon’s two-day shipping guarantee has in some cases slowed to up to seven-day delivery, Baird Equity Research analyst Colin Sebastian said in a note. Tuesday’s announcement aims to speed up the operation, at the risk of limiting the availability of non-essential items like electronics that typically are a big part of Amazon’s business.

“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,” Sebastian said.

Customer searches for popular items including iPhone cases, AirPods and Apple Watch bands have fallen from the week prior, an indication of shifting shopper interests, according to research from Helium 10, which provides tools to sellers.

Workers at bars, gyms, theaters and other non-essential businesses have been furloughed to help contain the spread of the deadly virus, and President Donald Trump on Monday said the U.S. economy may be sliding into recession.

For sellers, which account for over half of sales on Amazon, the new warehouse policy only adds to the economic uncertainty they are facing, said Chris McCabe, founder of Amazon seller consultancy ecommerceChris.com.

“Sellers are rethinking their entire strategies for selling in 2020,” he said.