How Huge is the Impact of Covid-19 on Amazon Seller Supply Chain？

It is no exaggeration to say that we are living in unprecedented times: as government officials order people to stay home, cities become empty unless it is absolutely necessary to go out, (most) stores close, businesses close their offices and instruct employees to work from home, and nearly 7 million people in the U.S. apply for unemployment benefits, and the number continues to grow.

Amazon Seller Supply Chain is in Short Supply Because of Covid-19

The COVID-19 outbreak caused a lot of problems for the world, and Amazon and its third-party sellers were not immune. Even as Amazon continues to deliver orders, it has had to stop accepting FBA replenishments from sellers and only accept items in six categories that are classified as essential (baby products, health and home, beauty and personal care, including personal care equipment, groceries, industrial and scientific, and pet supplies).

This creates a problem for sellers who need to replenish their inventory at FBA, especially because out-of-stocks are a dreaded problem. While this is certainly not ideal, there are ways for sellers to continue to distribute their orders by self-shipping. Sellers have expressed concerns about their BSR rankings on the Seller Central forums, and their concerns are not unreasonable. If a product is out of stock, or if you set your account to vacation mode and leave the listing inactive so that customers can’t buy your product, then the product ranking will drop. If you are delivering your own orders, setting your account to vacation mode can help you slow down the rate of BSR drop and make it easier to recover after you replenish your inventory. Therefore, it is recommended to switch from FBA to self-shipping delivery and then use vacation mode when you are low on stock to avoid out-of-stock. Keep in mind that you may need to invest in Amazon advertising to drive sales and restore BSR rankings more quickly once things return to normal.

Some sellers are experiencing more “complications” and some are unable to get more inventory from their suppliers due to factory closures in China. This is where the supply chain comes into play. The supply chain  is simply the system of companies, manufacturers, people, etc. that work in a “chain” to move products from suppliers to customers. With so many sellers relying on factories in China to manufacture their products, and with many factories forced to shut down during the outbreak, sellers may experience problems in manufacturing their products.

This has led some sellers to look at other parts of the world as potential locations to manufacture their products. Popular regions include: the United States, Canada, India, Turkey, Vietnam, Mexico and Taiwan(China).

Even if a seller has fulfilled an order with a supplier in China, other issues may still arise in the supply chain due to the restrictions caused by the outbreak. One such issue is shipping orders from China. Many ships are stuck in port waiting to sail but are unable to do so due to a lack of dock workers, customs issues or delays. This suggests that another breakdown in the supply chain could occur due to external forces beyond the control of the seller or supplier, much like the Chinese government forcing factories to close.

Amazon Seller Supply Chain is Important

Some may think that sellers who sell products that are listed as one of the priority product categories on Amazon will come through this difficult time unscathed, but they may be wrong. Even if their products are prioritized, they still face the risk of high inventory and supply chain problems. Even if their products sell well, but they can’t get replenished inventory from their suppliers, then they are in the same boat as other sellers who can’t get their inventory to Amazon’s warehouses. Even if they are not currently impacted, eventually they will run out of inventory and face supply chain issues.

When it comes to supply chain management, the key that many sellers overlook is controlling the supply chain. This outbreak may provide an opportunity for sellers to find other ways to produce lower risk products. Overseas manufacturers may be cheaper than domestic manufacturers, but the current situation is a good indication that sometimes paying more for inventory may be worth it. In addition, with the outbreak and rapidly changing world and customer needs, some companies using domestic manufacturers have been able to adjust their product offerings. They have been able to work with manufacturers to create private label products like hand sanitizer under their brand and are ready to sell quickly. Achieving such a rapid shift using overseas manufacturers would have been nearly impossible due to supply chain issues.

These examples illustrate why the supply chain is important to Amazon sellers. Without full control of your supply chain, you risk disruption to your business without being able to replenish your stock should a manufacturer stop working. By limiting your business to one overseas supplier, you will be limited in your ability to control your supply chain and make changes dynamically when needed. Obviously, there is no way to know in advance that an event such as the COVID-19 outbreak will have such a widespread impact on almost the entire world, and having a domestic manufacturer won’t insulate you from all the problems. But perhaps, for example, diversifying your supply chain by supplementing it with domestic suppliers will give you more control over your supply chain and allow you to change over time. In the meantime, as the world slows down, perhaps you can use the extra free time to explore ways to better control your supply chain and protect your Amazon business from future problems.

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