- Shoppers have flooded Amazon’s website with orders for essential and non-essential goods during the coronavirus pandemic.
- Amazon was overwhelmed by the surge in demand, resulting in delivery delays and logistics bottlenecks at its warehouses. Meanwhile, third-party sellers struggled to fulfill orders and keep their businesses afloat.
- Despite recent improvements, Amazon said it can’t predict when things will return to normal for sellers, as many logistical challenges remain.
The coronavirus pandemic has tested the patience of Amazon shoppers, as many of the perks they’ve come to expect from the website, such as free, two-day shipping and an endless library of affordable products, are no longer guaranteed.
It’s easy for consumers to point the finger at Amazon for out-of-stock notices, far-off delivery dates and higher prices.
But Amazon and the sellers that supply the products on its site are not entirely to blame.
Amazon has been combating coronavirus-related issues on multiple fronts for the past several months. It was hit with a surge of online orders in March as shoppers were panic buying essential items on its site. At the same time, Amazon was policing a widespread price gouging problem and its grocery delivery services were buckling under the weight of online orders.
By mid-March, Amazon made the decision to prioritize shipments of household items and medical supplies at its warehouses, while vastly limiting who could sell goods like face masks and sanitizer, which left many sellers in the lurch.
Last month, Amazon started allowing merchants to ship in some nonessential items, but it is still limiting the quantity of items in new shipments. The quantity restrictions signal that the logistics nightmare might not be over yet for Amazon or third-party sellers, who say the restrictions are preventing their businesses from recovering.
Amazon and the third-party sellers that make up more than half of its sales agree: There were few ways anyone could prepare for the crisis and the supply shortages and delays that came along with it.
“They had no time to plan and that’s the really scary part,” said James Thomson, a seller consultant and former head of Amazon Services, the team that recruits third-party sellers to list on Amazon’s marketplace.
“Amazon is great at forecasting when the data is predictable. Well, this was unpredictable.”
‘No such preparation’
Amazon’s fulfillment and delivery operations are used to taking on millions of packages per day, but the coronavirus presented a unique set of challenges.
The company continues to deal with delivery delays caused by bottlenecks in its logistics network. Shipping methods it would usually rely on have strained capacity, making it harder for Amazon to quickly transfer inventory from one fulfillment center to another. On top of this, Amazon’s last-mile delivery partners struggled to handle the demand from the surge in online orders.
For every wrinkle in the shipping process, time is tacked onto the delivery date, frustrating shoppers and merchants who are used to Amazon’s traditionally speedy one- or two-day delivery promise.
Amazon acknowledged on its most recent earnings call that it quickly became overwhelmed by the demand for essential items at the height of the crisis.
“While we generally have experience in getting ready for spikes in demand for known events like the holiday season and Prime Day, we also generally spend months ramping up for these periods,” Amazon CFO Brian Olsavsky told investors on the call. “The COVID crisis allowed for no such preparation.”
Additionally, in an April memo to sellers, one of the top executives that oversees Amazon’s sprawling marketplace, Dharmesh Mehta, acknowledged the situation “is definitely not business as usual.”
As it raced to keep up with a spike in online orders, it also faced growing unrest among warehouse workers across the country. Workers who feared for their safety on the job were absent for weeks or more than a month as they took advantage of unlimited unpaid time off (a policy that has since been eliminated).
Inside warehouses, social distancing rules meant workers were farther apart than usual, which slowed down the process of getting packages out the door. The company has hired more than 175,000 warehouse workers and delivery drivers to better keep up with the demand.
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