Amazon Sellers That Depend on China Have Already Taken a Hit From Coronavirus

They could miss out on Prime Day if factories don’t reopen soon

a woman opening a shipping box
Amazon sellers face product shortages as factory closures and slowdowns in China continue.
Sources: Amazon, Getty Images

Among the top Amazon sellers, 49% are based in China, according to data from ecommerce intelligence firm Marketplace Pulse. Of course, Amazon sellers based elsewhere source goods from China, too.

Marketplace Pulse CEO Joe Kaziukenas said he doesn’t have an exact figure, but it’s safe to say the majority of Amazon sellers are either based in China or buying goods from there.

But as the coronavirus outbreak continues, manufacturing in China has slowed. The disruption to Amazon customers will likely be minimal—as Eric Kauss, director of marketplace operations at performance marketing agency Tinuiti, said, “There’s always something to buy on the platform.”

However, disruption to its third-party sellers, which CEO Jeff Bezos proudly noted accounted for 58% of Amazon sales in 2018, is already happening.

The Lunar New Year buffer

Eric, a third-party seller who asked to be cited only by his first name over concerns about copycat sellers, noted that the outbreak coincided with factory shutdowns for the Lunar New Year. That means importers had placed larger-than-usual orders beforehand, which should tide them over for a while.

But since then, the government has extended factory closures to March in some areas, and it remains to be seen when China’s manufacturing industry will be up and running at full speed again.

“I would say about one-third of the factories we work with are still closed, and many of the ones that are not closed have told us to expect slower production times,” said Jonathan Weber, a seller focused on products like outdoor equipment and office supplies.

That’s because employees who live near reopened factories were able to return to work, but those from other provinces remain “self-quarantined,” he added.

“It’s been a very difficult moment for a lot of Amazon sellers,” said Deneiro Bartolini, a merchant with products in categories like kitchenware, baby items and mobile accessories.

Combined with tariffs levied by the Trump administration, Weber agreed it is “definitely difficult to source [products] at this time.”

An Amazon spokesperson said it has worked with suppliers to get additional inventory, and provided guidance for sellers. It will continue to monitor developments and take appropriate steps, the spokesperson added.

Waning inventory could be an issue on Prime Day

For his part, Bartolini said he typically plans ahead to ensure he has enough inventory for the break, but “this time the halt has been so long that lots of sellers either ran out of inventory, or they had to raise prices to avoid running out.”

Weber, too, said the housewares he sources from Guangdong province, which is about 600 miles south of the outbreak’s epicenter in Hubei, will go out of stock because he has no alternatives.

“We will probably raise the prices a bit until we run out of stock, and then stay out of stock until the factories are back online,” Weber said. “For complicated products, it just takes too long to remake the supply chain.”

Meanwhile, Amazon is reportedly stocking up on its own first-party inventory. But if it runs out of anything, out-of-stock goods will be a “fantastic opportunity” for third-party sellers, according to Guru Hariharan, CEO of Amazon platform CommerceIQ and former member of Amazon’s inventory planning team.

“Amazon knows there is a safety net of [third-party sellers],” Hariharan said. “For every item that goes out of stock, [a third-party seller] wins the Buy Box and can start to make good money because of out-of-stock issues from Amazon.”

Hariharan said some third-party sellers have raised prices, especially for high-demand products like hand sanitizer, which has in turn seen search frequency increase 10.5x on Amazon month over month. (Wired reports Amazon is telling merchants not to raise prices on face masks to “exorbitant levels” and is deleting listings for overpriced masks, but its efforts to control pricing elsewhere on the platform are unclear.)

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