How Coronavirus Could Slow Down Amazon Deliveries

Intro amid the rapid spread of Corona virus businesses around the world are closing doors and government officials are telling people to stay home meanwhile Amazon faces perhaps its biggest challenge yet the pandemic has triggered a surge in online orders so big it's hiring a hundred thousand new workers and halting the intake of any new inventory that isn't in high demand and in many ways Amazon is in a position of strength when you have a situation like this where consumers don't want to shop in traditional brick-and-mortar more of them are going on to online channels like Amazon to buy products and Amazon takes a piece of every single one of those sales long lines and empty shelves have prompted some grocery stores to limit food purchases sending millions of shoppers online where Amazon faces uncharted territory as it attempts to police its huge network of listings and sellers that's changing more rapidly than ever before Amazon's got a monumental task in front of them they need to protect buyers but they also have to make sure that they're communicating effectively with sellers who may be listing items inappropriately we wanted to find out how Amazon is handling the flurry of shoppers waiting for their orders and what the pandemic means for sellers with inventory stuck in China and for the warehouse workers and delivery drivers hustling to get Amazon packages out to those in need [Music] Amazons Response in a blog post amazon warned that popular household items are running out of stock and some orders are facing delays so although it's asked all employees to work from home if they can it's 110 us fulfillment centers are largely still up and running with most of its 250,000 us warehouse employees working to get packages out without heavy delays if you're a warehouse employee for an Amazon facility there is no work from home option fortunately they're in a situation where many of the warehouses are heavily reliant on robots and so you need a whole lot fewer employees that you would think to run some of these warehouses still Amazon is adding those a hundred thousand new employees to meet the surgeon demand from people relying on Amazon service during this stressful time what happens if Amazon gets just disrupted what happens if Amazon can't you'll get their workers into the warehouses a handful of warehouse workers have begun testing positive for coronavirus Amazon temporarily closed one facility where there was a confirmed case in Queens New York for additional cleaning and sent workers home with full pay there are at least five confirmed cases among Amazon workers in Europe Amazon is offering two weeks paid leave for hourly workers like them who are diagnosed or quarantined and unlimited unpaid time off for hourly workers through the end of March still hundreds of Amazon workers in France protested asking for a halt in operations and workers have circulated a petition calling for extra measures like paid leave regardless of diagnosis hazard pay for working on location and a complete facility shutdown in the event a co worker tests positive but Thompson says Amazon will still be able to get orders out even with some warehouses shut down there are so many warehouses already in place and Amazon has done such inventory balancing across those warehouses that let's say a warehouse burns down or let's say everybody in the warehouse gets sick Amazon can still move inventory around fairly quickly or already have it already in place elsewhere to ensure the customers get the products they want still Amazon admitted that some of its ThirdParty Sellers delivery promises are longer than usual there have been some delays because Amazon's trying to fight a multiple front war right now in terms of making sure that they can still do one day prime they can get deliveries executed as quickly as if there were no crisis right now manpower might be limited based on some people calling in sick to help speed up delivery for household staples medical supplies and other high demand products Amazon is prioritizing space for these items in its warehouses this means it's no longer accepting shipments in its warehouses of any other items from third-party sellers until April 5th while Amazon prioritizes customer needs sellers whose products are not household staples or medical supplies are facing huge losses we have a lot of Western products and our best selling products is a children's pink cat would Jerry kibosh has more than 15,000 items for sale on Amazon he says this will halt more than 50 percent of his business depending on his rate of sale and how long the moratorium lasts for others it means a total loss of work it meant laying off employees I mean there's no work here if we can't send things out so we've had four that had to lay off until Amazon opens back up Crystal Graham runs a prep Center where third-party sellers pay her team to package items in compliance with Amazon standards and shipped them to Amazon warehouses she estimates 95 percent of her business is currently at a standstill the employees and everything they're worried they're all worried because you know if we closed there's nothing else here if it continues we will be forced to downsize back to one or two people it could close our doors another prep center owner told Amazon Prime Now CNBC her losses will be 100 percent until Amazon lifts a hold meanwhile customers are having trouble getting orders from Amazon's usually rapid prime now service it normally offers tens of thousands of items with free two-hour delivery but many delivery time slots are unavailable on Saturday I ordered a prime now order it around noon and it didn't get delivered until Sunday at 4 p.m. and normally you can get things delivered in 1 to 3 hours and this area an Amazon spokesperson told CNBC we are experiencing an increase in demand for prime now and are working hard to increase delivery availability Amazon fresh which usually offers grocery delivery from local Whole Foods stores within two hours is highly delayed with time slots in some regions not available until six days later as customers experience delays coronavirus is also wreaking havoc on the supply chain for third-party sellers because so many products come out of China we have hundreds of clients and over 50% of them today are experiencing delays in replenishing inventory we're seeing that so many companies really don't have a contingency plan in place all their sourcing it is out of one country so it's unfortunate that we are so dependent on Chinese manufacturing there's just a lot of uncertainty and fear about anything that's being sourced in China because China had to take such draconian measures to stop the spread of the coronavirus and it worked to a large degree but it seems like it's also causing a lot of problems and disruption in the supply chain Bernie Thompson is one Amazon seller Amazon Sellers struggling with supply several of his items including his second best seller are now out of stock we were selling near two three thousand units a month of that product and now that supply has totally disappeared Bernie Thompson's pluggable technologies has seen revenue growth every year since he founded it in 2009 until now this year with coronavirus we expect that we might not get our 11th year as a as an up year like many sellers Thompson's inventory of a hundred and twenty consumer electronics products is largely manufactured in China but he says even those coming from Thailand and Taiwan are impacted we're out of stock of five out of our 120 products right now probably affecting you know maybe 7 to 8 percent of our revenue right now that we've lost I think for anybody who's getting products out of China there will continue to be this problem and quite frankly unless companies are able to find secondary sources of supply very quickly which is quite unrealistic I think you're going to see some companies that have a very very hard time absolutely things going for the inventory he does still have it's hard for Thompson to get it to customers because he's asked the majority of his 35 employees to work from home we really tried to do right by customers and try to create as much branded attachments we can through you know great products great support great information about our products but if they keep get the product that's all it's all kind of eliminated for a lot of these companies the out of stock situation is not just one or two days it's a month it's two months and I've heard worst case situations where it could be as many as six months before some of these small private label sellers get back in stock the Western we're sold by Jerry kvish is also largely manufactured in China product that we thought would be shipping two or three weeks ago we're now being told may ship end of April early May and the issue they have is they don't know when their component suppliers are going to open up it's a serious issue you do not want to long run out of stock on Amazon you're punished severely by the algorithm Amazon sent a notice to sellers advising them to cancel orders they're no longer able to fulfill and suggested putting their businesses in vacation status to protect their listings from being pushed lower in the rankings if we go out of stock of a product there's a hundred other brands many whom are Chinese brands who are there with stock behind us since 2013 we've gone from less than 1% of sellers on Amazon being Chinese sellers to now almost 48 49 % of sellers in the United States being China China based sellers as US sellers like Price Gouging Thompson begin to see their bottom line impacted by inventory shortages customers are also feeling the squeeze some of the first items showing out of stock are products like disinfecting wipes hand sanitizer and toilet paper in some cases sellers who do still have these items in stock have turned to price gouging packs of Purell for $400 face masks for 300 toilet paper for $100 emergency for 90 and disinfecting wipes for 70 I believe that this is something that amazon must act on quickly and decisively because it's damaging not only Amazon's reputation is damaging our reputation just by being there certainly with now over $300,000 a year joining the marketplace half of them coming out of China that's a lot of sellers to be monitoring still Amazon is coming down hard on these sellers removing more than five hundred and thirty thousand listings and terminating more than 25 hundred seller accounts Amazon told CNBC its policy on fair pricing is long-standing and that there is no place for price gouging on Amazon we have the same situation where we had SARS a few years ago where certain types of health products are being sold for ridiculous amounts of money over and above what they might otherwise be sold for the reality is Amazon is taking a lot of steps but there are 600 million products in the Amazon catalog so even though Amazon removed for example a million products already to date the fact is there's another I'm sure hundreds of thousands more that are being added regularly in order to more easily police price gouging Amazon is limiting the number of sellers who can offer affected products like face masks hand sanitizer and disinfecting wipes although it won't remove existing listings unless they're in violation of the company's fair pricing policy if a customer comes across price gouging amazon says to report it in the app or call customer service we were critical of some of how their platform was used in some of these products that use aureus ly were priced Amazon immediately got back to the state of California and are working cooperatively to go after those that are taking advantage of customers that utilize their platform overall I think they're trying to do the right thing they have already stated that they're working with law enforcement to try to hand over price gatherers and people who are trying to profit ear off of the virus Amazon removed items sold by this seller in Tennessee who has more than 17 thousand bottles of hand sanitizer left after stockpiling it before the crackdown Amazon says it's deployed an additional dedicated team that's working 24 hours a day 7 days a week to search for investigate and remove offers for unfairly priced products majority of third-party sellers are trying to do the right thing there's usually depending on the situation maybe 5% or less of sellers who are actually actively trying to do something that's that's negative or in some way bad actor type behavior Contaminated Packages with so many items coming directly from China and is also facing customer questions about contaminated packages the reality is it's very unlikely to contract the virus from an Amazon package even if it came Priority Mail it's going to be three or four days before it gets here that's more than enough time for any challenges with with a cough or sneeze carrying over to you the customer picking up the product and becoming infected all you really need to do is make sure that you wash your hands as soon as you touch something that comes in from the outside anyway the World Health Organization says it's safe to receive a package from China the virus doesn't last long on objects like letters or packages it also says the likelihood of an infected person contaminating commercial goods is low to help curb the spread of the virus amazon has asked any of its contract flex delivery drivers who feel sick to stay home of course people shouldn't work while they're sick but if you are a contractor you're not going to get paid unless you actually work contract workers driving for lyft or uber meanwhile are being offered up to 14 days of sick leave if they're diagnosed or quarantined to help Amazon is creating a 25 million dollar relief fund for delivery drivers and seasonal employees allowing them to apply for grants ranging from four hundred dollars to five thousand dollars if they're diagnosed with corona virus in addition it's offering a two dollar pay raise for all delivery and warehouse workers this particular virus has caused everybody to re-evaluate what does it mean in this country to pound it out just keep going even if you're sick even if your nose is runny just keep going to work well that's not always necessarily the right idea another safety concern is False Claims false claims that certain items can prevent the spread of corona virus if you make a claim that something is supposed to cure or prevent or treat a disease that you need some sort of laboratory proof or some sort of testing to show that that's actually the case and if you don't have that proof then you can't make that claim and that's something that's actually mandated by the federal government in 2011 Rachel Johnson Greer was in charge of finding products with unsupported claims like this for Amazon which uses internal keyword searches to sniff them out you have people who are saying Crona space virus or misspelling trona virus and so they have to come up with ways to find it when people are deliberately trying to game the system because you do have people who are making claims that some sort of supplement can help boost your immune system and cure coronavirus or prevent you from getting crota biros amazon says it's removed millions of products that make unsupported claims about coronavirus in addition amazon has stopped allowing sellers to pay to be at the top of advertised listings when a customer searches the word coronavirus it's also added a link to official information from the Centers for Disease Control and Prevention to the top of any customer searches for coronavirus kovat 19 and 95 masks and other coronavirus related content in another forward-facing response to the pandemic Amazon is in talks with the Gates Foundation to help deliver free at-home testing kits in the Seattle area it aims to process thousands of tests per day keeping sick people out of doctors offices where they could expose others I think they will actually build trust because they're saying hey we recognize there's a problem we're a very large marketplace it is whack Amole is but we as Amazon are doing everything we can to protect you the consumer they're marshaling as many resources to prevent any sort of damage to the reputation as possible buyers need to buy with confidence they need to know that Amazon is regulating their third-party sellers and the prices and they certainly don't want expressions of outrage to be surfacing in public right now while Amazon continues to push orders out amid the outbreak questions remain about the long-term impact on the workers and sellers that fuel Amazon's massive marketplace my concern as a seller is that some of the decisions that they make may not work at the lower levels because they do not necessarily understand how the unintended consequences are gonna ripple through the selling community so it's an unknown and unknowns are dangerous for all of us everybody needs to be worried about the economic effects because we've never had a supply disruption like this this is like you know a gigantic Rock a landing in a small lake we know the the ripple effects are gonna be big we just don't know how big [Music] you