With consumers looking to e-commerce with marked frequency in light of the spread of the coronavirus and the “social distancing” mandates that have come along with it, Amazon is swiftly selling out of products, and as of this week, says that it prioritizing certain types of products when it comes to the offerings of third-party sellers on its marketplace site. In a statement released on Tuesday, a spokesman for the Seattle-based e-commerce behemoth said, “We are temporarily prioritizing household staples, medical supplies and other high-demand products coming into our fulfillment centers so we can more quickly receive, restock, and ship these products to customers.”
The freeze on a whole host of third-party products – which will be barred from storage in Amazon’s warehouses until April 5 (and thus, will be not be fulfilled and shipped to consumers by Amazon as part of its sweeping logistics service) – “comes at a tough time for a number of sellers,” the Wall Street Journal reports, as “many have struggled to replenish their stocks on the platform when Chinese factories shut down in response to the novel virus outbreak.”
The temporary halt to Amazon accepting all but certain types of products from third-party sellers does not preclude those parties from offering their products on Amazon’s massive marketplace, of course. “Independent merchants can sell on Amazon without relying on the company’s fulfillment centers,” per the WSJ. However, “that means making arrangements to stock their goods in other warehouses and independently arranging delivery for customers,” at least for the time being.
The Amazon announcement comes as the $1 trillion platform has been increasingly flooded with consumers looking to stock up on products without having to leave home. In recent weeks, Amazon’s Prime Now – the company’s quick delivery service available to Prime subscribers – and Amazon Fresh delivery services, for example, have been “overwhelmed by demand,” which Bloomberg calls “a sign that virus-spooked shoppers are turning to the world’s largest online retailer to avoid going to brick-and-mortar stores. As for its third-party marketplace, which accounts for more than half of Amazon’s annual retail sales (its total revenue for 2019 topped $280.5 billion), is seeing heightened demand.
Considered against the background of the “increased online shopping” that Amazon confirms that it is experiencing, it is difficult not to see how the temporary ban on everything but “household staples, medical supplies and other high-demand products” from third-party sellers in its fulfillment centers could actually prove a coup for Amazon’s enduring quest to boost its private-label and exclusive-brand business, which offer up everything from fashion items and beauty products to home goods and cleaning supplies. After all, as Business Insider reported in April 2019, Amazon has been making moves “to put its private-label brands in front of customers to try to juice sales” (something that has prompted no shortage of antitrust questions and concerns). Now, assuming it has the supply (and manpower) to support such burgeoning sales, Amazon’s private labels seem best-positioned to thrive (as the company cuts back on third-party sellers).
This is a particularly relevant consideration, as some consumers are looking beyond face masks and hand sanitizer, and stocking up on non-necessities in connection with the self-isolation periods that are being encouraged by governments across the globe and the Centers for Disease Control and Prevention in the U.S.
And Amazon is seeing the effects of this. Mitchell Bailey, chief operating officer at etailz, a growth platform for marketplace sellers, told MultiChannel Merchant that in addition to the obvious purchases, such as those for non-perishable foods and cleaning supplies, sales on Amazon are jumping in “a few different categories, in particular, including health and personal care, sports and outdoors and baby products.” Some of these sub-categories “have seen 90 percent growth rates as customers make larger purchases,” he claims.
Speaking about the benefits to be amassed by Target and Walmart, and certainly, also Amazon, Forrester researcher Sucharita Kodali told Fortune that these retailers might be focusing on grocery and pharmacy items, in particular, but extra shopper traffic – which is being driven to brick-and-mortar stores (if applicable) or online, particularly for those essential items – “will help [retailers] in other categories,” such as clothes and home goods. “They’re not going to put a moat around the electronics or clothing sections of their stores, so they will get some extra business.”
For Amazon, that extra business very well might be pointed towards its in-house brands.