The COVID-19 coronavirus is wreaking havoc throughout the tech industry. From cancelled trade shows to missed revenue targets, the deadly virus — which has infected over 76,000 people and spread through six continents — is now posing a threat to Amazon Prime Day.
The e-commerce giant is currently working with its third-party sellers to avoid low product inventory for its two-day summer sale event, according to the New York Times. Prime Day 2020 is still over four months away, but the annual sale is a massive revenue generator for Amazon. So it comes as no surprise that Amazon is doing everything it can to ensure this year's Prime Day runs smoothly.
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According to Amazon, Prime members purchased more than 175 million items worldwide during Prime Day 2019. Independent and third-party sellers, in particular, exceeded $2 billion in sales making last year's Prime Day the biggest Amazon shopping event ever for third-party sellers. The New York Times reports that 60% of Amazon sales are from third-party merchants, many of which are China dependent.
Amazon scrambles to prevent Prime Day shortages
Amazon operates by stocking less inventory in its warehouses than other retailers. This "lean inventory" business model lets Amazon operate more efficiently because it's not storing products waiting to be sold. However, this same business model makes it more susceptible to supply problems, especially when major events like a virus outbreak occur.
To avoid supply-chain disruptions, Amazon is sending e-mails to its third-party merchants to ensure that its shelves will remain well-stocked for Prime Day. The New York Times states that Amazon is asking for six to eight weeks of supply on products made in China instead of its usual two to three weeks worth of products.
"Out of an abundance of caution, we are working with suppliers to secure additional inventory to ensure we maintain our selection for customers," an Amazon spokesperson told the New York Times.
This affects all types of products. For instance, a product made in the United States could still rely on pieces that are made in China.
Meanwhile, other brands are advertising less on Amazon's website in the hopes of preserving inventory for Amazon Prime Day.
Amazon did not immediately reply to our request for comment.
Shop now or wait for Amazon Prime Day?
There's still a lot of uncertainty about coronavirus and whether it has the potential to become a pandemic. From a retailer point of view, prices on most tech devices don't seem to be significantly affected just yet. However, as we inch closer to Amazon Prime Day and as the virus continues to spread, it could very well result in higher prices and product shortages.
The best thing you can do as a consumer is to keep an eye on the product(s) you need to buy and purchase them when they hit a price point that you're comfortable with. In other words, don't expect Amazon Prime Day to save the day.
