Reuters is reporting that Amazon could be hit if Chinese factories slow down. It says:
Amazon.com Inc sellers are bracing for product shortages as Chinese workers – worried about the fast-spreading coronavirus – may be unable or unwilling to return to idled factories.
Brandon Young, who pulls in more than $10million in annual revenue from the online marketplace, has a 30-45 day supply of portable Apple Inc watch chargers that could be difficult to replenish because they are built from genuine Apple components that are exclusively made in China.
Plugable Technologies founder Bernie Thompson says he could run out of his top-selling triple display laptop docking station by the end of this month, even if factories open as planned next week.
The entrepreneurs are among the 1 million-plus Amazon sellers whose livelihoods depend on factory workers in China. Their predicament foreshadows the risk Amazon sellers face if China’s fast-moving epidemic results in worker shortages or prolonged factory closures.
Running out of product on Amazon can wipe out a small business. Amazon’s algorithm gives top billing to sellers with the briskest and most recent sales. That prominent placement helps drive even more sales.
“Going out of stock is the best way to kill that,” Plugable’s Thompson said.
Amazon’s revenue from services to third-party sellers accounted for just over 19% of Amazon’s net sales in 2019. That figure did not include proceeds from Amazon’s lucrative advertising business. In a letter to shareholders, Chief Executive Jeff Bezos said those independent merchants accounted for 58% of physical goods sold on Amazon in 2018.
“Currently, there is no interruption to our operations,” Amazon said in a statement.