Amazon prioritizes household staples and medical supplies

A worker loads customer orders into a waiting tractor-trailer inside the million-square foot Amazon distribution warehouse that opened last fall in Fall River, MA on Mar. 23, 2017.

John Tlumacki | Boston Globe | Getty Images

Amazon is telling third-party merchants it’s “temporarily prioritizing” household staples, medical supplies and other product categories in response to a surge in demand from the coronavirus outbreak. 

The change went into effect Tuesday and is expected to last until April 5, according to a document obtained by CNBC. It only applies to Amazon’s U.S. and EU marketplaces. 

Amazon said it made the decision to prioritize these shipments so it “can more quickly receive, restock and ship these products to customers,” adding that it’s “working around the clock to ensure availability on these essential products.” The company told sellers it will notify them once it resumes regular operations. 

“We understand this is a change to your business, and we did not take this decision lightly,” Amazon said in the notice to merchants. 

Amazon told sellers Tuesday it will prioritize household staples and medical supplies.

On Saturday, Amazon said it was running out of stock of popular household items and that some of its “delivery promises are longer than usual.” In-demand items like toilet paper and bottled water showed that many listings were out of stock. Amazon’s normally speedy one-day and two-day delivery options also showed delays of several days.

As a result of the change, third-party sellers are unable to send in any new inbound shipments of non-high demand products to Amazon’s fulfillment centers. Amazon said it will continue to ship out merchants’ existing inventory in its warehouses, as well as any shipments created before March 17. 

The company also warned sellers not to list products in an inaccurate category, as it violates Amazon’s policies and could result in their account getting suspended.

The coronavirus had already threatened to throw many third-party merchants’ businesses into a tailspin. Sellers who depend on manufacturers in China have been looking to shift their supply chain elsewhere as some factories remain offline in the country. Now that the coronavirus outbreak has spread to the U.S., sellers are responding to even greater demand from online shoppers and taking extra steps to manage their inventory.

Sellers continue to fear that if their products run out of stock, Amazon’s ranking algorithms may demote their listings from search results. Amazon advised sellers to put their businesses in “vacation status” to protect their listings from being demoted in search results by its ranking algorithms. Other sellers pulled back their advertising spend on products that face low inventory.

Amazon addressed these concerns in its notice to sellers, telling them it’s “working diligently to account for this change in your Inventory Performance Index (IPI) score and in storage limits for the following quarter.” Amazon uses an IPI score to measure sellers’ historical sales, inventory levels and other factors to determine how well their inventory is performing in Amazon’s fulfillment network. 

In addition to household staples and medical supplies, Amazon told sellers it’s prioritizing products in categories like baby products, health and household, beauty and personal care, grocery, industrial and scientific and pet supplies. For sellers who offer products outside of these categories, they can still ship out orders to customers by using Amazon’s Fulfilled by Merchant service, which allows them to list products on Amazon’s site and ship out orders themselves.

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