Amazon's COVID-19 Windfall

When I was a kid, there was one place I would go when I wanted to explore and pick up cool stuff.

For me, it was RadioShack.

Yes, I’m serious. There were wires, gizmos, things I could build.

So these last seven months I took a trip back in time, and I did a ton of home repair: construction, updating electronics, adding all kinds of gizmos, and doing the wiring, painting, spackling, and assorted repairs.

I found myself wishing for RadioShack again. Not just for the depth of its inventory, but for how browsing there gave me cool ideas.

And I’m excited to say I found a new modern RadioShack.

It is — wait for it – Amazon. 

Consider: The latches on the sliding glass windows broken I’m gonna say conservatively for 10 years, a trip to Amazon search for “window slider latch“ — and there they are. Nine dollars, delivered tomorrow.



LED lights, Alexa controllers, bulbs, switches, wires — and in almost any size or shape you could require. Washing machine parts, a replacement ice maker for my fridge. Even kits to repair a hole in the wall (including drywall, tape, and spackle).

And, while the staff at RadioShack was sometimes helpful, and often disinterested, the consumer-provided questions and answers and feedback on Amazon is mostly fantastic.

And, what if you get the wrong size part, or if the part doesn’t work well? Amazon vendors respond quickly, answer questions, and often provide an extra part or a mission piece.

Now, I know that part of why vendors are so responsive is that Amazon presumably tracks response times on consumer questions.

And COVID has changed things for Amazon, and for its sellers as well.

For retailers who sell to both Amazon and brick-and-mortar retail, Amazon’s algorithms are relentless. If your product is popular for homebound COVID consumer, Amazon will let you know to increase inventory in its warehouses. And if you don’t stock shelves, Amazon will demote you in its search, moving a popular out-of-stock product deep into the search rankings.

Getting back up can be hard to do. Simply put, Amazon punishes sellers who can’t keep up with consumer demand.

At a time when much of the retail sector is in trouble, Amazon is getting stronger.

“Amazon has the power to bury sellers and suppliers if they don’t comply,” said Sally Hubbard,  director of enforcement strategy at Open Markets Institute, a think tank that has been critical of Amazon and other big tech companies.

“It might be automated through an algorithm, but it’s still the wrath of the monopolist that they are afraid of. ... Amazon can cut off its competitors’ access to inventory by leveraging its monopoly power,” reported ProPublica.

So, how did this happen, and what does it mean? Well, as people looked to buy online, and have reliable delivery and returns, Amazon grew its food, cleaning supplies, health, and beauty categories. And Amazon also doubled down, prepurchasing certain staple supplies, so it was assured of having stock when consumers needed basics.

This puts local grocery stores in a tough spot because no one wants to go in and find empty shelves. Meanwhile, Amazon’s Whole Foods had deep stock and reliable delivery.

So is this good customer service, or antitrust? Or both? For sellers, the decision to prioritize Amazon, and make sure it got stock first, was a business imperative, but also certainly in line with Amazon business strategies.

Amazon defends itself by pointing out that, for example, 2018 retail sales were less than one-third of Walmart's, according to data by the National Retail Federation.

And as ProPublica reported, U.S. retail sales fell a dramatic 8.7% in March, which accounts for the worst monthly recorded decline ever.

So, it’s a double whammy for sellers. With consumers moving dramatically online, and Amazon moving sellers who go out of stock deep down in rankings, sellers moved their limited stock to Amazon, with Costco, Target, and Walmart taking what was lef tover.

The other thing that Amazon did, according to critics, was to prioritize its private label products -- AmazonBasics -- for shipment. So that could mean delivery times for some items were pushed back weeks, while Amazon-branded products shipped in days.

So Amazon was a natural beneficiary as consumers shifted their buying habits, with the lockdown continuing for months But at the same time, the definition of "essential" and "non-essential" goods allowed Amazon to put its  thumb on the scale, and use its warehouse capacity and shipping ability to grow its business, even as consumers faced economic uncertainty and concerns about health and safety.

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