Will Amazon’s supply chain break down during peak season? A conversation with Jason Boyce, founder and chief executive officer of Avenue7Media and co-author of The Amazon Jungle: A Seller’s Survival Guide for Thriving on the World’s Most Perilous E-Commerce Marketplace.
Moving into the 2020 holiday shopping season, there were already “cracks in Amazon’s armor,” Boyce says, noting that the company had announced in the second quarter of this year that it was already out of square footage to meet its order-fulfillment needs. In March, Amazon temporarily shut down the ability of third parties to place inventory in its distribution centers (as part of the Fulfillment by Amazon offering), then later placed limitations on what it could handle. At the time, the giant e-tailer was coping with huge shipments of emergency supplies, including personal protective equipment (PPE) needed to battle the coronavirus pandemic. That type of product continues to flow through the system, and with the arrival of the holiday shopping season, Amazon is likely to “break,” Boyce says.
Earlier this year, Amazon announced that it was looking to double its square footage in time for the year-end holiday season. And even before the arrival of COVID-19, it was planning on adding 66 fulfillment centers in the U.S. “The next biggest retailer doesn’t even have that many,” Boyce notes. But the company’s current infrastructure isn’t sufficient for this year’s needs.
Other sellers are likely to face the same dilemma, which extends to a shortage of vehicles and drivers on the delivery end of the e-commerce supply chain. As a result, many consumers will be receiving their packages late this year, well past promised delivery dates. “I’ve been telling folks that if you’re going to buy holiday gifts, buy gift cards or buy now — don’t wait until next week,” Boyce cautions.
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