Amazon: Reaping the Benefits of a Pandemic
Every element of society has experienced a side effect of the coronavirus pandemic, in one way or another. Indeed, it is not only a health crisis, but an economic one. A suspension of crucial delivery services have left retailers waiting for fresh goods to arrive since January. An exception to the rule is the online e-commerce giant, Amazon.
An Opportunity for Online Retailers
People are now relying on the internet for everything from buying groceries to showing up at work. With this, the online retailing behemoth seems to have found their golden opportunity in a nightmare scenario. For example, the company has already added 100,000 new jobs to meet the growing demand for online products. Food products are at the top of the wish list. Unsurprisingly, the company is now reaping the rewards or their $13 Billion 2017 acquisition of ‘Whole Foods’ in 2017.
However, the benefits are not without consequence. With social distancing measures resulting in an influx of people relying on Amazon for their Food and Sanitation needs, the huge amount of traffic has put pressure on Amazon’s online system. This has resulted in widespread delivery cancellations and general sluggishness of their usually prompt delivery timing.
But delayed deliveries are not the only challenge resulting from their rather profitable disaster; in a time where face-masks and hand sanitizers are skyrocketing in demand, the potential for price gouging practices runs parallel to this rise. Indeed, Amazon had recently shut down a variety of vendors selling 1 liter bottles for as much as $350. Compare this to its previous price of around $20.
Though Amazon’s online store has economically benefited from the large scale panic buying, some Amazon retailers are struggling because of a lack of goods to sell, due to the lag in delivery services. These sellers do not so much fear a loss of short term sales, but rather, a plummet within their search engine rankings. If their rank plummets, sales will potentially face long-term damages.
This is due to one prevailing factor; Amazon’s Algorithm. The Algorithm uses a simple mechanism: successful products with positive reviews are given a higher ranking. The same mechanism is applied for poorly performing products, only their rank falls lower. In the case of a widespread pandemic, the delivery of certain goods are halted, and therefore, their products (Or lack thereof) cannot amass reviews. This is a dreadful scenario for sellers, as without the points given to their products by the algorithm, the website falls quickly through the ranks. If the product is unavailable for a short period of time, the consequences can be relatively easy to revert. However, the longer the product remains unavailable, the harder it will become to regain a good ranking.