How disrupted supply chains and angry sellers could hurt the e-commerce giant.
- Over one-third of all 2019 e-commerce sales in the US involved a purchase from Amazon, as the company continues to grow and diversify.
- While the company has overcome plenty of obstacles in the past, it's possible that the COVID-19 crisis is different.
- Among the factors which could finally bring down the giant are disrupted supply chains, disgruntled sellers, delivery delays, warehouse infections, and nosediving discretionary income among shoppers.
Disrupted supply chain<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjkwOTAyMy9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyMDA1NzkwMX0.OqftSH46Jjo6ipENep6dggVkeaxNOXhlK2KN-40ar_M/img.jpg?width=980" id="4f5d1" class="rm-shortcode" data-rm-shortcode-id="0b29014f034bc6e158abcac05bfc49a4" data-rm-shortcode-name="rebelmouse-image" alt="Amazon Fulfillment Center in Baltimore Maryland" />
Maryland GovPics / Flickr<p>Amazon faces a paradox that could break the system. On the one hand, it's seeing a massively increased demand for household goods, groceries and medical supplies like hand sanitizer and face masks. While this should mean more revenue for Amazon, it also places enormous stress on its supply chain.<br></p><p> Amazon operates on the principle of "just in time" delivery, which means that fulfillment warehouses never hold a lot of stock for any given product. It's based on the assumption that logistics are in place to ship more items as soon as stock levels begin to fall, but panic-buying depletes the inventory before manufacturers have the chance to respond. </p><p> What's more, disrupted worldwide logistics are delaying shipments, and even the US trucking network, which is the lifeblood of Amazon, is <a href="https://www.wsj.com/articles/coronavirus-upends-trucking-networks-with-heavy-one-way-flows-11585173693" target="_blank">facing disruptions</a>. Truckers are avoiding cities with shelter-in-place laws, complaining about the impact of corona regulations, and often face extra journeys to reach the goods they need to deliver. </p><p> Amazon is reshuffling logistics to prioritize essentials, but this in turn is damaging their ability to meet ongoing, although lower, demand for non-essentials. Bear in mind that "non-essentials" includes things like children's toys and games, electronics, and home sports equipment, all of which are in demand from parents and others stuck at home. </p><p> On top of that, most of Amazon's sellers ship their products from China, where industry is currently operating at least <a href="https://www.bloomberg.com/news/articles/2020-03-16/china-manufacturing-and-retail-contract-for-first-time-on-virus" target="_blank">13.5 percent below</a> normal production rates. "How well stores keep products in stock will determine if they thrive or lose share in this crisis," <a href="https://www.protocol.com/amazon-delivery-coronavirus-high-demand" target="_blank">said Sucharita Kodali</a>, vice president and principal analyst at Forrester Research. The jury is still out on whether Amazon will pass this test. </p>
The fall of third-party sellers<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjkwOTE1OC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYwMjIyNTkzM30.yprquXTdnH014nVplFrJF3NCcGITq68vVfqdAXQXq-c/img.jpg?width=980" id="70911" class="rm-shortcode" data-rm-shortcode-id="fe31e2b764ce76010ba4446e89fb777f" data-rm-shortcode-name="rebelmouse-image" alt="Amazon fulfillment center" />
Amazon Fulfillment Center, Shakopee, Minnesota
Tony Webster / Flickr<p>It would be ironic if Amazon's fall were to come about due to the failure of its third-party sellers, given that Amazon has received so much criticism for pushing smaller retailers and brands out of business. Yet it remains a possibility.</p><p>Over <a href="https://www.marketplacepulse.com/stats/amazon" target="_blank">50 percent</a> of Amazon sales are made through third-party sellers, and they are the foundation of the company's meteoric growth in the last few years. However, Amazon has been slowly selling them out, and COVID-19 could finally push them under.</p><p>For many vendors, Amazon is their only point of contact with customers. But now Amazon is <a href="https://sellercentral.amazon.com/forums/t/temporarily-prioritizing-products-coming-into-our-fulfillment-centers/592213" target="_blank">turning away</a> shipments of "non-essentials" to FBA (Fulfilled By Amazon) warehouses, in order to support smooth flow of essentials. This decision has affected approximately <a href="https://www.junglescout.com/amazon-seller-report/" target="_blank">53 percent</a> of Amazon sellers, preventing them from shipping products to their customers.</p><p>Sellers who don't use FBA warehouses aren't affected by this, but part of the rise of Amazon has been to make FBA extremely attractive to both sellers and consumers. For sellers, using FBA gives them a better shot at winning the Buy Box and allows them to surrender the hassles of delivery and returns. Consumers enjoy faster delivery and the reassurance of the Amazon brand when sellers use FBA. As a result, only <a href="https://www.junglescout.com/blog/amazon-freezes-fba-shipments/" target="_blank">6 percent</a> of Amazon sellers don't use FBA, and they are the only ones who'll benefit from this decision.</p><p>Vendors are reportedly <a href="https://www.businessinsider.com/covid-19-disrupting-global-supply-chains-how-companies-can-react-2020-3#balancing-efficiency-and-resilience-3" target="_blank">already looking at alternatives</a> like Flexe, which can give more flexibility for storage than Amazon. If FBA loses its appeal, could the rest of the Amazon pyramid topple as well?</p><p>Adding insult to injury, Amazon still hasn't responded to seller requests to suspend in-house Amazon Working Capital loan payments, subscription fees, and other costs associated with selling on the platform. Amazon might weather the corona storm only to find that its Marketplace has walked away.</p>
Failure to deliver on a core brand promise<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjkwOTEwMi9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYzNzU5Mjk1OX0.OlluiHqkeYfWd_KmSHWZnsLIc9ZAralM7FHiIeVnMNM/img.jpg?width=980" id="99296" class="rm-shortcode" data-rm-shortcode-id="526aad642cd8cbd585ae5dc0d8d00c91" data-rm-shortcode-name="rebelmouse-image" alt="Amazon Pickup & Returns on South St. in Philadelphia" />
Amazon Pickup & Returns in Philadelphia
Satellite movie shows clouds of carbon monoxide drifting over South America.
- The Amazon fires were captured by the AIRS camera on the Aqua satellite.
- A movie clip released by NASA shows a huge cloud of CO drifting across the continent.
- Fortunately, carbon monoxide at this altitude has little effect on air quality.
Infrared evidence<video controls id="48599" width="100%" class="rm-shortcode" data-rm-shortcode-id="b34d42b34326a4271c6879f5b271545d" expand="1" feedbacks="true" mime_type="video/quicktime" shortcode_id="1566894233602" url="https://roar-assets-auto.rbl.ms/runner%2F13864-PIA23356.mov" videoControls="true"> <source src="https://roar-assets-auto.rbl.ms/runner%2F13864-PIA23356.mov" type="video/mp4"> Your browser does not support the video tag. </video><p>You don't need eyes to see the massive fires raging in the Amazon. An infrared camera fitted on a satellite will do. <br></p><p>This movie, based on data collected from 8th to 22nd of August by the Atmospheric Infrared Sounder (AIRS) on NASA's Aqua satellite, shows carbon monoxide (CO) levels at 18,000 feet (5.5 km) above South America. </p><p>The colours denote the density of carbon monoxide, from green (approximately 100 parts per billion by volume) over yellow (app. 120 ppbv) to dark red (app. 160 ppbv). Local values can be much higher. Each separate shot is the average of three days' worth of measurements, a technique used to eliminate data gaps. </p><p>As the clip shows, the CO plume rises in the northwest part of the Amazon, a massive region covering Brazil's western half. First it drifts further northwest, towards the Pacific Ocean; then, in a more concentrated plume, towards Brazil's southeast. </p><p>CO (1) can persist up to a month in the atmosphere and can travel large distances. At the altitude shown in this clip, it has little effect on the air we breathe. However, strong winds can carry it down to inhabited parts, where it can impact air quality. <br></p>
Fishbone pattern<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMTA1OTg4Mi9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY0OTUyNDIxOX0.4esAeMcCHvZr3NzsSlaZFEVlx1zz24hmuzVwHKmsULA/img.jpg?width=980" id="4006b" class="rm-shortcode" data-rm-shortcode-id="39e4d3a58b57aebcc7f08fbbacdb871b" data-rm-shortcode-name="rebelmouse-image" alt="Fishbone Deforestation in Rond\u00f4nia state" />
Deforestation in the Amazon forest, just east of Porto Velho, following the typical 'fishbone' pattern.
Image: Planet Labs, Inc. / CC BY-SA 4.0<p>The rainforests of the Amazon are often called the 'lungs of the planet', because they absorb large amounts of CO2 and produce roughly one-fifth of the planet's oxygen. In other words: one in every five of the breaths you take you owe to the Amazon.</p><p>But the Amazon's respiratory function is impaired by deforestation, a process which continues on a massive scale, both in Brazil and worldwide. In 2018, the planet lost 30 million acres of tree cover (roughly the size of Pennsylvania). This included almost 9 million acres of rain forest (slightly more than the size of Maryland). </p><p>Thanks to efforts by Brazil's previous administration, deforestation in the Amazon had slowed down to its slowest paces since records began; but a recession in 2014 again placed economic needs above ecological concerns. The pace of deforestation increased again and it has only accelerated since the election last year of Brazil's new president, Jair Bolsonaro.</p>
850,000 acres lost<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMTA1OTg4OC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY0MDA4ODIxOH0.zxms4jJgGQ_zMk4poG-cDxHJqeVkAs-fBIdO3CE-OEQ/img.jpg?width=980" id="b7b75" class="rm-shortcode" data-rm-shortcode-id="f629697cc45d2c07a5ecdc909d04b807" data-rm-shortcode-name="rebelmouse-image" alt="Terra Ind\u00edgena Porquinhos, Maranh\u00e3o" />
Amazon forest fires raging in Brazil's Maranhão state.
Image: Ibama / CC BY 2.0<p>Mr Bolsonaro's campaign pledge to open larger swathes of the Amazon for exploitation has emboldened local ranchers and farmers. From January to August this year, Brazil's National Institute of Space Research identified more than 40,000 separate forest fires in the country – 35% more than the average for the first eight months of each year since 2010. </p><p>Few of these fires occur naturally: most are set in order to increase the land available for crops and pasture. As a result, the Amazon lost more than 850,000 acres of forest cover in the first half of this year alone. That's 39% more than in the same period last year and represents an area the size of Rhode Island.</p>
The blazes may be the first step in a hellish downward spiral.
- Never before has so much of the Amazon rainforest been on fire.
- The fires are largely set by humans clearing areas for development.
- The fires may push us into a vicious, irreversible climate pattern.
Why the Amazon is burning: Timber and meat<p>The prime driver for the historical deforestation of the Amazon has been the clearing of forests by loggers and the subsequent allocation of the naked land for cattle grazing in service of the global meat industry. Eating less meat is a strategic goal that the world needs to work toward more aggressively — starting, well, yesterday. The WWF <a href="https://www.worldwildlife.org/threats/deforestation-and-forest-degradation" target="_blank" rel="noopener noreferrer">asserts</a> that 17 percent of the rainforest has been lost over the last 50 years, some 18.7 million acres per year at a rate of 27 soccer fields a minute. </p><p>Such clearing of trees opens up the forest canopy, drying out the understory and the edges of growth areas, according to a troubling essay in <a href="https://theconversation.com/amazon-rainforests-that-were-once-fire-proof-have-become-flammable-91775" target="_blank"><em data-redactor-tag="em" data-verified="redactor">The Conversation</em></a>. Its authors explain how "normally fire-proof rainforests become flammable."</p><p>Prior to the recent surge in fires, rainforest destruction had been on the decline thanks to growing awareness of the Amazon's importance — a PSA promoted by groups such as <a href="https://rainforestfoundation.org" target="_blank">Save the Rainforest</a>, as well as through stricter local regulations. However, it's been picking up again lately. São Paolo got a <a href="https://www.washingtonpost.com/world/2019/08/20/sudden-darkness-befalls-sao-paulo-western-hemispheres-largest-city-baffling-thousands/" target="_blank">wakeup call</a> last week when a cold front, some clouds, and smoke from the burning turned day into night.</p><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMTA2ODY2MC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyNzMwMTQ1NH0.CVdv2Z-CId3-iRpsn0g_OY87iAZ9bdYMgra1YAakziM/img.jpg?width=1245&coordinates=214%2C62%2C70%2C98&height=700" id="26d0a" class="rm-shortcode" data-rm-shortcode-id="f7ff3dc8e1c13b8b62f989c750e046e1" data-rm-shortcode-name="rebelmouse-image" />
NASA's image of fires in the Amazon from August 15-22, 2019. Image source: NASA Earth Observatory
Why the Amazon is burning: Industrialization<p>The return to excessive rainforest exploitation is also a result of the ascension of <a href="https://www.theguardian.com/world/jair-bolsonaro" target="_blank" rel="noopener noreferrer">Jair Bolsonaro</a> to Brazil's presidency. One of the current crop of climate-denying, right-wing politicians rising to powerful positions around the world, Bolsanaro campaigned on opening the Amazon to more farming and mining, and has been weakening environmental protections since taking office. His pro-development stance has reportedly emboldened Amazon farmers who use burning to clear tracts of land — a sizable portion of the current conflagrations is attributed to this practice. Bolsonaro has also been <a href="https://www.survivalinternational.org/articles/3540-Bolsonaro" target="_blank">disturbingly clear</a> in his negative view of the remaining indigenous tribes being displaced, and who once numbered in the millions.</p><p>Bolsonaro has also <a href="https://www.bbc.com/news/av/world-latin-america-49429541/amazon-fires-president-jair-bolsonaro-suggests-ngos-to-blame" target="_blank">claimed</a> that non-governmental organizations (NGOs) were setting the fires to embarrass him, though he later backtracked, claiming he had never accused the NGOs. According to <a href="https://www.greenpeace.org/international/press-release/23932/greenpeace-reactive-on-amazon-forest-fires/" target="_blank">Greenpeace</a>, his government has gone so far as to block international aid intended to help put out the fires. In late August, he <a href="https://www.vox.com/world/2019/8/24/20831282/amazon-fires-brazil-jair-bolsonaro-military-flames-macron-trump-g7-rondonia-amazonias" target="_blank">finally relented</a> somewhat and sent the Brazilian military to the area to fight the blaze.</p><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMTA2ODY2OC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY1MjAyNDc1Mn0.qBssDVYu5MaCtIyk1s-5SGFVlRh7QiutPvhBH81fvzo/img.jpg?width=1245&coordinates=154%2C265%2C72%2C12&height=700" id="1a617" class="rm-shortcode" data-rm-shortcode-id="f85e6e11154a039d4813cf88eebd56ad" data-rm-shortcode-name="rebelmouse-image" />
Image source: Bloomberg / Contributor / Getty
Why the Amazon is burning: Climate change<p>The deliberate blazes set by Amazon developers, loggers, and farmers is unquestionably being aggravated by global climate change: The rainforest is drier now. There have been three "droughts of the century" lately, in 2005, 2010, and from 2015 to 2016. This feels alarmingly like the first phase of the dieback scenario.</p><p> Even without a dieback, a proliferation of fires may be the New Normal as the Earth heats up at an accelerating rate. While some advocate the planting of <a href="https://bigthink.com/surprising-science/reforestation" target="_self">new trees</a> as a way of slowing down the worsening of the situation, it's obvious that we may eventually find ourselves providing more dry kindling.</p><p>According to images taken from satellites, the Amazonas state of Brazil is the most affected area, though Rondônia and Mato Grosso are also battling fires.</p><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMTA2ODY3NC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYwMjAyODk4MH0.ZuMdWLnmoowsxLGS7-NxfLJs8c1K3F7ua5xh2p5l_No/img.jpg?width=1245&coordinates=319%2C75%2C70%2C73&height=700" id="1e4b2" class="rm-shortcode" data-rm-shortcode-id="09a63fba62b2892ead5c92c17344d078" data-rm-shortcode-name="rebelmouse-image" />
The fires in Brazil and the dispersal of their smoke.
Image source: European Centre for Medium-Range Weather Forecasts
What you can do<p>Aside from watching from afar in horror, it's difficult to know what to do. <a href="https://www.charitynavigator.org" target="_blank">Charity Navigator</a> has assembled <a href="https://www.charitynavigator.org/index.cfm?bay=content.view&cpid=7477" target="_blank">a list</a> of five of the best organizations to which you can contribute to help save and restore this area so critical to our own survival:</p> <ul> <li><a href="https://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=11733&fromlistid=448" target="_blank">Rainforest Trust</a> (4 stars)</li> <li><a href="https://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=7663&fromlistid=448" target="_blank">Rainforest Foundation US</a> (4 stars) </li> <li><a href="https://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=7141&fromlistid=448" target="_blank">Amazon Conservation Association</a> (4 stars)</li> <li><a href="https://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=4382&fromlistid=448" target="_blank">Rainforest Action Network</a> (3 stars)</li></ul>
The first wave of the retailer's anticipated automated delivery fleet hits the sidewalks.
- After testing near company HQ, delivery robots are rolling up to random customers' homes in Irvine, CA.
- The cute little carriers — dubbed "adora-bots" — are already adept at navigating people, pets, and other tricky obstacles.
- These may be the droids the shipping industry seeks.
Not their first rodeo<iframe width="560" height="315" src="https://www.youtube.com/embed/peaKnkNX4vc" frameborder="0" allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe><p>Does the Scout beep when it arrives at its destination? Does it bleep or bloop?</p><p>Amazon Scouts were developed in the company's Seattle labs, and first tested near Amazon's headquarters beginning in January 2019. Six of them have been delivering packages in Washington's Snohomish County in daylight hours and all sorts of weather. Being similar in size to largish rolling ice-chests, they're capable of delivering any package fits.</p><p>Amazon reports that the Scouts have been making friends along the way — they cite "Winter the cat and the excitable Irish terrier Mickey" in Washington. While the robots need to be able to cross streets and avoid moving vehicles, safely getting around on sidewalks represents an even more difficult technological challenge. Though streets are fairly ordered spaces with lanes and rules, any given sidewalk can be the Wild West, with unpredictable humans — including fast-moving children — and animals, as well as random obstacles such as garbage cans and recycling bins, moving skateboards, and so on. So far, there haven't been any major problems, which is impressive.</p>
A Scout comes to call<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMDU1NjU3OC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYwOTAzNTc4MH0.6Fv6vuikfw8k-nNH-7H7UwqUnIejMKZZNUWmURfS69I/img.jpg?width=1245&coordinates=233%2C128%2C-3%2C2&height=700" id="19ac5" class="rm-shortcode" data-rm-shortcode-id="76d0285f916868d8bf7b4f0e004abfd7" data-rm-shortcode-name="rebelmouse-image" />
Bleep, bloop! Coming through! Image source: Amazon<p>For Irvine's test program, Amazon is handing out delivery assignments on a random basis, regardless of the delivery option a customer selects at purchase. A big question Amazon's trying to answer is how well the public will respond to Scouts. Right now, encountering a Scout at the end of one's door must seem odd — in Amazon's video, even the actor seems a little unsure about whether she should say "thank you" or something else as she retrieves her package. </p><p>It's likely that we'll get used to seeing automated delivery vehicles rolling and buzzing around in time, and that's part of what Amazon is keeping their human eyes on.</p>
That tricky last mile<p>No matter how <a href="https://bigthink.com/robby-berman/the-science-behind-why-ups-trucks-avoid-making-left-turns" target="_blank" rel="noopener noreferrer">streamlined</a> the process of shuttling a package from one city to another has become, there's still the bottleneck at the end of the trip: A driver exiting their truck on foot and manually carrying a package to a door, and then walking back to the truck. In an industry where every second and penny counts, this last-mile segment has been a source of industry frustration.</p><p>Delivery bots that run continuously in their routes — continuously shuttling goods without lapses — <em>could</em> provide the solution, assuming the technology is reliable, cost-effective, and customers grow accustomed to dealing with droids. The popularity of automated assistants such as Alexa, Siri, and Cortana suggests consumers <em>are</em> moving in that direction. As far as the economic equation goes, these are early days, with lots of research and development costs to be absorbed as the technological and human interaction bugs are sorted out.</p>
The strike is poised to happen on Amazon's upcoming "Prime Day."
- Amazon workers at a Minnesota fulfillment center organized the strike, which is expected to last 6 hours on July 15.
- The workers consist mainly of East African Muslim immigrants, who've clashed with the company in the past.
- Amazon, Target and Walmart are all racing to offer customers the quickest shipping, a move that will likely worsen worker conditions at fulfillment centers.
NurPhoto / Contributor