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Amazon’s signature Prime Delivery and Grocery delivery services are facing delays due to overwhelming demand from customers on account of the COVID-19 outbreak. The logistical challenges are mounting for the company. AMZN stock is in red after hours.
The coronavirus pandemic has created panic all across the globe with a massive surge in demand for household items. In a blog post on Friday, March 13, e-commerce giant Amazon.com Inc (NASDAQ: AMZN) warned that it is running out of stock for popular household items amid the increasing demand due to coronavirus. Almost all popular items and brands in the “household staples” category were out of stock.
A notice at top of the Amazon marketplace this weekend reads:
“Inventory and delivery may be temporarily unavailable due to increased demand. Confirm availability at checkout.”
Besides, Amazon also said that customers can possibly expect Prime Delivery Delays during these days. There’s a “dramatic increase in the rate that people are shopping online,” Amazon said. Furthermore, it added that its “delivery promises are longer than usual.” In a detailed mention, Amazon wrote:
“In the short term this is having an impact on how we serve our customers,” Amazon said in the blog post. “We are working around the clock with our selling partners to ensure availability on all of our products, and bring on additional capacity to deliver all of your orders.”
Amazon has also assured the customers that they are working on ensuring that no vendor takes benefit of the Coronavirus demand and artificially raises prices on basic need products. “We actively monitor our store and remove offers that violate our policy,” Amazon said.
Amazon Facing Logistical Challenges
Needless to say, Amazon is facing major logistical challenges at this crucial moment. This is also clear from the fact that Amazon’s signature two-day and one-day Prime delivery service is facing major disruption. Currently, Amazon serves over 150 million paid prime members across the globe.
Furthermore, to expand its services, Amazon pumped an additional $1.5 billion during last year’s holiday season. Despite this, the sudden surge in demand has put a glaring challenge in front of Amazon. It has informed customers that services like Prime Now and the Amazon Fresh grocery delivery could likely see delays.
Besides, Amazon’s fulfillment centers will also see a shortage of employee attendance as they have been given leave. With the rising cases of coronavirus, Amazon has asked employees to stay on leave through the end of March. Last Friday, one Amazon employee tested positive for the coronavirus from the Seattle headquarters as confirmed by the company. Amazon has notified all other employees regarding it and has extended full support to the affected employee.
Amazon (AMZN) Stock during Coronavirus Outbreak
The Amazon stock price has collapsed nearly 25% over the last month with the coronavirus outbreak. As of Friday closing, the AMZN stock was trading 6% up at a price of $1785 with a market cap of $888 billion. While many businesses are struggling to achieve their quarterly targets with the virus outbreak, analysts remain bullish on Amazon.
A few days back CNBC analyst Jim Cramer said that Amazon could see a sudden surge in demand amidst the rising coronavirus. This could possibly have a positive impact on the company’s revenue. Besides, the e-commerce giant is also working on supporting customers of its AWS services.