Supply chain disruption set to hit Amazon ‘Prime Day’

E-commerce is set for another mini-peak in volumes over the next couple of days generated by an anticipated record Amazon annual Prime Day megasale.

However, the two-day discount bonanza could be affected by the well-documented widespread supply chain bottlenecks, making it more challenging to stock stores and distribution centres and keep up with consumer demand.

Cargo marketplace Freightos surveyed 177 small and medium-sized businesses who sell on Amazon and found that just over 75% of them continue to experience supply chain disruptions. Nearly half of respondents said they’re expecting inventory shortages on Prime Day due to freight delays.

“People may plan for Prime Day months in advance, but most sellers... don’t have the cash to bring in the inventory three months before,” said Freightos CEO Zvi Schreiber. “They’ve got to pay for the inventory and then they’ve got to pay for the storage and they’re all working with slim margins.

“Now, with the shipping costs, they’re working with even slimmer margins. So, if you’ve got slimmer margins and you don’t have spare cash, you can’t just fill a warehouse three months in advance.”

Several “cascading” issues are hitting retail businesses at once, highlighted the news channel CNBC, which underlined that the global supply chain was still feeling the ripple effects of the Covid-19 pandemic – including shortages of shipping containers and capacity and air freight capacity, along with materials like semiconductors and plastics, while labour shortages have caused major backlogs throughout the system.

Compounding the difficulties has been a Covid-19 outbreak in the southern Chinese province of Guangdong, where one of the world’s busiest ports, the Yantian International Container Terminal, in Shenzen, is located, leading to a shrinkage in available capacity.

CNBC also quoted Jonathan Gold, vice president of supply chain and customs policy for US trade group, the National Retail Federation (NRF), who said these issues are adding “increased time and cost” to the global supply chain.

In a recent letter to President Joe Biden, the NRF emphasised that across its 16,000-plus membership, more than two-thirds have been forced to add two to three weeks to their supply chains. It called for action on the port challenges. All NRF members reported to the group that their costs had increased as a result of the disruptions.

“It’s not just one sector that’s being harmed as a result,” Gold added. “Everyone is hurt because of it.”

CNBC also interviewed the head of electronics company Plugable Technologies, Bernie Thompson, who said the business has been hurt by the shipping container shortages, along with the continued chip shortage, driven by a surge in demand for electronics.

Making matters worse, some of Plugable’s goods remain stuck on the Ever Given – which was wedged on the sands of the Suez Canal for almost a week at the end in March, disrupting traffic in one of the world’s major ocean shipping corridors. As a consequence, Plugable has had to “severely limit” its participation during this year’s Prime Day.

Thompson expressed confidence that Prime Day will still draw in many brands and sellers, but participation may be “down dramatically” compared to last year, as companies may not feel comfortable that they have enough product in stock to run deals.