Grocery Order Waitlists, Warehouse Closures, Safety Concerns - Is Amazon in Trouble?
It is hard to think of a situation where a company might benefit from selling less, but Amazon seems to think it’s the right move. Currently so overloaded with orders that they must put new subscribers on an indefinite waitlist to order groceries, Amazon has begun deactivating product suggestions on their website and postponing promotions like Prime Day in an effort to discourage users from buying more than they need. Meanwhile, Amazon has temporarily suspended operation of its fulfillment centers in France at the behest of the French government, who have expressed concern about Amazon’s allegedly inadequate safety measures.
So is it the end of Amazon? Absolutely not - in the opinion of our writing staff, Amazon has the opportunity to emerge from the end of the pandemic even stronger than before. The problems they are currently experiencing are a result of a massive increase in business. But between these new developments and other recent missteps, the next few months might be a little rocky.
Waitlisted for Groceries
Stay-at-home orders and a growing distaste for public spaces like grocery stores have led online grocery orders to skyrocket.
Amazon Fresh, the company’s grocery delivery service, has increased its capacity to fill orders by 60% in order to keep up with the demand. But it’s not enough.
Amazon Fresh is now putting new subscribers to the $119-a-year Fresh Prime program on a waitlist. New subscribers currently on the waitlist cannot place an order until they receive an invitation from Amazon. Wait times are currently unknown.
This is a major problem for Amazon. Existing customers can continue to use Amazon Fresh (though, as we detail later, with potentially limited access to Amazon Whole Foods grocery orders) but are still constrained by increasingly scarce delivery windows. Once you make your grocery order, you must choose a delivery window. Available delivery slots are limited, so even customers that can access Amazon Fresh can be forced to wait days or weeks.
What this means is that a new user who subscribes to Amazon Fresh - and there are a ton of new users (a study found that 28% of all online grocery shoppers made their first order in March) - is looking at a potential wait period of weeks before they receive their first order.
During this wait, they are still on the hook for the $119 yearly Amazon Fresh/Prime payment.
Once they are in and past the waitlist, subscribers to Amazon Fresh also receive the option to place grocery orders through Whole Foods for pickup or delivery. However, even in cases where an existing Amazon Fresh customer already has made it past the waitlist and into the Amazon Fresh program, there is an additional waitlist for the Whole Foods option.
A Whole Lotta Whole Foods
Speaking of Whole Foods, Amazon’s purchase of Whole Foods in 2017 has given a big boost to their grocery delivery capability during COVID-19. Amazon has increased the number of Whole Foods stores that offer grocery pickup from 80 to 150. Store hours have also been shortened in order to allow extra time for fulfillment of both pick up and delivery orders. Some stores have been temporarily closed, repurposed into full time grocery order fulfillment centers.
The demand is so great that Amazon announced it was hiring 75,000 new workers to lighten the load of Amazon Fresh. This is in addition to the 100,000 workers they have already hired to deal with the stress of the COVID-19 demand spike.
We will see in the coming weeks if this can make a difference for people currently on the waitlist.
Data about the specifics of the waitlist - how many people are on it, how long they must wait before they are accepted, etc. - is currently scarce. As the country recovers from the effects of the virus, it is fairly certain that wait lists and distant delivery windows will become a thing of the past.
E-Groceries Are Big Business
But an end to COVID-19 and a return to normalcy don’t mean that things will go back to exactly as they were. Geekwire reports that, per research from RBC Capital Markets, the e-grocery industry is poised to explode. The research concludes that Amazon’s grocery orders alone could produce $70 billion in gross merchandise volume by 2023. This would be an increase of three times what they made in 2019.
So it is likely that Amazon sees major growth as a result of COVID-19. That is, if they can keep up with demand. Amazon is fighting to keep up with demand while struggling to increase its capacity.
€1 Million Fine for Every Nonessential Item Shipped
In France, Amazon has seen their capacity reduced to nothing. The French government has requested that Amazon suspend shipment of all non-essential items as a safety precaution against the spread of COVID-19 in their fulfillment centers. In France, Amazon could be fined as much as €1 million per the rules of this suspension.
Complaints against Amazon began after a French trade union called their fulfillment centers overcrowded, and criticized Amazon’s handling of health issues during the pandemic. Amazon opted to completely shut down every single one of its fulfillment centers, citing that the warehouse operations are too complex to guarantee no non-essential orders are processed.
Amazon France has announced that they plan to remain closed until April 22nd, at which time they plan on having successfully appealed these suspension orders.
So what does this have to do with Amazon US and their grocery waitlists? The primary concern of the French government vis a vis Amazon was that their health and safety regulations were inadequate - could this happen in the US?
Yes, It’s Possible
Yes, it’s possible, and something similar happened in Kentucky in late March: an Amazon returns center was shut down for over a week after 3 employees tested positive for COVID-19. The quality of the center’s health and safety regulations were called into question. Though the center was reopened on April 1st, the precedent was set.
There is another case from earlier in March of a sortation center in New York that was also shut down over employee health concerns.
There have been several cases where the safety of Amazon’s workers have been called into question, including the high profile case of Chris Smalls. In late March, Smalls ordered a walkout of around 50 employees at a Staten Island fulfillment center to protest and draw attention to Amazon’s decision to keep the center open despite reports of employees being infected with COVID-19. Officially, Amazon fired Smalls for allegedly coming to work despite having been in contact with an individual infected with COVID-19.
The official story has raised enough doubt, however, to prompt an investigation by the city of New York. And it continues to develop in some ugly ways.
We’re not taking sides here - though we do send our sincerest hopes that Amazon is treating its employees with respect.
The point is, whether allegations of inadequate safety regulations are true or not, Amazon’s massive spike in business means they are going to be under heavy scrutiny, and their capacity to to fulfill orders can potentially be further complicated by center closures.