For Amazon, Walmart and others that rely heavily on manufactured goods from China, the coronavirus has slowed production and closed factories. As a means to slow consumer demand, many brands are spending less on advertising and promotions to weather the virus.
These shortages are expected to continue throughout the summer causing alarm to Amazon for the infamous “Prime Day” deals. Amazon is expected to feel the shortages first, since they run their inventories lean. All retailers are expected to feel the impact of lower inventories.
What makes warehousing operations efficient is lean inventories (high turns) but in events like contagious viruses, the best-in-class sometimes suffer first. With something so unpredictable and at the same time scary, people stop shopping when their confidence erodes.
In this last week, the stock market sell-off has shown investors believe the worst is yet to come.