How to Diversify Your FBA Supply Chain Amidst the Coronavirus

Healthcare isn’t the only industry impacted by the coronavirus.

The global retail industry is being hit hard. 

Amazon’s business model is fundamentally based on creating a marketplace where people globally can buy everything from A to Z.

But how can this online retail giant with over $200 billion worth of revenue uphold its reputation when the coronavirus is having unprecedented effects on the FBA supply chain?

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The New York Times reports that Amazon has been trying to do everything possible to prevent what could be an inventory catastrophe. The company has:

  • Made larger, more frequent orders of Chinese-made products that have already been shipped to the United States
  • Contacted some third-party sellers to determine how their inventory has been affected, especially since ad revenue could be lost as merchants reduce ad purchases to hold on to their existing inventory for longer
  • Begun to think about the potential inventory fallout for Prime Day which is scheduled for July 6

Amazon Coronavirus concern speaks volumes. You are probably even more troubled as an FBA seller who depends on inventory from China in your supply chain. It’s time to act before lack of inventory starts bleeding your FBA seller business dry. Here are some steps that you can take to diversify your FBA supply chain despite the uncertainty the coronavirus brings. 

Interesting: Amazon Business Plan in Crisis

Establish Direct FBA Supply Chain Relationships with Manufacturers in Other Countries

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Most FBA sellers turn to China because it's renowned for offering cheap labor which drastically reduces the cost of goods. You want the best profit margins possible.That’s fair. Cheap labour, however, isn’t the only factor that should be considered. Some other factors to consider are:

  • Shipping fees
  • Automation
  • Your ability to remove as many middle men in the supply chain as possible

It has been said that Thailand is one of the best alternatives to the Chinese supply chain. Here are some facts about Thailand that support this claim. 

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Is Thailand the best place for your supply chain? The answer to this question depends on the products you sell and how well you are able to effectively handle the logistics from this new location. Do your research before diving in!

Establish Connections in Countries that Know How to Diversify Logistics Risks

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One of the risks associated with working with manufacturers and suppliers outside of China is that they may not have well-developed supply chains.Some of these manufacturers may have to source their raw material elsewhere and the shipping time varies. There are so many factors to consider that it may be best to work with a more expensive supplier in a developed country that already has a handle on a well-diversified supply chain. Some countries to consider include:

  • Switzerland
  • Norway
  • Finland
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Final Words

There is no quick solution for the supply chain woes that could arise from the coronavirus outbreak. A good long term strategy is to diversify your FBA supply chain. China isn’t the only place where you can find capable suppliers and manufacturers. Always remember to ask the seven critical questions outlined before taking the first step to connect with a new supply chain. You don’t want our efforts to be wasted.


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