Your Prime membership could soon be useless - unless you're only buying Amazon's newly approved products

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Your Prime membership could soon be useless - unless you're only buying Amazon's newly approved products

Amazon Prime

  • Amazon's new policy to not restock non-essential items in order to keep up with the inventory in demand due to the coronavirus could be a frustration for Prime members.
  • That's because, as sellers run out of stock stored at Amazon's warehouses, they will have to ship items from stores in their own possession. Those items would most likely not qualify for free two-day shipping.
  • The restocking ban is supposed to be lifted on April 5 and under normal circumstances most sellers would not run out of stock by then.
  • But circumstances are not normal right now.
  • Visit Business Insider's homepage for more stories.

Amazon's new policy that does not allow its independent, third-party sellers to restock any items that Amazon deems non-essential could be bad news for Prime members.

That's because if these sellers run out of stock in Amazon's warehouses before April 5 - the date that Amazon says it will resume accepting stock - the merchants will have to fill customer's orders by shipping the products directly to buyers from the stock they have in their own possession.

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Such sales typically don't qualify for free Prime shipping.

To recap: Earlier this week, Amazon told its merchants, including third-party sellers and its own direct suppliers, that it was only restocking items in six categories until April 5: baby products; health and household (including personal-care appliances); beauty and personal care; grocery; industrial and scientific; pet supplies.

However, as sellers told Business Insider, not every type of product in all of those categories will qualify to be restocked. For instance, not every third-party food product or every product for pets will be accepted into warehouses.

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Amazon took this extreme measure to allow its warehouse workers to deal with the increased workload during the pandemic. The company also said it will be hiring 100,000 people to help it keep up with demand.

But Amazon sells millions of products that do not fall into those categories.

Some sellers of those non-essential items may still offer free or low-cost shipping. But such offers typically involve 3-5 day shipping, not Prime's industry-best 1-2 days, said Carrie Miller, an Amazon seller of sustainable skateboard company Bamboo Skateboards, who sells through Amazon as well as her own website. Miller is confident that she's got enough products in stock at Amazon's warehouses not to run into problems as sales for her business have remained steady and predictable, she says.

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But other sellers of non-essential items are experiencing increased sales right now as people add items to their shopping carts while buying their soap and toilet paper.

Greg Mercer, CEO of Jungle Scout, an authorized Amazon partner that helps third-party sellers track inventory and sales trends, says Amazon's sales these past couple of weeks have been similar to Amazon Prime Day. That's Amazon's massive annual sale for Prime members.

That means that sellers who cannot restock may run out of inventory by the end of the month, he says.

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Another issue is the timing of this temporary policy. It comes right when many Amazon sellers were unusually low on inventory. Many sellers buy their wares from Chinese manufacturers. And China is only now getting up to manufacturing speed after the country shut down over the coronavirus. Some of these sellers have been waiting on orders they placed in Q4 of 2019 right before the Chinese New Year national holiday, Mercer says.

Amazon does have a program called Seller Fulfilled Prime, which allows sellers who ship on their own to display the Prime badge (which helps entice buyers) if they commit to free two-day delivery. But it's not a popular program because free two-day shipping is a bigger cost for sellers. Plus, Amazon says it is not currently accepting new sellers into the program.

A seller on Amazon's Seller Central support website suggested that Amazon offer this program to all sellers who run out of stock while Amazon is refusing to restock, so Prime customers would still get their products in two days and sellers would not lose the Prime badge displayed next to the item. But Amazon did not respond to that comment. Amazon did not respond to Business Insider's request for comment.

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Are you an Amazon insider with insight to share? Contact Julie Bort via email at jbort@businessinsider.com or on encrypted chat app Signal at (970) 430-6112 (no PR inquiries, please). Open DMs on Twitter @Julie188.

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