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

Amazon Prime
AP/Joseph Nair

  • Amazon's decision not to restock nonessential items to keep up with the inventory in demand because of the coronavirus could be a frustration for Prime members.
  • While there's still a wide selection of Prime eligible items today, Amazon says, if 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.
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Amazon's new policy that does not allow its independent third-party sellers to restock any items that Amazon deems nonessential could be bad news for Prime members.

While there's still a wide selection of Prime eligible items today, Amazon says, 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 possession.

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 direct suppliers, that it was restocking only 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. 

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

Amazon took this extreme measure to allow its warehouse workers to deal with the increased workload during the coronavirus pandemic. The company also said it would hire 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 nonessential items may still offer free or low-cost shipping. But such offers typically involve three- to five-day shipping, not Prime's industry-best one to two days, said Carrie Miller, who runs the sustainable-skateboard company Bamboo Skateboards and sells through Amazon as well as her own website. Miller is confident that she has enough products in stock at Amazon's warehouses to avoid problems, as sales for her business have remained steady and predictable, she said.

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Some Amazon customers have already gotten notices that items they just purchased on Prime will not arrive in two days as expected but will be delayed to five days, according to emails from Amazon Business Insider has seen.

The most successful sellers use a preparation service to plan their inventory with for even longer range sales. That means warehouses are stocked with items that could take weeks to months to sell.

"Amazon's warehouses are in no way filled with any sort of efficient 'just in time' inventory approach," said Sid Browning, who sells shoes on Amazon. By suspending shipments of non-essential stock during this hectic period, Amazon hopes to limit warehouse workers spending time stocking items "which may not sell for a year or longer," Browning believes. 

However, many other sellers of nonessential items are experiencing increased sales right now as people add items to their shopping carts while buying their soap and toilet paper.

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

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

Another issue is the timing of the temporary policy. It came 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 the fourth quarter of 2019, right before the Lunar New Year, Mercer said.

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 big cost for sellers. Plus, Amazon says it is not accepting new sellers into the program at this time.

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A seller on Amazon's Seller Central support website suggested Amazon offer this program to all sellers who run out of stock while Amazon is refusing to restock so that 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.

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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