Mar 11, 2020

How online retailers are handling the COVID-19 gold rush

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Like social platforms, they're fighting misinformation and trying to quash price gouging.

There is high demand online for disinfecting wipes, hand sanitizer and face masks — things people hope will prevent coronavirus — so much so that we’ve seen inflated prices for those items on Amazon, eBay, Walmart’s online store and places like Etsy. Other online sellers are making claims that certain products will help, but there’s no proof they will. 

Amazon has removed over 1 million items from third-party sellers, and it says it’s working with officials in multiple states to prosecute the “worst offenders for price gouging on coronavirus-related items.” eBay is blocking new listings of disinfecting wipes, N95 surgical masks and hand sanitizer. I spoke with Louise Matsakis, who covers online platforms for Wired. The following is an edited transcript of our conversation.

Louise Matsakis (Courtesy of Matsakis)

Louise Matsakis: I think that the eBay story says two things. One, eBay doesn’t really have the capacity to handle this on a listing-by-listing basis. They’re just like, “You know what, we’re not gonna deal with this anymore.” Secondly, I think it points to how these platforms are really responsive to public relations crises. eBay doesn’t want to sell something that a bunch of people are really upset about. Amazon doesn’t either. But I think that Amazon is more willing to go listing by listing and try and take a scalpel at this rather than a hammer. EBay is just like, “We don’t have the capacity to even deal with this right now.”

Molly Wood: What about Amazon? Does it actually have the resources to scalpel this problem in the near future and beyond?

Matsakis: I honestly don’t think so. I’m still seeing a lot of price gouging, I’m still seeing a lot of misleading listings for the kinds of face masks that actually won’t protect you from the virus. I think that these issues are going to continue to be a problem, and I think that they show that just like social platforms have to respond to misinformation about a public health crisis, these e-commerce platforms also have to figure out how to have a very controlled response. I think that this is one of the first big crises where these e-commerce platforms have had to figure out a content moderation strategy just like the social platforms have. I don’t know if they were really ready for that in the same way.

Wood: I wonder if this is an arena where, like with so many things with tech platforms, some regulation would help. Tech platforms have resisted a lot of regulation and oversight. But I wonder if it would be helpful for them to have a rule to follow instead of having to go into a secret boardroom and make a rule?

Matsakis: I actually think that’s a great idea. I’ve gotten a ton of emails from people who work in contracting and construction, because they actually need to wear these masks to do their job — by law — in a lot of places, and they can’t get a hold of them. There are contracting jobs that are on hold right now because they can’t actually get the supplies that they need. Those unintended consequences are the things that regulation can prepare for ahead of time. I think that’d be great. It also makes it a lot easier for Amazon to make this decision very quickly and not have pushback from their sellers or pushback from consumers, and they can just point it off to the regulators and say, “This is already a pre-made decision, and we’re following the regulation,” rather than having to exactly scramble and come up with our own piecemeal decisions here, which I think is really ineffective and creates a lot of backlash for them. I think they would actually welcome that. 

Wood: As a result, of course, we’re seeing sellers inflate prices and other sellers even offering products that they say will guard against coronavirus when they actually won’t. How widespread is this generalized misbehavior?

Matsakis: What’s complicated here is that there are legitimate supply chain issues. On one hand, I think that there are opportunistic sellers who are trying to jack up the price of hand sanitizers and face masks to entice shoppers who are scared and willing to pay more than they usually would. But I think that there are also issues where I’ve heard from sellers who were saying that distributors are actually raising their list prices because they’re having trouble getting a hold of stock, or they’re having trouble actually producing these goods at the level of which they’re demanded. I think this is a really multifaceted issue. It’s not as simple as, “This guy wants to make a bunch of money off people who want to sanitize their hands more than usual.” It’s also that this is a really complicated supply chain that we’ve created where now people are accustomed to going on Amazon and getting something cheap in as little as 24 hours to their doorstep. When that’s not possible, you see the cracks in the infrastructure, where there are legitimate issues within China, where it was the epicenter of the virus, originally, where all these factories are, where a lot of things like hand sanitizers and masks are actually created. I think that there are more issues here than you might expect from a supply chain perspective.

Amazon pledged on March 5 to take steps to fight price gouging after Sen. Ed Markey, D-Mass., complained of “unjustifiably high prices” on hand sanitizers and surgical masks to protect against coronavirus infections. (Nicholas Kamm/AFP via Getty Images)

Related links: More insight from Molly Wood

In case you’re thinking that all these conferences being canceled and offices being closed is a bit of an overreaction, I point you to RSA, the big cybersecurity conference in San Francisco last month. Several big companies canceled, but the event went on as planned. Now two attendees have tested positive for COVID-19. A 45-year-old engineer is in a medically induced coma. I know that social isolation is awful and seems extreme, perhaps, but it does save lives. 

On the other side of that calculation, yes, it also disrupts lives and finances big time. South by Southwest, the organization, laid off about a third of its staff as a result of having to cancel the Austin,Texas, event. It is all very, very bad.

Also watching

Apparently nothing is ever bad enough, though, to stop the tech world from getting excited about new Apple products. There were a flurry of hardware rumors online Tuesday after an early build of iOS 14 leaked. One analyst offered up some possible iPhone sales numbers in the China market for February and said they were “a doomsday scenario for the company.”

Speaking of that, Bloomberg reports that the day trading app we just can’t stop following this week, Robinhood, maxed out its credit line in February to prepare for the upcoming market volatility, as the company said. Robinhood said it has paid back the $200 million, but analysts said it’s usually not a good sign when companies max out their credit, nor is it a good sign when they keep crashing during the market volatility they were supposedly preparing for.

The team

Molly Wood Host
Jody Becker Interim Senior Producer
Stephanie Hughes Producer

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