If you go to AvaCare Medical‘s website, you’ll see that hand sanitizer and surgical masks are out of stock. It’s a sign of the times, driven by fears of COVID-19, the coronavirus that has caused a global panic, and it’s not clear when those items are going to be in stock again.
I interviewed Steven Zeldes, CEO of Lakewood, New Jersey-based AvaCare Medical, to hear from the front line of medical supplies in the midst of the COVID-19 scare. The company provides medical supplies via its website for everyone from homebound patients to big hospital chains. And in seven years of business, Zeldes has never seen such demand. His company offers a look inside a supply chain that has come under enormous stress, even in an age of lightning-fast deliveries, online ordering, and automated manufacturing.
The company doesn’t accept insurance coverage. But people are freely throwing their cash at AvaCare these days. The company has 60 employees and multiple warehouses that are working around the clock.
“In the last few weeks, we have had a complete frantic buying,” Zeldes said in our interview. “These are not our typical customers. We are an online company that typically has customers in the U.S. A few weeks ago, we started getting thousands of cold emails, live chats, and website messages from people in different countries looking for face masks, thermometers, hand sanitizers, gloves. We’ve never seen anything like this.”
COVID-19 has infected more than 106,000 people around the world to date, and more than 3,600 people have died.
Asked if Silicon Valley companies are also hoarding a lot of supplies for their work campuses or employees, Zeldes said he didn’t know. Some companies are shutting down their campuses and sending employees home, while others are stocking up on supplies to keep the workplace sanitized.
“We are getting orders from large corporations, where they are buying, whether it be Purell or face masks, to be able to make sure that their employees are safe,” he said. “There are so many orders I don’t know that companies are standing out.”
Now that the coronavirus has come to the U.S., Zeldes said the medical supply business is being “totally overwhelmed by the thousands.” The site typically ships an order within 24 hours. But now the supplies sell out as quickly as items are restocked and reposted on the site.
“We’re doing our best to get them the items that they’re asking for,” he said. “Our customers are not just health care facilities, nursing homes, or hospitals, but also the regular people who are at home. It has been crazy the last two weeks.”
In a normal week, a typical customer will order a few weeks’ worth of gloves or a case of supplies.
“Now, we’re getting orders for thousands or hundreds of thousands of items,” Zeldes said. “We have never even seen anything remotely close to what we are seeing now. The regular customer who was buying one case is now buying five cases.”
AvaCare Medical is not raising prices for those items, except where its costs are going up based on price changes from its own suppliers. These are mainly U.S.-based companies that are national medical supply manufacturers and distributors with operations in the U.S. and abroad.
AvaCare Medical anticipated the demand and increased its own orders.
“So we were able to service our customers, and a lot of them are these health care professionals,” he said. “If they are hospitals or health care professionals, we are going the extra mile to get it for them. We think this is going to go on for a while. We are seeing items going on allocation and back order. I believe we are looking at depletion of certain items for the foreseeable future, at least for a few months. It’s going to take time for restocking to happen.”
And now the orders are coming from everywhere, including overseas. Since hand sanitizers can be made from alcohol, the best-selling item over the last few days has been alcohol. Now that is also out of stock.
“We are selling thousands and thousands of cases,” he said. “It’s nonstop. Individual orders are in the hundreds of thousands, or millions, when it comes to the face masks and thermometers.”
President Donald Trump said that 3M was going to start making 35 million masks a month, and that there were 40 million masks in stock as of a week ago. But the items are currently out of stock.
“What’s happening is that people [who] don’t necessarily need it have these items and are buying them,” Zeldes said. “Our health care professionals are the ones that are caring for people in situations that have to be protected, and they’re not getting what they need. Over the last two weeks, we have gotten requests for much more than 35 million. That’s just us, AvaCare Medical. I can imagine what is going on everywhere else.”
If this comes to an end, and all of a sudden everyone stops ordering, AvaCare Medical will be able to turn on a dime, Zeldes said. The company typically ships its orders within 24 hours, and it doesn’t post items for sale that would be delivered in the distant future. Still, it’s possible that tens of thousands of orders might evaporate if there is a change in the panic mentality.
As for the timing of shipments, Zeldes said, “If an item gets out of stock, we quickly pick it off our website. But typically if anything is on our site, we are usually in stock most of the time. We get so many orders in a span of a few minutes that it just depletes the whole inventory. But typically anything that is showing in stock on our site we typically have in stock and able to ship that day as a delivery.”
Zeldes added, “I am the CEO of the company, and I have had to go over and help some of the departments out. I have been involved in the daily operations making sure that everything is getting out, everything is being done, and we get help where people need help.”