Hoping to clean up the hand sanitizer business, a horde of entrepreneurs upgraded the category by trying to take advantage of an opportunity created by the COVID19 virus. In a shopping frenzy, the product flew off the shelves and caused massive demand. A simple formula and instant delivery of ingredients have enabled many small businesses to manufacture products for sale and distribution to consumers. With traditional manufacturers trying to increase inventory, including an increasing number of ad hoc opportunists, oversupply seems very likely.
In view of the sheer number of online product offers, one could expect the market to become overloaded. At Amazon alone, we found 310 deals for "hand sanitizer" that sold from $ 11,543 for a 265-gallon container ($ 2.94 / ounce) to $ 7.00 for a one-ounce bottle. In contrast, Dollar General Stores sells a 2-ounce bottle of hand sanitizer for just $ 1.00. These large price differences cause great confusion among the public as they try to ensure a continuous supply of the product. However, the demand appears to be undiminished.
The government estimates that the hand sanitizer market will grow to $ 5.1 billion by 2024, an increase of 600%. The growing demand for the product brings some major players to a once fragmented market. Exxon / Mobil announced the production of 160,000 gallons of hand sanitizer at its Louisiana refinery, with the plan to donate to local and national healthcare providers and first responders. And they are not alone in this endeavor. Many large distilleries, including Anheuser Busch and Bacardi, are currently producing hand sanitizers to donate to facilities in their local communities.
Major discounters like The 99 ¢ Store, Dollar General and others, including Walmart and Target, are currently selling hand sanitizers at low prices. Although demand is over the roof, prices for retailers and discounters are stable with no signs of significant increases. It raises the question of whether the market is oversaturated with so many hand disinfectant manufacturers.
The supply chain indicates growing demand for hand sanitizers, but there are also other issues such as the lack of plastic containers and their perceived environmental impact. The FDA requires that the only ingredients in pharmaceutical quality are used in the manufacture of disinfectants and that these components are in short supply. Many manufacturers state that they have reduced capacity due to supply chain interruptions. It is feared that the market will not be able to meet growing demand. However, this fear has not materialized.
In the consumer goods category, the number of items should decrease as the pipeline is filled by traditional manufacturers. The more than 300 sellers at Amazon face a dilemma when the demand for high-priced products disappears. This group and others trying to benefit from COVID19 are concerned that they have priced themselves out of the market. They are faced with the choice of lowering their prices to a competitive level or taking a large amount of unsold inventory. One could expect that with so many manufacturers a possible oversupply will develop. However, we can expect COVID19 to become an ongoing reality that may extend into the distant future. The supply chain takes time to fill the pipeline, but we can assume that this product will be around for a long time.