Everything has changed in the last 30 days.
Since Dr. Li Wenliang first warned about the unknown virus, COVID-19 has brought about dramatic changes in everyone’s life. Earlier this month, the World Health Organization renamed the coronavirus outbreak a ‘global emergency’ from a ‘global pandemic.’ In this crisis, it can be hard to be optimistic and keep your senses calm.
Fortunately for Amazon sellers, staying calm under pressure is something they learn since day one. By staying updated about the situation and taking proactive steps, brands can secure their position and recover faster after the crisis subsides. In this article, we have outlined the impacts of COVID-19 on Amazon sellers and the best practices sellers can follow to move forward.
Quick Facts On COVID-19
- Amazon has stopped receiving shipments from sellers for non-essential items in the US marketplace
- Sellers cannot create coupons until April 5th in the USA marketplace
- The Italian and French marketplaces will only ship essential items to consumers
- Amazon UK is taking up to 3 weeks for shipping the products to customers
- There is a huge price hike for corona related products
- Counterfeit masks and sanitizers are flooding on the market
- The search for “Doomsday prep” products have increased dramatically
- Searched for respirators and masks went up by 17000%
The Impact Of Coronavirus Pandemic On Amazon Sellers
Impact #1: Customer’s Demands Have Changed & So Has Amazon’s Priorities
Amazon recently announced that it is looking forward to hiring 100,000 fulfillment workers to manage the increase in orders. Because of the closure of brick and mortar stores, products such as household staples and medical supplies are out of stock on Amazon. As a result, Amazon is prioritizing the essential products coming into their fulfillment centers so that they immediately restock, receive and ship those products to shoppers. It won’t be an exaggeration to say that the sales spike for these products is as high as Black Friday and Cyber Monday.
Impact #2: Consumer Spending Power Is Decreasing
According to a recent survey by Moody’s Analytics, more than 80 million jobs in the US could be lost because of the COVID-19 outbreak, especially in sectors like food, hospitality, travel, tourism and leisure. This can also lead to reduced customer spending on non-essential products and luxury products. As a result, sellers are seeing an uptick in searches and sales for essential items like groceries, toilet paper, bottled water and a drop for non-essential products like office supplies, party products and furniture. As work from home is the new norm, certain work from home products has also seen a surge in demand. This includes office chairs, home entertainment products and gym equipment.
Impact #3: Chinese New Year Shutdown Has Extended Bit Too Long
There is a huge chunk (about 70%) of third-party sellers who import their goods from Chinese manufacturers. The Chinese manufacturers who had planned to close their operation for one or two weeks in January were forced to close their factories for more than eight weeks straight, all thanks to the COVID-19 breakdown. Prolonged shutdowns in China have led to extreme delays in manufacturing because of which the sellers have suffered huge losses. While China is undoubtedly the biggest and cheapest manufacturing hub in the world, there are other countries like India, Vietnam, Indonesia, Thailand and Malaysia that have robust infrastructure and a strong manufacturing base for popular consumer products like clothing and electronics. Buyers can always find alternate manufacturers from these countries.
Impact #4: Trade Shows Have Been Cancelled
International and national travel bans have been imposed by the governments all over the world and all the trade shows, events and conferences during January, February, March and April are being disrupted. The Canton Fair, the oldest trade fair in China and Prosper Show, has also been canceled. These events are essential for Amazon sellers to increase their networking with other sellers. Cancellation in trade shows and lack of attendance will adversely affect strategic expansion for many brands.
Facing The Storm: 7 Tips To Corona-Proof Your Amazon Store In These Testing Times
Tip #1: Be Smart, Be Attentive & Follow The Rules
Don’t do anything tricky; don’t take risks, and most importantly, don’t do anything that can put your seller account in danger. Even though you see other sellers trying to capitalize in these difficult times, you should not be doing anything that’s not right for your brand and your customers. Amazon is on high alert for any of these issues and involving in such black hat techniques can jeopardize your business. The next few months are crucial. There are going to be a lot of changes in and out of the Amazon world. The best thing you can do is make an informed decision. Stay updated and read about the changes from reputable sources like eStore Factory.
Tip #2: Switch To FBM
FBA has always been the most desirable fulfillment method for the sellers to date. Still, since there is a surge in demand for groceries and other household necessities, Amazon is continually delaying shipments for non-essential items, resulting in lengthened delivery times. The retail giant also announced that it would stop accepting shipments of non-essential goods to its fulfillment centers, so sellers cannot replenish the inventory if they go out of stock. This can negatively affect your sales rank
If you are one of those sellers selling non-essential items, then consider switching to FBM for now. Keep your inventory at Amazon’s fulfillment centers; you don’t need to worry about IPI or long term storage fees because Amazon has waived it for April. Just switch your products to FBM and start fulfilling the orders yourself. Do keep in mind that FBM works a little differently:
- With every sale, you will be notified in your Seller Central account as well as on your Amazon Seller mobile app.
- You should mark your products shipped within 24 hours, failure to do so can adversely affect your account health
- You will need to pick, pack and ship the products and ensure that the product reaches the customer in a timely manner
- Make sure you have a fulfillment operation ready with you
- Give your customers a tracking ID as well so that they can know when to expect the delivery of the product
- Keep a watch on the customer service issues
Tip #3: Reduce Your Advertising Efforts Wisely
It’s normal to see your advertising sales reduced, spend increased and your ACOS spiked. While you cannot do anything in this situation, it would be wise to limit your advertising efforts. It is not profitable to spend too much on PPC because you won’t get the expected ROI and sales. Apart from that, if the conversions and traffic are not as expected, you might also see a decrease in your organic ranking, which is even worse. At this moment, instead of trying new things and tapping into new strategies, it would be smarter to sell what you already have. Reallocate your PPC spend to advertise, push and cross-sell the products that are not impacted by the supply chain.
Tip #4: If You Are Selling Essential Products, Maintain Your Product Price & Ethics
No matter how tempting it may look, don’t inflate your prices at the moment, especially if you are selling essential items. Not only will you slow conversions and lose customer trust, but you will also draw unwanted attention from Amazon. If Amazon suspects price gouging, they can even suspend your account. According to Feedvisor, Amazon has removed about 530,000 product listings from its platform and has suspended over 3900 US sellers account for price gouging. You won’t even have your hands on the few sales you were getting till now. And this is the last thing you want in these testing times.
Besides, irrationally raising the price of your product is not what genuine businesses do. Yes, your business is poorly affected as well, but it won’t be the right thing to cover that loss by increasing the prices. Now is the time to give back to society what the society gave to you. Do good and nothing bad will happen to you.
Tip #5: Pay Attention To Quality Control
If you are sourcing your goods from Chinese suppliers, it may happen that you face a reduction in product quality. Because of the fewer staff, increase in spend and decrease in profits, your supplier may be facing a backlog in production. To cope with such circumstances, they may decide to cut corners on quality. So it is very essential that you, as a responsible seller, conduct a thorough quality check on all of your products before sending it to the customers. If you fail to do so, it may result in negative reviews on your listing.
Tip #6: Explore New Sourcing Channels
Remember, this is not the end of the world. The show must go on, just keep calm and carry on. Yes, the people are in lockdown, but they are still there; they are still buying products. When restaurants in China were closed and saw a decrease in customers coming to their restaurants, they started selling takeaway meals instead. There is always an opportunity for businesses to make profits, even in these tough times. Despite the increase in demand for essential items and reduction in demand for non-essential and luxury items, there is a room for sales in some of the items people will want to buy during their work-from-home and quarantine days. Capitalize on them and try to give your business healing with the profits earned from them.
Tip #7: Use Your Downtime Productively
Seeing the Chinese businesses, it is clear that post-coronavirus economic recovery is faster than anyone could have expected. The pandemic is happening, but you are not alone, if you take a few good steps today, your brand can get prepared for pent-up demand in the near future. While you are yourself in quarantine, invest your time to re-evaluate your operations and process. Do what you couldn’t do when you were too busy maintaining PPC campaigns and fulfilling orders. Here’s all you can do:
- Optimize the listing content of your entire product catalog
- Optimize the images
- Create A+ Pages
- Create a brand store
- Review your reviews and identify what’s wrong with your product and listings
- Make experts audit your account and identify the flaws
- Translate the content for your product catalog and sell globally
- Increase brand awareness with Google SEO and Social Media Marketing
- Find new and profitable products to sell with Product Research
- Claim back your FBA reimbursements with FBA Refunds
All these services will help you increase conversions and profit without breaking the bank.
Quick FAQ Session:
What products are accepted for selling on Amazon?
Only the essential products are being sold on Amazon presently so only the products from the below six categories will be accepted:
- Health & Household
- Beauty & Personal Care (including personal care appliances)
- Industrial & Scientific
- Pet Supplies
What if my shipment is already on its way to the fulfillment centers?
If your shipment is created before March 17th, Amazon will accept it and put the products in the supply chain as usual.
Can I submit a removal order to get my inventory out of fulfillment centers?
Yes, you can, but it will take some time. Amazon recently accounted that the removal operations are paused for now in some of their fulfillment centers. But sellers who wish to remove their inventory can still send removal orders; it’s just that their request will take longer than usual.
Has Amazon suspended any fees for sellers?
Yes, Amazon just yesterday Amazon announced that it will waive two weeks of storage fees in March for products stored in the United States, United Kingdom, Germany, France, Italy, Spain, Poland, the Czech Republic, and Canada. Moreover, it has disable the Inventory Performance Index (IPI) and sent out a notification that it will waive out April’s long term storage fees for sellers selling in the countries mentioned above.
Is the virus actually transmitted through packages?
No, this is one of the thousands of myths that are surrounding COVID-19. This virus is transmitted mainly through respiratory droplets. Although it can live on many surfaces, its life is not more than some hours or a day. So, it is possible that the virus can lurk on the box, but it won’t be there for long. According to the World Health Organization, the risk of transmission from the packages is very low because extreme shipping conditions make it difficult for the virus to survive.
What products should I sell during this crisis?
If you can, sell essential consumer products. Not only are you helping the shoppers by providing them the necessary products, but you are also entering into a market that has high demand, low supply and great profits. There are a lot of opportunities for selling, as the demand for a certain category of products is still quite high. People are not just buying toilet papers and sanitizers, but as the brick and mortar stores are completely closed, people are buying many other things online as well. You can use our product research services to find the ideal product to sell for now.
This Too Shall Pass, Till Then eStore Factory Is Here To Help
While there is a myriad of negatives, there are two positives which will definitely cheer you up: (a) you are not alone in this. Every competitor is facing the same issues as you are. (b) You are selling in Amazon, one of the largest e-commerce platforms. You won’t only survive but also thrive in the chaos that is occurring in the midst of our lives. The impact of coronavirus has changed the way the brand does business. In these rough times, if brands are not able to afford full-time Amazon consultants for handling your online store, they can always take advantage of our one-time services. They are affordable and can bring significant benefits to your business.