UPDATE 3/16/2020 - Added Amazon’s Official Response to COVID-19
UPDATE 3/18/2020 - Amazon Temporarily Prioritizing Products for Inbound Shipments to Amazon
UPDATE 3/23/2020 - Amazon Prioritizing Fulfillment of Certain Products through FBA
I am writing this post on the day the World Health Organization declared the coronavirus outbreak a global pandemic. This post will be updated as new information becomes available. I want to share my perspective on how brands and manufacturers can thrive by selling on Amazon in this environment, how the Coronavirus impacts brands and manufacturers selling on Amazon, steps Amazon has taken on the marketplace, and practical advice for brands and manufacturers selling on Amazon. This post is not intended to convey any medical advice, share statistics on the disease, nor downplay the effects of the disease and personal impact but to share a perspective that brands and manufacturers can thrive in this business environment and practical business steps to take during this time.
"Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. According to Taleb, the opposite of fragile is antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better" - "Prologue" (PDF). Fooledbyrandomness.com. Retrieved 3 November 2017. Nassim Nicholas Taleb, Antifragile: Things That Gain From Disorder
Here is Amazon’s official response to Covid-19.
Increased Demand From Amazon Customers
The CDC suggests putting distance between yourself and other people if COVID-19 is spreading in your community. This means staying away from the local brick and mortar shop and could lead to increased online purchases - including buying products from Amazon. Mike Pence, Vice President and now in charge to lead coronavirus response, in a tweet suggested commercial establishments to encourage customers to “use online transactions where possible.
As more and more employers utilize work from home policies and less local market shopping; brands and manufacturers can capitalize on the increased demand for shoppers on Amazon.com. Bill D’Alessandro, the CEO of Element Brands stated his sales for Aloe Vera gel (used to mix with alcohol to make hand sanitizer) has seen roughly 20X the sales velocity of these SKUs.
Steps Amazon Has Taken to Improve Trust in the Marketplace
The first leadership principle at Amazon is Customer Obsession, which states that “leaders start with the customer and work backward. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.” Amazon has taken steps to improve consumer trust and provide a fair marketplace by removing inflated pricing, suspending seller accounts, limiting advertising on certain products, and temporarily suspending products related to coronavirus.
Removing Third-Party Sellers Violating Pricing Policies
Since Amazon acts as a third party marketplace for brands and manufacturers selling on Amazon, sellers are able to adjust the retail price of products. With the spike in demand for items such as bleach, hand sanitizer, and face masks there have been issues with third-party sellers price-gouging or not complying with fair pricing policies. As of March 6th, Amazon has addressed this by removing over 530,000 offers from the marketplace for coronavirus-based price gouging and suspended more than 2,500 seller accounts in its U.S. marketplace for violating its price-gouging policies.
Updated Critical Policy Around Product Advertising
Amazon has instituted new policies for rules around Advertising by adding prohibited products related to Amazon including medical, surgical, N95, disposable and dust face masks. This will allow authentic products to be displayed in search results without the ability to have items that are unsafe to be displayed for potential customers.
Suspending to Investigate Potentially Coronavirus Related Products
Amazon will periodically remove product listings from the Amazon marketplace in order to review compliant information. We have seen an increase in this removal for products anywhere generally related to coronavirus. By performing these reviews, customers will be ensured they will be purchasing appropriate and compliant products. If listings are getting removed, check out how to reinstate product listings on Amazon.
Amazon Temporarily Prioritizing Products for Inbound Shipments to Amazon
On March 17th, Amazon announced to third-party sellers they have temporarily disabled inbound FBA shipment creation for non-essential items to Amazon Fulfillment Centers due to increased online shopping demand from COVID-19 until April 5th, 2020. Vendors received a similar notice stating they will see reduced purchase orders and pausing of purchase orders for products that are not essential items and extended delivery windows for existing purchase orders to give more time for Vendors to fulfill purchase orders with a request to ship products toward the end of that extended window. Amazon is classifying prioritized essential products as household staples, medical supplies and other high demand products. In order to match this increased demand, Amazon is looking to hire 100,000 new full- and part-time positions in fulfillment centers across the US in order to increase capacity of receiving, warehousing, and fulfillment.
Amazon Prioritizing Fulfilling Amazon Customer Orders
Amazon is prioritizing fulfilling Amazon Customer orders for essential products, even when the non-essential products are in stock and Prime eligible through Amazon FBA. This is affecting both third party FBA products and Vendor Central shipped from and sold by Amazon.com offers. The updated windows range from 2 days delayed to 29 days and some items that do not show a specific time from for when the product will ship.
Practical Advice For Brands and Manufacturers to Thrive on Amazon During the Coronavirus
Here is some practical advice for brands and manufacturers selling on Amazon during the coronavirus.
Audit product listing information to ensure there is no information around coronavirus including backend search terms. Information like this will lead to the removal of your product listing pages and will require case management correspondence to get your product reinstated.
Capitalize on Increased Customer demand by being in stock. There will be increased online shopping during this time as customers avoid public places so being in stock with products so customers have the opportunity to buy your offer.
Advertise towards the increased demand. With this increased demand, increase Amazon Advertising budgets or run new types of campaigns to capture more sales.
Take swift and immediate action to address compliance concerns with Amazon. If your product is removed from the Amazon marketplace due to potential concerns around the coronavirus, respond quickly and accurately through Amazon’s case management to help expedite any resolution of your product listings.
If you sell products related to the coronavirus, comply with all fair pricing policies and price gouging laws.
Utilize Fulfilled by Amazon. If your work place has a work from home policy, fulfillment of orders can still occur by outsourcing inventory warehousing and fulfillment to Amazon.
Consider alternative Amazon selling business models. With Amazon temporarily suspending non-essential items, sellers and vendors can consider different fulfillment methods including merchant fulfilled for sellers and direct fulfillment for vendors in order to keep in stock for products.
To reiterate, this piece is not intended to convey any medical advice, share statistics on the disease, nor downplay the effects of the disease and personal impact but to encourage brands, manufacturers, sellers, and vendors on Amazon to take advantage of the increased customer demand. Stay positive. Amazon is taking increased action to provide a safe marketplace for customers, which may seem to be at the detriment of sellers. However, keeping a safe and trustworthy marketplace will rise the tide of all ships.
A leadership principle Goat Consulting holds deeply is being resilient and adaptable. We have been helping brands and manufactures navigate selling on Amazon for years. For some companies, this brings new challenges related merchandising, advertising, fulfillment, and reporting but we have been there to help companies navigate these difficult challenges and thrive. This coronavirus is no different, we will continue to provide the level of commitment and service to help your brand navigate this challenges and help your business thrive. Reach out through our contact form to start a conversation to see if Goat Consulting can help you achieve your goals.