9 Tips for Amazon Sellers Facing Coronavirus Challenges
Article by: John L. Ghiorso
For 3rd-party sellers on Amazon, the coronavirus (COVID-19) pandemic has created new obstacles and unprecedented uncertainty. So I consulted the team at Orca Pacific to create a list of the top nine tips for sellers navigating the platform today.
These tips can be broken down along the lines of supply and demand.
Supply Disruptions Caused by The Coronavirus
- Some sellers might be impacted by irregularities or delays in manufacturing, particularly those who receive supply from China. While the individual circumstances vary, all sellers should be aware of the compounded risk of running out of stock on Amazon. Most sellers understand the importance of relevance on the platform. When a product runs out of stock, the break in continuity causes massive damage to organic ranking which could take months to recuperate (especially when competitors who do have supply are running up the score). This means that it may be advantageous for sellers with multiple channels to prioritize Amazon in the instance of a supply shortage.
- For sellers with no choice but to run out of stock, there are some best practices to minimize damage to account health. Be sure to cancel previous orders that can no longer be fulfilled, update all listings in a timely fashion, and put your account in vacation mode. Amazon has mentioned that they will consider the effects of coronavirus on sellers, though exactly how and to what extent is unclear. While sellers shouldn’t count on major intervention, it is best practice to include a brief description of how coronavirus has impacted business when responding to performance notifications in Seller Central.
- Amazon’s recent suspension of “non-essential” shipments into fulfillment centers means that sellers with little inventory cover need to jump on securing another fulfillment method—and quick. One option is to use a 3rd-party logistics company such as ShipMonk, CaseStack, Monarch FX, or Deliverr. These companies vary in capability, so sellers should fully consider their needs in terms of size and special storage requirements prior to selecting a 3PL partner. Another option is to ship from the seller’s own warehouse.
Demand Fluctuations During a Pandemic
- Demand will spike for certain categories due to panic-induced buying. Some of these categories have an obvious connection to the virus (sanitizing supplies, consumables) and others do not (emergency supplies, health/personal care). While bandaids, flashlights, and supplements are unrelated to the pandemic, they are still at top of mind for shoppers actively considering emergency preparation and their health. Rather than assume demand will increase/decrease in your category, brands should consider whether their products might be top-of-mind regardless of what seems intuitively connected to the outbreak. It is also best practice to update basic content on product detail pages to highlight use-cases that might appeal to someone stuck at home (eg. highlighting the home-office use for office supplies).
- Sellers in categories with increased demand need to increase advertising spend to match. Budgets that were once lasting all day are running out by 10 am. Of course, this advice is only realistic if sellers don’t have supply issues. It doesn’t make sense to pay to run out of stock quicker. So sellers should evaluate run-rates for each of their products to better understand what their supply can withstand. If you can pick up a huge share, do so. If you need to scale back, do that too.
- Sellers should not simply increase their ad spend and take their hands off of the wheel. Don’t think “everything is the same but up 20%”. This is a time of extreme volatility marked by massive shifts in buying behaviour that can require a seller to adjust on the fly. Keep a close eye on supply, demand, and the activity of competitors, both big and small.
- Technology will also require extra scrutiny. External and internal tech, from Amazon’s A9 algorithm to a seller’s internal advertising tool, are based around a predictive set of variables. Machine learning is designed to be effective under normal conditions; there’s no telling how volatility will make an impact. If you were driving through a blizzard in a self-driving car, you’d be smart to put both hands on the wheel.
- Some sellers reacting to increased demand have taken to price gouging, questionable advertising tactics, and false or misleading product titles and descriptions. Not much needs to be said about these practices except that they are morally wrong and will not be allowed by Amazon. Sellers, especially those selling medical supplies and sanitizers, should be mindful of Amazon’s updated policies aimed at addressing these practices, including implementing price-maximum thresholds, prohibiting coronavirus keywords, and rejecting all new applications to sell sanitizers, face-masks, and related products.
- While demand will continue to fluctuate in the coming months, sellers need to be aware that the effect of social distancing (ie. increased online purchasing) is likely to carry some level of permanence. The convenience of purchasing online could allow eCommerce to pick up a larger share of retail in the long-term. That means that the most successful sellers will need to exhibit foresight as much as flexibility.