Since the outbreak of the coronavirus (COVID-19), demand for essential products has increased exponentially. Due to global supply shortages, store shelves are often empty and everyday items such as food, medicine, and toilet paper have become scarce.
Amazon is also responding to this state of affairs, preferring to ship essential goods above all others. Amazon considers the following product categories essential:
- Health & Household
- Beauty and personal care (including personal care appliances)
- Grocery store
- Industry & Science
- Pet Supplies
For third-party sellers of non-essential products, this may mean temporarily freezing their FBA shipments.
In addition to the preference of necessary products, sellers often face delivery difficulties of their products. The Chinese export industry, normally the main supplier for many Amazon sellers, is suffering from the heavy burden of COVID-19.
Thus, especially for third-party sellers, the question often arises as to what these changes mean for their business and what steps can be taken to minimize losses in the Corona crisis.
5 immediate measures to minimize losses in the Corona crisis
- Consider Fulfillment by Merchant (FBM)
Anyone who ships their goods using the Amazon FBA service is dependent on the smooth functioning of the platform. As long as Amazon deprioritizes or even completely stops selling non-essential products, a seller cannot sell his goods. One way to sell his goods independently of Amazon through the marketplace, and thus minimize his losses in the Corona Crisis, may be to use Fulfillment by Merchant (FBM). Before a seller opts for this option, however, it is important to note that two basic requirements must be met in order to use the service: The seller's own inventory must be available and the goods to be sold must not currently be in an Amazon fulfillment center.
When using FBM, the goods must then be picked, packed as well as shipped independently. In addition, it must be ensured that the product reaches the customer on time and without damage or problems.
FBM shipping can also come with some other risks that are important to be aware of before making the decision:
Unless a seller already has an extensive fulfillment process in place, the cost of FBM orders can be significantly higher than FBA orders. Buyers can also leave negative reviews that refer to the longer delivery times and are not marked with an extra note that it is an order during COVID-19.
In addition, Amazon does not handle customer service or returns in this model.
- Integrate new business models
Due to the supply difficulties one may face in sourcing products from China or other overseas suppliers, business models such as private label, wholesale and dropshipping will be hampered during COVID-19.
However, there are other business models that can be relied upon during the pandemic that can minimize losses during the Corona Crisis:
- Sell products in the Handmade category: Products made by hand can be shipped directly to the consumer.
- Resell productsWhile reselling in retail is currently difficult, reselling products via Amazon can be an opportunity. This involves purchasing a product from a competing retail site (such as Ebay) and offering it through Amazon at a higher price.
- Produce your own products: Depending on what products the seller normally sells through the platform, creating the products with a 3D printer can be a good option. However, costs and benefits must be weighed heavily here.
- Temporarily reduce or disable Amazon Ads
Those who experience a drop in sales during the downturn, especially if a seller is selling non-essential goods, can reduce or suspend their Amazon Ads served until further notice to save costs.
Especially since Amazon does not currently prefer to ship these products anyway, it is recommended to save the ongoing costs and use the time to optimize the ads and reactivate them at a later date.
4. focus on your own brand
Even if the sales could currently decline for a certain time, this is a good time to focus on your own brand and its appearance. The own brand catalog can be built up, the next optimized ads can be planned and the appearance can be prepared for a later time, when the situation normalizes.
Communicating with customers, both on and off Amazon, can also be a great way to alleviate customer anxiety and build long-term loyalty to your brand. Promotions can also be an effective way to get the brand name out there.
5. stay informed
The current situation is constantly changing, both on and off the platform. As soon as Amazon lifts the current restrictions, it is therefore especially important for sellers to act and ramp up their measures again in order to stay in business. It is therefore advisable to stay constantly up to date in order to be able to react accordingly.
At Seller Central Amazon's latest announcements and answers to the most frequently asked questions can be found here. In addition, sellers have the opportunity to exchange information with each other here.