The coronavirus pandemic and its subsequent economic uncertainty may have affected all of us, but retailers have been particularly impacted by the recent crunch. At least 150 publicly traded companies, including Abercrombie & Fitch, Gap, HP and Visa have already warned investors of a significant economic hit during the second and third quarters of 2020 since the global outbreak. But the impact isn’t solely limited to physical retail outlets. Even digital platforms are likely to feel the pressure in the coming weeks.
Amazon in particular. While the eCommerce giant may have announced an expected increase in sales over the past few months, much of that increase can be directly attributed to the increased demand for essential household goods and medical supplies—with the resulting shortages driving both public demand as well as panic. The result, as Amazon has indicated, has meant “temporarily prioritizing household staples, medical supplies, and other high-demand products coming into our fulfillment centers so that we can more quickly receive, restock, and deliver these products to customers.”
It seems like a reasonable solution; particularly at a time when over 5,000 separate incidents of drastic price gouging on essential products have been reported by state attorney generals and consumer protection agencies. There’s just one problem for vendors and sellers of non-essential items:
“For products other than these, we have temporarily disabled shipment creation. We are taking a similar approach with retail vendors. This will be in effect today through April 5, 2020, and we will let you know once we resume regular operations. Shipments created before today will be received at fulfillment centers.”
Who Is Affected By The Suspension?
It’s important to remember that this temporary suspension only applies to merchants who are currently using Fulfillment By Amazon (FBA) services—which is likely going to be many of you reading this. All other Amazon services, such as Fulfillment By Merchant (FBA) or Seller-Fulfilled Prime (SFP) are exempt since you’re not actually using Amazon’s internal fulfillment network; and it’s quite common for merchants to use both Amazon’s network as well as their own fulfillment services. Hybrid Seller Central accounts are fairly easy to set up, and can actually provide you with a greater profit margin in spite of less convenience.
But even with this exemption, non-essential product orders are likely going to see temporary pauses as a result of Amazon’s change in prioritization. But what constitutes an essential household item? Amazon has given the following examples:
Baby Products
Beauty & Personal Care, including personal care appliances
Grocery
Health & Household
Industrial & Scientific
Medical
Pet Supplies
As you can see, many of those items can be interpreted fairly broadly. It just happens to leave out apparel, books, consumer electronics, entertainment and luxury retail product listings. All items that have historically been top sellers for Amazon merchants.
Is The Measure Needed?
In times of a global medical crisis, it’s understandable why Amazon needs to focus on the quick replenishment and delivery of essential household items—particularly given the shortages reported in regions hit the hardest by the coronavirus.
However, some merchants have critical items that can help during this global pandemic but are not allowed to ship into Amazon. Still, other merchants are wondering if they’re missing out on a potential sales advantage; particularly in the U.S., where state and federal officials are doing everything in their power to encourage remote work for non-essential employees. Yet reports appear to have indicated that many sellers of non-essential goods have seen their sales drop by 40% to 60% on Amazon in the past three weeks alone as discretionary spending becomes less of a priority for many consumers. In fact, some have reported seeing 40 to 60 days worth of inventory in stock, necessitating an entirely new refocus of their own sales strategies.
How Drastic Is The Measure?
While the suspension isn’t an outright prohibition or ban, the window between now and April 5th can seem like an unbearably wide one; particularly when maintaining first quarter revenues seems so positively vital given the current economic state.
But even given the uncertainty and constantly evolving status of an epidemic that could potentially last for months on end, it’s important for merchants to remember that Amazon’s solution is far from permanent; nor is FBA the sole fulfillment service to sell with. In fact, Amazon isn’t even the sole eCommerce platform currently available. Learning how to navigate a crisis has always been the hallmark of an intelligent business, be that through marketing strategization, supply chain management or product development. Amazon’s product orders depend on public demand—and meeting that demand during an economic crisis requires booth foresight and adaptability. Don’t rely solely on Amazon’s FBA to drive that demand. Focus on the quality of your product, not its culpability. Customers can see the difference. Even when you can’t.
Color More Lines provides white glove, global account management of your eCommerce platforms so mission-driven companies can focus on new product development, branding and growth strategies. Find out more at Color More Lines.