The Impact of COVID-19 on Amazon Sellers and Brands

A year like no other’ is certainly an apt phrase when it comes to describing 2020. The pandemic has impacted the whole world, and will go down in history as one of the defining events of our lifetime.

During the initial period of lockdown in early 2020, people across the globe relied on home delivery for essential goods. This has continued as we have moved through more periods of lockdown, something that we’re going to have to live with for the foreseeable future.

Amazon played an important role in online retail during the pandemic, having a significant impact on people living under lockdown restrictions. Amazon sellers were affected too, in a variety of ways.

With regard to sales figures, things have remained fairly positive — despite a decline in spending for many consumers. New trends emerged, opening up opportunities for sellers to add to their range of items.

The majority of pandemic-related challenges sellers faced were the result of issues with inventory management — a common by-product of high sales demand in Amazon FBA warehouses.

However, this is something that we will have to both get used to and prepare contingency plans for in the future as we move in and out of periods of lockdown.

ISSUES FOR AMAZON SELLERS

With China being the main supplier to Amazon sellers pre-pandemic, it’s no surprise that many were affected badly when the country went into lockdown. There were many delays as well as supply chain and fulfillment issues. However, the efficient COVID-19 control measures meant that most factories reopened fairly rapidly.

An ongoing issue has been the price of air shipping, which increased due to cargo flights being taken over by governments for medical purposes, and a sudden lack of commercial flights. This has meant that sellers have either had to pay inflated air shipping rates or ship by other means, which has caused problems for delivery timescales.

Amazon also started prioritizing essential goods over non-essentials for deliveries, in response to an increased demand for certain products and customers being heavily reliant on Amazon during lockdown.

Many Amazon sellers found that items were rapidly going out of stock, and had to make an abrupt temporary shift to other fulfillment services, or in some cases, fulfil orders themselves.

Amazon did make a point of deferring account suspensions for sellers who were not hitting fulfillment and performance targets as a result of unavoidable delays with their supply chain.

ISSUES FOR AMAZON FBA SELLERS

The pandemic hit the Amazon FBA network particularly hard, with the increased demand for both essential and non-essential items (due to store closures) coinciding with low staffing levels. This was both due to sickness and self-isolation, and social-distancing policies for warehouse staff.

Restrictions were placed on inbound orders of non-essential items, and estimates for delivery were significantly extended — in some cases by up to a month or more.

Many sellers switched to FBM (Fulfillment by Merchant) choosing to take over responsibility for order fulfillment themselves or via an outsourced company, and found that this was a quicker and simpler way to both restock and offer customers a faster delivery.

THE AMAZON BUY BOX

An unexpected side-effect for sellers was that non-FBA sellers found they had an increased chance to win the Amazon Buy Box.

The white box on the right-hand side of the product page (where customers Add to Cart or Buy Now) is usually ‘won’ by one seller, with competitors featuring in the ‘Other sellers on Amazon’ box located further down the page.

Many consumers automatically purchase from the Buy Box winner, sometimes unaware there are other buying options open to them. This can lead to repeat purchases, and increased ratings and reviews. The Amazon Buy Box algorithm previously favoured Amazon FBA sellers due to the faster shipping times, but this was adjusted to reflect the seller who could ship fastest, even if this was via FBM.

PREPARING FOR FUTURE LOCKDOWNS AS AN AMAZON SELLER

At the moment, it seems inevitable we’ll experience further periods of lockdown as Covid infection rates rise and fall. However, when the next quarantine does come into effect, there are some steps you can consider taking.

First, stay in the loop! Do your research and stay informed with the latest Amazon news and updates, so that you’re not caught off guard.

Check out your FBM options so that you’re prepared in the event of future inventory shortages and supply-chain delays. But be aware of the risks involved with FBM — it can be costly, you’re responsible for your own customer service issues, and customers can leave negative feedback based on delivery speed and quality, even if an issue is through no fault of your own.

Focus on building your Amazon brand’s presence and reputation, and learn how to master areas such as listing optimization, Amazon PPC, and SEO keyword rankings to please the Amazon A9 algorithm and boost your rankings.
This can all help with you win the Amazon Buy Box — helping to differentiate you from other Amazon sellers, and receive maximum benefit from the increase in online shopping.

If sales are dropping because of problems securing supplies from overseas, consider other business models you can temporarily incorporate into your Amazon business — perhaps with a view to more permanent inclusion if they prove successful! This might include looking at online arbitrage, handmade or self-manufactured products, or if you’ve got a knack for writing, publishing content via KDP (Kindle Direct Publishing).

Finally, make sure to up your customer service ante — keep in regular communication with your current customers and use digital marketing strategies to widen your reach.

At Marketplace Sorted, we help brands on Amazon achieve their full potential when it comes to Amazon growth. With us, you can enjoy a 360° full service brand management and growth service, with the whole process being managed on a performance basis with our Amazon Brand Accelerator program.