Coronavirus Update: What We’re Seeing on Amazon as we Enter Q2
Since the outbreak of the coronavirus, most Amazon vendors and sellers have been feeling an impact in one way or another. Some have found themselves in a position of great opportunity. Others are struggling to maintain their presence at all. Overall, many of our clients have maintained their strategy as planned. But, there are some facing new inventory constraints due to increased consumer demand. To offer some perspective, we dive deeper into what our clients have experienced recently in this blog post.
Changes to Inventory Protocol
While there were some early indications there could be a significant fallout, very few of our vendor clients have stopped receiving POs entirely. Some, mostly in non-essential categories, have seen PO reductions, but we expect this to continue to evolve and revert to more normal numbers in the coming days and weeks as Amazon works to lessen the burden for brands that sell non-essential products.
Earlier this week, Amazon announced an expansion of what is defined as a prioritized item. On the Seller Central side, products will be evaluated on an ASIN-by-ASIN basis in determining if they’re available to ship via FBA. For products that remain non-essential, Amazon is currently waiving Long-Term Storage (LTSF) fees. Finally, Amazon has also paused seller repayments for brands that participate in Amazon’s lender program.
Beginning several weeks ago, our clients that sell non-essential products started to see delays in Prime shipping times, often reflecting arrival dates several weeks away. But, as of this week, many of those ship times have decreased. As a whole, Amazon has erred on the side of under-promising and over-delivering on delivery dates. And, similar to POs, we can expect this to continue to change.
Our Amazon.ca clients also received a product prioritization message from Amazon this week. But, generally, the Canadian marketplace has experienced a delayed impact compared to the US. It’s important for other regions a week or two behind the US to stay informed. This way, there are fewer surprises and some time to prepare.
Should your brand be experiencing delays in shipping, we recommend continuing to operate on the channel as planned. Each day is subject to an adjustment, and Amazon could shift its shipment priorities at any moment. Pulling back on strategy or budget could prevent brands from competing as things continue to evolve, as well as after the dust settles.
Advertising and Overall Sales Trends
Advertising also has been top-of-mind for many brands during the coronavirus outbreak. Many have wondered how changes in supply and demand could affect their advertising strategies. Our stance on spend or budget reduction remains the same when it comes to advertising with the exception, again, for clients experiencing inventory issues.
But it’s important to remember, there is no single answer that applies to all brands. We’ve taken a category-by-category, ASIN-by-ASIN approach for our clients based on their unique situation.
When discussing coronavirus-related advertising adjustments with our clients, we’re considering the following:
- Increases or decreases in purchase orders
- Inventory on-hand and available supply
- Category-specific changes in consumer behavior
As we said, in some cases, it has been appropriate to decrease spend. We’ve made these recommendations methodically and limited them to items experiencing these issues.
Meanwhile, clients in essential categories such as grocery or CPG brands have seen notable growth. As a result, many have increased spending to cater to increases in consumer demand.
There have also been instances where neither increasing or decreasing spend is necessary. And some clients have pivoted product focus to those without inventory issues so they can continue to reap the benefits of advertising without worrying about stockouts.
We understand why brands may consider pausing advertising at this time. But before doing so we suggest analyzing conversion rates and ACoS. If neither has been affected or have only slightly fluctuated, we recommend continuing as usual. This way, brands don’t have to sacrifice glance views or sales velocity in the long-term.
Most of our clients have seen increases in sales overall, including those in non-essential categories, given the heavy current restrictions on-store shopping. We see this as an opportunity for our clients and any brand that sells on Amazon. There’s more potential to capture market share as competing brands may be decreasing advertising spend.
There are other widespread trends we’ve noticed. For example, regardless of the issue, all brands can expect a delay in support ticket responses.
A recent response we received read:
“We are currently experiencing higher than normal wait times. As a result, we are not able to assist with changing product attributes or categories at this time so we can prioritize the most critical contacts. Please consider using this self-service tool to change attributes or categories.”
As the coronavirus outbreak continues to impact Amazon’s landscape, we anticipate fast and frequent changes. Stay tuned for our continued observations in the coming weeks. And, if you could use the support of a strategic partner, schedule a free consultation. And feel free to contact us if we can be of any assistance during these uncertain times.