Well, judging by the past two months on Amazon, we surely are living in them. Our team was carefully monitoring this whole lockdown situation on an everyday basis and we drew some basic conclusions. I’m intentionally writing LOCKDOWN SITUATION because an epidemic situation can only change purchasing decisions, where customers will choose a different product or need something else. But the lockdown situation is something that has the leverage to completely tear the purchasing power apart only if it continues, and that’s what we’re actually facing right now as a bigger problem.
I’m going to share a couple of things we’ve noticed. Hopefully, someone finds it useful in the upcoming months.
- Amazon has a new set of rules and they’re often the only ones who know them. This is a perfect storm for them, and a good excuse to do what they did in the last two months only: suspended listings over "price gouging" even if they haven’t changed their prices in the last 6 months, suspended lightning deals, suspended coupons, suspended vine product reviews, introduced delayed deliveries as a new norm (not for their own products though), prioritized certain product categories for a period of time, limited the number of inbound shipments to only 20 days’ worth of stock, appealed for influencers to stop sending them affiliate sales, hired a 100k+ of new employees etc. In the aftermath of the coronavirus/lockdown, Amazon is going to have much more of their own market share than what they ever had.
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We’ve identified three types of selling accounts right now.
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Account type one: accounts that have seen a major drop in sales.
These are some of the categories that have suffered the most: automotive, fashion, luggage, sports and outdoors and generally, anything that has to do with travel and leisure. In some accounts that sell various sizes of products – their travel size products are in big problem right now. The main priority for these accounts is to sell out any way they can. We’ve seen many account owners opting out for a waiting game. The idea is – just wait a bit longer, turn off PPC until this crisis is gone. But, honestly, what are the odds of this even coming close to an end? If you’re in this situation, then maybe it would make sense to give up the margins, lower your price and sell out while you still can, to solve the cash flow issues. You know your product best, so start looking for information that would give you a hint to where your product’s future lies. The best possible approach is to stay up to date with the latest coronavirus updates and try to estimate the place of your product in the lockdown era. If you don’t see a good future for your product – give up your margins, sell out quickly and reinvest into a product that will make more sense.
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Account type two: accounts that have seen an unsustainable growth in sales in the last two months.
The categories that have seen a massive surge in sales: food, supplements, baby care, beauty and personal care, medical supplies, toiletries etc. The accounts that lacked good inventory management or had only up to a month worth of stock, are now in the same problem. You’re staying out of stock, and your next order is being shipped late. What should you do? This is how we navigate through this situation with our clients – keep PPC running for as long as we have stock, let everything run normally until they are completely out of stock and then pause the listing. The previous sales velocity you had before running out of stock, stays recorded by the algorithm and counts as positive points. Once you’re back in stock, you should be able to get back on your feet faster because your sales velocity was better before.
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Account type three: these accounts are the luckiest ones in this situation.
They usually sell a mixed product portfolio in various niches or products that have shown to be unexpectedly useful in a lockdown situation. Typical products in this account type are toys (kids are bored at home), home décor (people are trying to make their 24/7 living environment look nicer), tools and home improvement (people have more time on their hands and are fixing that doorknob they never had the time for), or any productivity tools that will make work from home easier.
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- The rising popularity of FBM program – simply put, all the categories of products that make life in lockdown more bearable, are now winning products. If you, as a seller have good inventory management skills, and have stocked up to Q4, then you are in the centre of the winning team 😊 but there are many increasing issues and threats that these accounts will be facing: first of which is increased competition. The sellers from losing categories will try to win the new terrain. Also, there is the problem of increased shipping and fulfilment cost. Amazon is now allowing sellers to send only up to 20 days’ worth of stock if they are in the non-essential categories. This means you have to pay extra to your 3PL logistics partner, because you need him more than ever, and at the same time, they are being flooded by offers from other sellers who have now realized they also need to have FBM as an option. What to do in this case? Make sure your business relationship with your 3PL partner, but also your supplier is stronger than ever. At the same time, start working on backups for both.
Keeping in mind all these things, we still don’t know how 2020 will look in the world of ecommerce. But we know for sure that the pandemic/lockdown situation is not getting close to an end. Many leading experts from the medical industry are already announcing the second wave of this virus coming in the winter. So, we can possibly expect recurring waves of global lockdowns and social distancing.
I don’t want to sound like a bearer of bad news, but judging by our own experience in the last two months, we’re very far away from ending this whole thing. If you are looking to reinvent your brand on Amazon and start selling something that will prove to be useful in the upcoming months and possibly years, start thinking outside the box called “hand disinfectant and gloves”. Start thinking in terms of prolonged lockdown as a new norm for living.
What will people need? Think of the psychological effects of lockdown. Products like natural antidepressants, indoor workout equipment, toys, entertainment, house cleaning, home décor, various toolkits etc. are just some ideas, to begin with.
What will people be faced with? Think of the financial effects of the lockdown. Products like essentials, crazy stuff for doomsday preppers like water/air filters, guns, ammunition, supplements are just some ideas that come into mind when you think about possible civil unrest caused by unemployment.
What will the investors do? This is a question that goes far beyond the reach of Amazon. In this situation, some ideas we’ve heard:
- Buying investment silver as a security measure. Silver has better liquidity than gold according to some industry experts like Jim Rickards.
- Buying Amazon stock. Amazon will not fail in a prolonged lockdown situation, we’ve seen that.
- Investing in cryptocurrencies, only if you know this industry really well.
- Selling physical products in the essential’s categories (by a large volume and tiny margins).
- Investing in digital goods and services, such as Zoom, Skype, Viber, independent internet providers etc.
Anyway, we’re yet to see the aftermath of this whole situation. What are your thoughts on what is the best thing to do?
Jelena Nuhanovic
Jelena is a PPC veteran in charge of designing successful strategies for our clients. After gaining rich experience in general business analysis; she found her true passion for scaling ecommerce businesses through paid advertising channels.
Jelena makes sure that every dollar you invest in advertising is being spent on the right channel through the usage of the right strategy
