How COVID-19 Is Affecting Amazon Sellers

No matter where you are in the world, you’re currently feeling the impact of the COVID-19 coronavirus. Whether you’ve fallen ill, had loved ones suffer, felt the economic impact or simply had to adjust your lifestyle and work flow, everyone is experiencing it.

For Amazon sellers and remote workers, while we’re feeling the impact as well, we’re better off than a lot of people in the world right now. However many sellers are still facing uncertainty over the future of their company.

This post will round up what exactly the coronavirus means for Amazon sellers, and how you can make it through such a turbulent time.

Coronavirus – what it means for Amazon sellers

Relatively speaking, the coronavirus is not new for those in the Amazon game. We’ve been experiencing a ripple effect since it first emerged at the start of the year. It is certainly heating up now, as it is for all professional sectors.

Here are the biggest news items related to COVID-19 so far.

Supply chain

With the virus originating in China, the resulting shutdown in the country had a big impact on many sellers’ supply chain, even before the virus took root in the west.

With a huge number of sellers sourcing products from China, a lot of listings ran low or went out of stock when factories shut down to stop the spread of the virus.

Most factories are now back up and running as the situation in China is easing, but sellers have already felt the blow of lost sales & rankings due to an inability to get stock in on time.

Temporary reduction on FBA intake

The biggest bombshell was dropped when Amazon announced that shipments to fulfillment centers will temporarily cease for some categories.

Amazon’s announcement reads, “We are 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.”

Here’s the full announcement by Amazon:

This is huge if you rely on FBA for fulfillment of your products. If your product doesn’t fit the prioritized categories, you’ll need to arrange other ways of shipping orders (such as FBM).

To see just how big this is, see the replies to the announcement in Amazon’s seller forums.

“Amazon just put tons of businesses out of business. Destroyed thousands of jobs amidst a crisis. Horrible joke. Absolute joke. No warning. Expect major lawsuits coming from sellers who now will go bankrupt.”

“You declare that you care about FBA businesses, Do you understand how this impacts the businesses taking into consideration that you have your boot on our neck with the IPI score so Amazon can lower the logistic costs and deliver more profits?”

“I am affected big time. I am a one man (woman) band having my own handmade business. I don’t sell, I don’t eat. Period.”

Make no mistake, it’s a big call from Amazon, but one that had to be made. So many who are housebound now rely on platforms like Amazon to get household necessities, and Amazon’s supply chain has to adapt to this.

Amazon also announced that they are hiring 100,000 new workers to handle the increase in demand, as well as increasing pay by $2 per hour for their workers for the time being. The FBA restriction is said to last until the 5th of April.

Prime shipping delays

Along with reducing FBA intake, many items will have greatly increased shipping time when delivered by Amazon.

Amazon Prime, which usually boasts delivery times of 24-48 hours, is now displaying shipping times of up to a month for many non-essential items.

See some of the reaction in Amazon seller Facebook communities:

Many have already noticed the drop in conversions from the removal of the Amazon Prime badge and an increase in quoted shipping times.

It’s important to note that the large increase in shipping times is not across the board just yet. Some non-essential categories still show regular delivery times, indicating it likely depends on the customer’s location, and how much stock is available in fulfillment centers nearby.

Scrutiny over price gouging

Arbitrage sellers trying to make a profit buying up essential supplies and selling them on Amazon have been dealt a swift hand.

Many sellers trying to drive up the price of items such as masks, hand sanitizer and antibacterial wipes found themselves in violation of Amazon’s fair pricing policies, and thus were kicked off the platform.

The most notable case was a pair of brothers who bought up more than 17,000 bottles of hand sanitizer (as well as other items) before being suspended by Amazon.

Amazon has removed over 3,900 seller accounts in the US due to price gouging. Countless others have had new listings blocked for products related to the coronavirus.

Amazon says it has removed more than half a million listings that it believes are engaging in price gouging during the coronavirus pandemic https://t.co/BJPY3tle2m

— CNN (@CNN) March 24, 2020

What Amazon sellers can do to get through

There are very few sectors that aren’t feeling the hit of COVID-19 right now. Amazon third-party sellers are obviously part of this too. But there are things you can do to keep your business operating through this hard time.

Fulfillment – pivot to FBM if necessary

If you’re not selling “essential” products (medical supplies, household staples, and more high-demand products), you may have to look at pivoting your fulfillment method for at least the next month.

For a lot of sellers this is the only option to keep money coming in, if you had previously been relying on FBA.

Even if you already have stock in FBA, it will be a huge boost over your competitors if you can get products out to customers quicker than some of the quoted Amazon shipping times.

It pays to look at options for third-party fulfillment services, now. The sooner you can get your supply & fulfillment chain ready to go, the sooner you can change your products from FBA to FBM and keep operating.

Source additional cash flow

For some sellers, the biggest issue isn’t finding inventory or even fulfilling it, but keeping up with demand. Some categories are already seeing growth during the pandemic, and this could expand to many more with people practicing social distancing.

If you’re looking to speed up your supply chain by buying more inventory, investing in additional shipping materials, hiring additional employees and more, you may want to get paid faster for your Amazon and e-commerce sales in order to make it happen. 

Payability is fully operational during this crisis and can get you paid the next-day, every day for your sales. They can also get you an advance on your future sales (75-150% of your monthly payouts) with an Instant Advance. Approval is based on account health and sales performance so there are no credit checks and you can get approved and paid in 24 hours.

Approval is based on account health and sales performance so there are absolutely no credit checks. Payability provides funding solutions to businesses selling on Amazon, Shopify, Walmart and more. 

Don’t try to take advantage

If seeing people publicly shamed and outed for price gouging isn’t enough to convince you, let me reiterate.

Don’t try to raise prices and take advantage of increased demand/scarcity during this time. While it might seem like a great way to make extra profits, at best you’re going to anger a lot of people. At worst, you’ll be kicked off Amazon and potentially even face charges.

This doesn’t mean you can’t sell essentials and meet an increasing demand for online shopping & delivery. But don’t jack up the prices because people have no other option right now.

Ethical business practices are always the best idea in the long run. This is true tenfold during times of crisis, as we are in now. People will remember the businesses who were there to help people out, and they remember those who just tried to take advantage too.

Be one of the good ones. Even if it means taking a bit of a hit right now, you’ll be better off once we’re all out of this.

Smart business practices

Now is the time to optimize your business dealings as much as possible. If you’re seeing sales drop off, you might need to cut down on some areas of your business that aren’t profitable. If you’re bleeding money on PPC, for example, it might be time to turn it off, or at least direct your budget towards only profitable campaigns.

If stock levels for a product are about to run low due to the FBA shutdown, this is also an area you’ll want to cut down on PPC/advertising.

Do a full audit of all areas of your business, and cut down where it’s not profitable. 

Likewise, any areas that are profitable, particularly products or variations that are doing well, is something you want to double down on in this climate.

Are Amazon sellers in trouble?

What does this mean for Amazon third-party sellers going forward? Is this going to mean the end for FBA/Amazon sellers?

Honestly, no. Amazon businesses, like any right now, are being faced with a lot of challenges. But it doesn’t have to be the end of your business.

Amazon’s throttling of FBA is expected to only go on until midway through April. Whether the situation has eased by then, we don’t know – and there’s the possibility for things to get worse. But there’s also a good chance that Amazon will be able to open up their fulfillment network to regular activity again, perhaps even sooner than expected.

In the long run, e-commerce should see significant growth as the result of the pandemic, as people spend more time at home and less time in physical stores.

Even once it ends, expect a lot of people to have become conditioned to shopping online, and more people buying from sites like Amazon.

Weathering the storm we’re in now could mean great things for your business. You’ll be in a great position to rebound once things turn around. Many great companies were built during recessions. Yours can too. A business needs the ability to adapt to changing circumstances. Those who do what is necessary almost always thrive in the long run.

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