As the coronavirus continues to wreak havoc on almost every aspect of our lives, it’s also changing the Amazon landscape, causing many sellers to have to react to new (hopefully temporary) realities on the marketplace. While some sellers have seen their sales drop significantly as a result of a drop in demand, the sellers lucky enough to see Amazon shoppers still searching for their products have nevertheless had to deal with a number of unexpected and potentially disastrous events, most of which came with very little warning.
Here are the biggest impacts we’ve seen the coronavirus having on Amazon:
1. Inventory and FBA Shipment Restrictions
Amazon recently announced that it will be prioritizing household and medical supply products that have seen a spike in demand as a result of the pandemic, at least through April 5. As a result, many FBA sellers whose products are do not fall under at least one of these product categories will be unable to send in more inventory to Amazon until then. Of course, not being able to replenish inventory on Amazon can have disastrous consequences, especially if you are prevented from doing so for an extended period, causing your product to be out of stock for a while.
Our recommendation: if you are an FBA seller, check to see whether you are able to send in inventory to Amazon. If you are not able to replenish inventory, then make sure you are actively managing your inventory levels and planning accordingly. Try to plan ahead as much as you can, including talking to your suppliers. Hopefully Amazon removes or relaxes this restriction on or before April 5. Look for updates on this situation regularly.
The coronavirus has already significantly affected consumer behavior (think: toilet paper), causing significantly increased demand for certain categories of products. In an attempt to take advantage of this spike in demand, many sellers are increasing their bids on many PPC targets. This rapidly changing consumer behavior, coupled with increased competition from other sellers, is having two main impacts on Amazon PPC. First, it is causing conversion rates to drop, in many cases somewhat drastically. Second, it is causing costs per click (“CPC”) to increase. The overall effect of these two changes is that many PPC campaigns are yielding less successful results than they had been historically.
Our recommendation: the last thing you want from a PPC perspective is to spend more for a click that is not going to convert as well as it is used to. Make sure you are actively managing and monitoring all of your campaigns on a daily basis. Two things you should be looking for are increased ACOS and increased CPCs. If you find that your campaigns are not performing as well as they had been, then gradually pull back until they start to stabilize. To the extent you can, try to make changes at the keyword/product target level rather than on the campaign level, which will help any over-correction. Of course, the last thing you should do is shut off PPC completely, which will almost certainly lead to a significant drop-off in sales.
3. Delayed Shipments to Customers
As if it wasn’t bad enough with Amazon’s temporary restriction on sending many products into its fulfillment centers, in connection with its decision to prioritize household and medical supply products, Amazon has been moving back the estimated delivery dates for many non-essential products that it delivers to customers. So, while a product may have been delivered to a shopper within two days of the shopper placing the order under normal circumstances, this same product might not be delivered for up to a month after the order is placed if it is not a household or medical supply product. We all know that one of the biggest reasons shoppers purchase products on Amazon is because of its almost impossibly fast delivery. Without this benefit available, though, many shoppers might decide either to wait to purchase the product or to buy it elsewhere. If a product is not available to be shipped to a customer for a while, then odds are the conversion rate for that product will decline.
Our recommendation: check your listings daily to see when the products are available to be delivered to shoppers. If you find that there is a significant delay in delivery, then don’t panic, but make sure you are paying extra close attention to your PPC campaigns for these products, as you might see the performance of these campaigns further decline as a result of a decreased conversion rate.