Given how many people are currently stuck at home due to the COVID-19 quarantine, you’d expect this to be a period of considerable growth for ecommerce businesses, particularly those reliant on the Fulfillment By Amazon (FBA) service. After all, what better way to pass the time than by browsing the world’s largest digital marketplace? Unfortunately, as is so often the case, the reality is somewhat more complicated.
For one, since the beginning of the outbreak Amazon has been prioritizing the shipment of essential products. That has eased considerably since, but it’s great news for FBA sellers involved in either of these markets. If you sell household staples or medical supplies, business is booming.
If you sell anything else, you might be struggling to get your products into people’s hands in a timely manner, and your competition from other third-party sellers might be outpacing you.
As reported by CNBC, many Amazon sellers are already dealing with cashflow problems and supply chain disruptions. While many may still have enough stock remaining in Amazon warehouses to manage for a few weeks, the outlook becomes less and less positive as the pandemic wears on. Reports of concerns over a possible second wave in China just add fuel to the fire that disruptions may be cyclical and far-reaching. At best, that means reduced spending on non-critical services such as advertising.
At worst, it could mean larger disruptions, less consumer spending, and even layoffs as business slows to a crawl.
Per eCommerce publication Digital Commerce 360, Amazon is no longer restricting nonessential shipments to Amazon fulfillment centers, even though it is still prioritizing essential products. This means that as we move into June, sellers will once again be able to lean on Amazon for shipping and handling. AI-driven ecommerce analyst Feedvisor’s analysis of Amazon sale changes provides even more good news for sellers, with sales increasing slightly across all categories as of the end of March.
This does not, however, mean that we’re out of the woods. Amazon isn’t the only thing influencing the bottom line of FBA sellers. Because of COVID-19, notes Bloomberg, many people are facing a highly uncertain future.
The economy continues to stall, despite efforts to get people back to work, and unemployment rates are high. Most consumers, as a result, are still focused on surviving the days ahead. Since the pandemic started, 1 in 4 Americans has filed for unemployment benefits, and few are likely to consider making unnecessary purchases.
Moreover, the fact that sales are climbing doesn’t mean they’re booming. Rather, it represents a gradual recovery from the strain of COVID-19. The news here isn’t all bad, though.
The greatest benefit of having an FBA business is the terrific reach and visibility, especially if serious fulfillment chain disasters can be avoided. Sellers can also add SKUs (especially products that are in higher demand but not necessarily just one-offs), fulfill products through a 3PL, or pivot to a subscription model. Sellers who can be innovative and make it through COVID-19 intact are likely to see growth as the effects of the pandemic continue to dissipate..
It is quite possible that our consumer behavior has changed permanently. People have grown used to relying on digital businesses and delivery services to fulfill most of their shopping needs.
Ultimately, this means that while the coronavirus is creating trouble for many FBA sellers in the short-term, long-term prospects are extremely promising.
About the Author
“Christopher Moore is the Chief Marketing Officer at Quiet Light, which specializes in helping clients sell their internet-based businesses. Additionally, he founded Gadabout Media LLC to inspire, educate, and unite others by creating visually stunning content for clients.”