COVID-19 And Its Impact On Amazon Third-Party Sellers

COVID-19 And Its Impact On Amazon Third-Party Sellers

More than 50% of the Amazon sales are made through third-party sellers and since everybody is confined to their homes with no safe alternative but to shop online, a massive surge of online supply and demand has taken place, leaving amidst its third-party sellers in unmitigated waters and much uncertainty. 

In the wake of reality-altering pandemic known as coronavirus, almost everyone has felt the wrath. From disturbed routine to limitation from the outside world, it hasn’t been easy for the most. More specifically, all those heroes out there doing their best to keep the world running by providing not only everyday essentials but also time occupying deliveries to their panic-ridden consumers whose sole purpose seems to be mass hoarding essentials like toilet paper.

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It’s an understatement to say matching the demand with supply has been only one of the many challenges Amazon FBA sellers are facing these days.  

Ban Over Non-Essential Categories

To match a smooth supply to an increased demand for products, Amazon recently restricted its FBA sellers to 6 essential categories: Baby, Health & Household, Beauty & Personal Care (including personal care appliances), Grocery, Industrial & Scientific, and Pet Supplies.

This ban was announced to be lifted by the 5th of April but it seems Amazon is still navigating on that front and there has been no relief to the sellers whose non-essential shipments are no longer being accepted by Amazon. This inbound freeze has affected about 53% FBA sellers.   

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The vendors whose sole bridge to the customers is Amazon are now looking at alternatives such as FBM.

Disruption In Supply Chain

The domino effect took place long before the USA came into contact with the deadly virus. Sources report that sellers felt a serious decline in sales due to supply disruption in China, where Chinese suppliers and factories were facing serious ramifications from the COVID-19 outbreak. Unable to produce and import goods globally, the ripples could be felt around the world.

Major Delay In Shipment

Amazon is famous for its fast delivery services. With Amazon Fresh, you could get same-day deliveries on groceries and produce. The Prime users could enjoy free deliveries within two days, and the Amazon Dash could take care of necessary household items just before depletion. 

Due to the effects of CoronaVirus, Amazon’s promises have taken a great toll. Even with a temporary hold on the selling of non-essential goods, Amazon may be meeting ends but it is not as smooth as it used to. Even the regular 5-8 day delivery has taken an unsavory stretch to as long as a month! 

In a frenzy of buying, with limited workers, and health & safety measures it is proving challenging for Amazon to deliver on its previous standards. As a result of late shipments, many customers are canceling their orders after finding out their orders will take too long to arrive.

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Decline In Consumer Spendings

We found out through a survey that around 80 million jobs may be lost due to the spread of COVID-19. These are mainly jobs relating to luxury services, tourism, and travel. 

The people are currently concerned with self-preservation more than anything else. The buying focus has been limited to survival at home and making life efficient within the comfort of their walls. 

Since people are spending less on items outside the essential categories, more is spent over goods like health, food, child and pet care. 

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Sellers dealing with non-essential items are either facing this difficulty despite turning to other methods than FBA.

Moreover, due to delay in Prime Day (usually held around mid-July, now postponed till August) will likely also bring a major setback to sellers as mass materialism allows them to single-handedly generate a huge spike in revenue.  

How Amazon Sellers Should Combat These Difficulties?

These may be trying times and to make sure Amazon Sellers survive through this epidemic, here are a few suggestions sellers can apply to see their business through. 

Give FBM a try – With inbound shipment freeze, many sellers are already considering Fulfillment By Merchant. Since Amazon is unable to fulfill, you don’t have to sit around feeling trapped and helpless. Try fulfilling your products by yourself, if you have a storage area. A plus advantage of switching to FBM would be the buy box. Currently, Amazon has been favoring the FBM sellers who are able to meet ends better than FBA sellers for the placement in the buybox. 

Halt advertising or spend less on it  –  With the economy being at stake, many businesses are making a practice of cutting down on costs and saving up for harsher times. Since we do not know how long this spell may go on, it is a wise choice to temporarily cut down on extra costs such as advertising. Amazon itself is urging sellers to do the same. 

Change your strategies – With Chinese suppliers out of the question, you can look for other sources such as local businesses. Many sellers are showing support to their communities by sourcing from them in order to avoid further delays in shipment and communication issues. Meanwhile, the customers will likely be more pleased as well with less damage to the ecosystem. Besides that, where applicable, you can also go for homemade production of goods, or 3D print your own items! Other sellers are reaching out to suppliers outside china and the US such as  Vietnam, Mexico, Taiwan, and more. 

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Update your inventory to hot selling products – Right now, as we have observed, there are certain categories that are hot to sell and consume alike. Products such as DIY projects, self-grooming & care kits, fitness, home office supplies, medical supplies, and pet care products are very in. Seling products such as these may prove quite beneficial to the sellers. 

Most importantly, stay informed – Staying on top of current news and updates is the way to make sure you don’t miss out on important trends and updates regarding amazon.

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Lead Content Writer
Alina is a content marketing specialist at AMZ One Step, where she writes about Amazon Marketplace and helps sellers in planning out a multi-channel strategy for their Amazon Business. Besides that, she likes talking about Art, Psychology and Astronomy.

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