“We will consider this unforeseen event when we evaluate your account’s recent performance.”
This is from a notice from Amazon to its third-party sellers, which you may have seen if you’re one of them. Clearly, the eCommerce giant understands the impact that the Coronavirus pandemic could have on your bottom line — whether you sell on Amazon or another eCommerce marketplace.
After all, factories in China have been shut down as a result of COVID-19. For those that have reopened, momentum is slow. According to The New York Times, they “are operating well below capacity… Quarantines, blocked roads and checkpoints are stopping millions of workers from returning to their jobs. Supply lines have been severed.”
All of this is causing production delays on goods sold in the United States and by eCommerce sellers. Not only that, customs restrictions are holding up the actual shipments of goods that are currently stuck in ports or on ships. And on the consumer side of things, people are either panic-buying or participating in online retail therapy as they self-quarantine and socially distance themselves from actual brick-and-mortar stores. So demand is higher than ever.
Ultimately, these delays and spending habits could lead to inventory shortages — or worse, stockouts. But now is not the time to panic about how you’ll manage through these uncertain times. Keep reading to see how Amazon is protecting itself and its third-party sellers, get tips on preventing a stockout no matter what marketplace you use, learn how to safeguard your business from future events like this one, and more.
How is Amazon Protecting Itself?
In a statement to Business Insider, Amazon said, “Out of an abundance of caution, we are working with suppliers to secure additional inventory to ensure we maintain our selection for customers.” In addition to ordering extra inventory for itself, Amazon is giving sellers more time to ship their products to warehouses and waiving certain late shipment fees.
Amazon also recommended that its sellers take precautions to protect their seller account health, which we’ve included in the next section alongside other helpful tips. Keep in mind, these tips can be used for sellers on most marketplaces and eCommerce platforms (not just Amazon), so no matter where or how you run your eCommerce business, don’t panic. This week Amazon also delayed shipments to their FBA fulfillment centers for all non-essential items as they work to restock hand sanitizers, baby products, medical supplies, and more in order to keep up with increased consumer demand. We’ve outlined more on this development and what you can do if your business is affected by it below.
How to Protect Your Business NOW from Coronavirus-Related Disruptions
As we mentioned, overseas and domestic supply chain disruptions could lead to inventory shortages or stockouts in your eCommerce business. In most cases, stocking out as a third-party seller can result in missed sales, losing the Buy Box, or even suspension in some cases.
It isn’t just people selling hand sanitizers and food that are quickly stocking out. The panic and change in the routines of billions has affected a number of verticals. For example, if you sell school supplies, coloring books, or office supplies just to name a few examples, chances are you are also struggling to keep up with demand as millions adjust to working from home and teaching their children at home. Plus, as most retail stores have closed, eCommerce is really the only option for consumers to purchase goods. If you find yourself running short on inventory and aren’t sure at the moment how to replenish it, here are ways to prevent a stockout during the COVID-19 crisis. While these are temporary “fixes”, they may be necessary to get you through the next few weeks until you find a solution:
- Slow your own sales: Some sellers are decreasing demand on their own by stopping advertising and marketing campaigns, cancelling pre-planned promotions, and increasing prices. If you’re an Amazon seller and are thinking about increasing your prices, remember that Amazon’s terms strictly forbid price-gouging; in fact, they’ve already removed millions of listings for overpriced face masks, sanitizers, and emergency supplies. Needless to say, be careful about your repricing strategy.
- Go on “vacation”: Turn your storefront on “vacation” mode by ultimately making your product listings inactive. This means your listings will be temporarily suppressed from search results.
- Cancel existing orders that you cannot fulfill: If you have any open orders that you can’t fulfill or that will severely impact your inventory levels, cancel them. Then, if you can, reach out to your customers to let them know that your business has been impacted by the Coronavirus, apologize for the inconvenience, and ask for forgiveness and understanding. This should hopefully prevent them from leaving any negative reviews on your listings.
- Communicate with overseas vendors: You should always keep an open line of communication with your suppliers, but this is especially important now more than ever. Stay connected, even if they are still quarantined, to get updates on their timelines. Use a free messenger app like WhatsApp if you have to.
- Consider logistics companies — or local manufacturers: You could look into third-party logistics or fulfillment companies to reroute shipments through less affected areas like Mexico or India. Alternatively, you could check in with US-based manufacturers to see if they are currently operating. Though keep these two considerations in mind: American factory workers might also be self-quarantining so production could be slow, and some US manufacturers might source their own supplies from China and thus not have what they need to help you.
Amazon’s note to third-party sellers claims that they’ll take this situation into account when reviewing recent performance. If you still end up with poor performance metrics, follow this guidance from Amazon: “please include a brief description of how your business was impacted when you respond to the relevant performance notification in Seller Central.”
Sometimes supply chain issues don’t come from a shortage in inventory, but from an abundance of inventory with nowhere to sell it or not enough cash on hand to take advantage of every opportunity. In these uncertain times, things don’t always go as planned. Large marketplaces such as Amazon have recently been overrun with fraud and price gouging on disinfectants, sanitizers, cleaning products, and more as people began to stock up to protect themselves from the coronavirus. In order to protect customers from this, Amazon and other marketplaces have had to heavily regulate these products. While these regulations were necessary to protect consumers, even legitimate sellers who have been selling these products for years have seen their products sent back and their listings removed. According to The New York Times, one Amazon seller in Tennessee was left with 17,700 bottles of hand sanitizer and nowhere to sell them.
As people socially distance themselves from brick-and-mortar stores and stock up on essentials via eCommerce marketplaces, many sellers have had issues keeping up with demand. This week Amazon suspended all non-essential deliveries amid the coronavirus outbreak. According to Multichannel Merchant, “Amazon has temporarily suspended fulfillment of non-essential items through its Fulfillment by Amazon service for third-party sellers through April 5 due to high coronavirus-related demand for medical supplies and essentials.”
If any of these issues with order fulfillment and keeping up with demand sound familiar, here are a few things you can do:
- Sell on Other Marketplaces: As we mention multiple times in this post, it’s very important to diversify your business by selling on other marketplaces and reducing your reliance on a small number of products. If your inventory has been sent back or you can’t currently get your inventory in FBA, consider selling on a less regulated marketplace like Tophatter. Tophatter is a discovery marketplace with a unique 90-second auction model. It’s ideal if you’re looking to sell your excess inventory at high volume. Many categories perform well including home, health and beauty, electronics, and consumables. They are also unique in that Tophatter is CBD-friendly and less restrictive on categories that are often restricted by other marketplaces including personal health and wellness products that other marketplaces are currently restricting heavily. They also have simple to understand fees (9% across all categories + a small fee to get your product in the auction). Get started here and get $100 off your fees just for being referred by Payability. Depending on the products you sell and if you currently have them in your possession, you can also consider selling on consignment marketplaces such as Poshmark, Tradesy, and Mercari.
- Temporarily Switch to Self-Fulfillment or Another Fulfillment Option: If you have yet to send your inventory to FBA, you may want to hold off until they are able to process it and temporarily find another fulfillment option. If you are able to get shipping materials and make it to the post office, UPS or FedEx, you may want to consider self-fulfillment. If self-fulfillment isn’t for you due to high volumes or other issues, you may want to consider fast shipping services like Deliverr that offer 2-day shipping on Walmart, eBay, Shopify, Amazon and more from their fulfillment centers. You also may want to speak to warehouses and fulfillment centers that you trust to see if they can fulfill your inventory. Perhaps, the shipping and logistics companies you are already working with also have warehouses and fulfillment centers you can use. If you aren’t doing very high volumes, but are able to fulfill your orders yourself, you can buy shipping labels directly from Amazon and take advantage of their bulk discount or use a service like ShipStation to print labels across all your selling channels and take advantage of their bulk discounts. Depending on the size of your business, you may be able to negotiate your own bulk discounts with USPS, UPS or FedEx.
- Get Paid Faster: If you have found a product or products that are in demand right now and have found a safe and consistent channel to sell them on, your biggest issues may not be inventory, finding a sales channel, or fulfillment. The issue may just be keeping up with demand. If so, now is the time to get paid right away for your sales and continue to reinvest in what’s working. Payability Instant Access can get you paid the next-day, every day for your Amazon and marketplace sales rather than trying to wait every 14+ days to get paid. This can give you a lot more flexibility, reduce risk, and keep you out of debt during this vital time. Best of all, there are no credit checks and you can get approved in 24 hours. If you need a bigger infusion of cash, you can get up to a month’s worth of payouts (up to $250,000 in 24 hours) with a Payability Instant Advance. As with Instant Access, there are no credit checks as approval is based on sales volume and account health. Payability’s multi channel financing solutions are available to businesses selling on Amazon, Walmart, eBay, Tophatter, Newegg, MoreCommerce, Etsy, Shopify, Volusion and more.
If you’ve done all of this but are still worried, talk to other sellers to see what they’re doing, and stay tuned for updates from Amazon and any other marketplaces you sell on. In the meantime, we wish you the best of luck and are here if you have any questions about how to maintain cash flow in the midst of this crisis. Call us at (646) 494-8675.