Click here to download a pdf of the slides, Amazon Impacts of COVID 19 – Navazon Inc – 2020_05_05.
Many aspects of life and the economy are beginning to turn around and reopen, giving hope to many, including those who do business with Amazon.
Amazon Operations
Amazon also stabilizes operations as they continue to expand shipments of nonessential items, more in alignment with customer sales and demand. Grocery items remain high from increased online ordering, along with other stay-at-home good, while products that facilitate public or group activities remain depressed.
Some thought that the government stimulus in April would result in a bump in Amazon purchases. This did not play out as predicted.
The May 1st car rally around Amazon’s Seattle headquarters to protest for employee safety involved less than 100 people but drew a lot of media attention. This has placed a large focus on what Amazon is doing to protect its employees.
Amazon has plans to spend $4B+ on COVID-related projects and costs in Q2 of this year, including products such as masks, higher wages, developing testing capabilities, and enhancing the cleanliness of its facilities.
With the increased traffic and attention on Amazon Prime, the company is increasing marketing and benefits found there, such as free Prime Video content and pay-per-view movies that could not be seen in closed theaters. This has allowed them to reduce advertising spend in other channels, such as Google.
Prime members have also become the only shoppers that can shop Amazon Fresh because the demand for delivered groceries has increased so much.
While Amazon’s physical businesses, such as Amazon Books, Amazon 4-star, Amazon Pop-Up, and some Amazon Go have been temporarily closed until May 16th, there have been employees working in some of those locations. This could indicate that Amazon expects normal operations to resume soon, including its online business.
Difficulties and Opportunities for Vendors
Delayed delivery messaging on detail pages has been dropped, indicating that the normal speed of Amazon deliveries should soon be returning. It is projected to return to 1-day shipping capabilities in Q2 or Q3 of this year.
Prime Day Deals is now accepting submissions from recommended products, and the date for submissions has been extended again to June 5th.
Even though some surge purchase order levels are dropping to reflect customers sales, there are still high levels of drop ship orders. This shows that Amazon still has a way to go to catch up with current demand.
On-Time Non-Compliance waivers have been extended until May 31st, which allows vendors to continue accepting all POs and down-confirm what they have capacity for. SIOC waivers have also been extended for several categories.
Internationally, the French closure of Amazon warehouses continues until May 8th, while goods are still available through drop ship (direct fulfillment) or other European fulfillment centers. Deliveries are resuming in India in green and orange zones which have been designated as safer for operations.
Future Operations
The current estimate is for the major impacts of doing business on Amazon will last to the end of May, as customer demand has stabilized and POs are coming closer to alignment with customer demand.
But because promotions, deals, and coupons have been disabled or delayed, it creates larger inconsistencies that make accurate forecasting for storage, receiving, and other operations more difficult. However, Prime Day is now expected to occur in August, so keep that in mind for operations in the coming months.
For the full presentation, Click here to join the meeting. If you need help maneuvering your business into the best positions possible during this unique economic time and beyond, contact a Navazon agent today so you can be on your way to growing a successful Amazon account.