The world is beginning to seek recovery from the economic troubles that have come as a result of reactions to COVID-19. The past week has seen several changes for Amazon and its partners.
Amazon Operations
With phased reopening of economies and lifting of stay-at-home orders taking place, Amazon is still one of the primary sources for people to get goods in many parts of the country and world.
Many companies are emerging from the pandemic as winners or losers. With online business overall is up by and estimated 74%, and aside from Amazon’s boost in business, Walmart has moved to #2 online over E-bay. Home Depot and Target are also strengthening their online businesses. On the other hand, several companies are filing for bankruptcy, including J. Crew, the Neiman Marcus Group, and J.C. Penny.
Amazon still has plans to invest highly in COVID related costs through Q2. Among paying higher wages to their workers and developing COVID testing, which has been mentioned previously, they have shifted engineers working on drones to having them make face shields for healthcare professionals. They have also begun distributing free face masks at Whole Foods location nationwide.
Amazon’s physical business locations, like Amazon Books, Amazon Pop Up, and more have extended their temporary closure, though employees are still observed preparing for future opening.
Shipments of nonessential items are still expanding as they have in past weeks, aligning more with actual customer demand. That demand keeps grocery and stay-at-home related goods high. While products related to group, public, or community activity is still lower than pre-COVID levels, those levels are rising as people anticipate being able to return to normal activity.
Internationally, operations in France plan to resume on May 19th. Amazon Australia has stopped its direct import business from the U.S., though there are still other methods of getting goods to customers there. Amazon Global has also reactivated its business.
For Amazon’s deliveries, they still plan to resume 1-day shipping near the end of Q2 or in Q3. Prime customers no have shipping estimated between 1 and 7 days.
Difficulties and Opportunities for Vendors
Several of the programs for vendors are opening on Vendor Central. Vendors can now set up Coupons, Best Deals, and Lightning Deals. While not completely active yet, Amazon is accepting submissions for Deal of the Day and Prime day.
For purchase orders overall, they are still leveling out to reflect actual customer sales. Reactive POs happen still, but they are smaller than they have been previously. Delayed timing has occurred for auto-orders, but this issue should be corrected by the end of the week. Buying of new products has resumed, but it is based on existing customer demand.
Drop ship is still elevated in high-demand areas, and other areas are seeing increasing demand based on the seasonality of the product.
Product suspensions continue every week, especially on products that may be viewed as COVID related. Many mask manufacturers in China have been cut off from selling through Amazon based on discoveries of many counterfeit products. Selling various kinds of PPE is more difficult because of increased scrutiny.
There is a new North American Vendor Prep Manual, and one of the entries worthy of note is the distinction between pallet and carton labeling, so vendors should watch for that difference when shipping. Waivers for O-Time Non-Compliance have been extended to May 31st, as has the SIOC waiver for baby, beauty, grocery, and health and personal care categories.
Amazon Pantry has made purchases available again and Fresh is accepting new customers, so vendors in those categories will likely see an increase in their business. The invitation limitation for Fresh was removed in many cities so customers can shop without an invitation. And with an increased number of pick-up windows and higher order capacity, more people have easy access to groceries through Amazon.
Future Operations
The estimated duration of high impacts due to the virus is still toward the end of May. The demand of customers has stabilized for the most part, so Amazon ordering will soon follow suit, if it hasn’t already in certain categories.
With the limit on new shipments of nonessential goods lifted by quantity for FBA, businesses will soon be able to return to their pre-COVID levels of shipments and sales. Also, category events are expected to resume in June, allowing those category-specific products to once again have their day.
As mentioned earlier, with many of the tools and programs vendors have being reinstituted, businesses have more levers to pull to jumpstart their sales and growth once again.
If your business needs help in recovering losses incurred during the COVID-19 pandemic, reach out to a Navazon representative. Together, we can find out the correct path to profitability for your Amazon business.