COVID 19: Observations, Implications, Adaptations
The COVID-19 pandemic has drastically impacted all aspects of society. At Swell Quality, we don’t want to diminish the health and societal implications of this event, and we certainly hope you and your loved ones are staying safe during these bizarre and scary times. With that in mind, we would like to share our observations and predictions as a retailer and brand management firm from the past few months.
The economic fallout from COVID-19 has been particularly severe, as nations across the globe have come to a standstill, income has become scarce, and the future of business has become increasingly uncertain. Every industry in every global market has been affected by the scale and uncertainty of the pandemic. But our world, the world of e-commerce, has seen dramatic changes that cannot be overstated or overlooked.
COVID-19 reminded us of Amazon’s power and presence. Amid nationwide shutdowns, the United States appeared to be wholly dependent on Amazon for several months to supply and deliver goods to hundreds of millions of people. The entire fabric of brick-and-mortar shopping evaporated overnight, and all of the customers and sellers who had yet to transition to Amazon, or other online marketplaces, were forced to do so in the blink of the eye.
Here are some of the notable, crazy highlights that unfolded from March through mid-June:
Fulfilled by Merchant (FBM) Revival: Amazon has always prioritized Fulfilled by Amazon (FBA) in the buy box, and for good reason. Their logistics system is the best in the world and no third party has the knowledge or infrastructure to compete. However, Amazon, like the rest of the world, had never been faced with a crisis like COVID-19.
With their warehouses under immense stress, third-party sellers had to step up. Merchants, through FBM listings, owned the buy box as Amazon struggled to catch its breath. Brands that had an efficient FBM system already in place were rewarded immensely, while those fully reliant on other methods of fulfillment were put in a serious bind.
Similarly, sellers that were not prepared were left with a record number of negative reviews, as they learned FBM is not only about fulfillment but also the added responsibility of customer service issues that are typically handled by Amazon.
We were fortunate that our investment in a Salt Lake City warehouse to fulfill FBM orders allowed us and our clients to be prepared for an emergency, and we encourage all brands to make sure their partners can offer the same.
Suspensions: “Your Amazon Seller account has been deactivated. Your listings have been removed.” This notification is every seller’s worst nightmare, but account suspensions have been aplenty since the onset of COVID-19.
We cannot stress enough how important it is to stay up to date on current Amazon policies. However, thousands of sellers, scrambling to adjust to a new environment, saw their listings banned and received price gouging suspensions, some for lifting their prices just a few cents to cover higher supply chain costs.
This is a valuable lesson, as suspensions are usually triggered by bots and can occasionally occur when the actor has done nothing wrong. Reactivating your account as quickly as possible is a crucial part of being viewed as a reliable brand and maintaining cash flow, especially in the midst of a crisis when customers need you most. Every Plan of Action (POA) – the documented steps you agree to take to rectify the situation – that is rejected could yield another week or more of suspension. This could result in the loss of an employee’s job or an entire purchase order of revenue.
At Swell Quality, we recommend hiring a professional the second you notice your account has been suspended. You need someone who speaks Amazon’s complicated language. Hiring a trusted, well-rated expert to draft your Plan of Action is a no-brainer, even if you have done nothing wrong. If you need a recommendation, we’re always happy to point you in the right direction.
Amazon Continues to Grow: This one is short and simple. During COVID-19, Amazon has been in the news every single day. Some of the press has been good. Some bad. But Amazon is everywhere, and it will continue to grow.
Take just this stat. During one of the worst periods of unemployment in modern US history, Amazon added 80,000 (80,000!) jobs. The demand for the Amazon platform and your products has never been greater.
So, where do we go from here? How do we expect our COVID-19 observations to translate into the future? Below are a few of our takeaways for a new era of e-commerce.
B&M Retailers Online for Good: Remember those brick-and-mortar retailers we mentioned earlier that had to build and maintain an online presence in a matter of days? They’re here to stay. With so much uncertainty around the future of physical retail and the increasing competitive requirements for a convenient online presence, mom-and-pop shop is going to take on an entirely new meaning.
Respect for Third Party Sellers: Hey, we get it. Online sellers generally have a bad reputation because of lazy, apathetic partners who do little to lift the brands they represent.
However, during COVID-19, brands and distributors that mostly deal with brick-and-mortar stores have been forced to open their doors to more online sellers. What they may not have expected was for those same sellers to be gateways into optimized listings, creative campaigns, and unprecedented online success. Not every seller is created equal, and we encourage all brands to ask the right questions when they’re searching for partners to make sure they’re getting more than just a buyer.
Supply Chain Transformations: COVID-19 left brands feeling exposed. Supply chain weaknesses were put on full display, and brands that were previously able to get away with a scattered set of partners were left scrambling to get everything under control.
Moving forward, we believe smart brands will evaluate every aspect of their supply chain, from material sourcing and manufacturing to distribution and retail. Although it seems counterintuitive, a crisis can serve as an ideal time to trim the fat and get your business under control, whether that’s by consolidating sellers and distributors, enforcing your advertised prices, or any other forward-thinking action.
News is Necessary: Being up to date on the news has never been more important for success in e-commerce. COVID-19 has demonstrated how global, macroeconomic forces impact even the smallest brands, and being in front of these changes is essential for survival and maintaining a competitive edge.
On a smaller scale, as your business continues to grow on Amazon, being aware of changes to platform policy are necessary to avoid major setbacks. We use ASGTG for our Amazon-specific news. You and your sellers should do the same.
Phew. Hard to believe that those are just a few of the takeaways from the past few months, but COVID-19 really has brought unprecedented change. We hope that these observations and takeaways will help you adapt to the current time and prepare for uncertainty in the future.
If you’d like to learn more about how Swell Quality can help your brand, we’d love to hear from you. Reach out and connect with us!