Amazon Suspends FBA Shipments due to Covid-19. What does this mean for your business?
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On Tuesday Amazon announced that they would not allow third party and retail sellers to send non-essential goods into their fulfilment centres in the USA and Europe until April 6th. This does not apply to fulfilment centres in other countries like Canada or Australia. Any shipment created before March 17 will still be received.
Amazon’s definition of non-essential is any products that does not fall in the following categories:
- Health & Household
- Beauty & Personal Care (including personal care appliances)
- Industrial & Scientific
- Pet Supplies
There is a warning from Amazon stating that: “Listing products in an inaccurate category is a violation of our listing policies and may result in account suspension”
You can still use FBM and Seller fulfilled Prime (SFP) to sell your items. On Wednesday 18th, Amazon issued the following guidelines for FBM in Europe:
If you expect delays in shipping your orders then extend your handling time and if you have any evidence that shipped orders will be delivered late then please alert customers promptly
For SFP they recommend staying in contact with your SFP carrier to monitor if their pick up schedule has changed. If your carrier is not able to pick up from you or if you are experiencing delays Amazon recommends that you disable Prime in your Prime Shipping template.
How sure are we that we will be able to send goods in on April 5th?
At this stage it would be safe to assume that this suspension may be extended past April 5th, however, if it is, there is nothing you can do about it apart from plan for it, so make sure you plan for it.
Also, it is worth remembering that even if you are able to send your goods in on April 5th, you will have every seller trying to get his goods in at the same time (notwithstanding the essential goods that Amazon is prioritising), so in the same way as during Q4 when there are delays in receiving the goods you should expect a massive back lock of goods going into Amazon’s warehouse so it could take 2 or 3 weeks after April 5th for your goods to be received and available for sell to customers. You should be expecting the next few weeks to be like Q4.
How do I check which items I can ship and which not?
You can check which items can be shipped to Amazon by creating a dummy shipment and seeing which items Amazon allows you to ship in.
Go into the Inventory / Manage FBA Inventory section of seller central. Then click on the box next to the word Status that will allow you to select all the items on the page. Once you have done that click on Action on 250 selected and then Send/Replenish inventory.
Tip: If you sell a lot of items, go to the bottom right of the page as there is an option to modify how many SKU’s you see on that page allowing you to select up to 250 SKU’s with 1 click. You can also select all the SKU’s on more than 1 page at the same time to avoid having to do more than 1 dummy shipment. Press Yes to continue and then continue to Shipping plan (you may need to select either individual products or case-packed products).
What does this mean for your business in the short term?
Amazon has always recommended that you should keep at least 4 weeks of stock in their warehouse so if you have followed that guideline then you should be ok. The problem is with the increase in sales that a lot of sellers are currently experiencing that normal 4 weeks of stock might actually only last you 2 or 3 weeks.
If you and your manufacturer are in the country that you intend to sell in then you should be focussing right now on converting your operation to FBM.
You should use the period of time that you have between now and your FBA stock selling out in order to prepare:
- Speak to different shipping providers and create accounts with them as they usually offer discounts for businesses and volume shippers
- Find out how you are going to get the items to the shipper every day, do you have enough volume for them to pick up from you and check if they are still picking up
- Work out what is the cut off time for same-day shipping as well as your delivery time to different states and countries
- Work out how you are going to pack your goods, as you will need to ship them it individually. This means boxes, tape, label printing and manpower.
Many sellers do not realise that you can have an FBA and an FBM listing in parallel so you should be preparing your FBM listing so that it can start selling as soon as your FBA stock sells out. All of the above should be inputted into your seller central account as soon as possible.
Remember Amazon gives the same terms to every seller, so if no one has any FBA stock then FBM stock will sell. This means that if none of your competitors is able to send goods into Amazon then they will all also sell out, but amazon customers will still be shopping so expect to see an increase in sells of FBM items where there is no more FBA stock available.
One thing to think about is the Amazon model of subsidising the price of shipping (it might be a time to try and grab long term market share by subsidising cheaper FBM Shipping).
Because of the increase in sales, you will probably need to order more stock, so send that stock to your house or office so that you have stock to send as FBM as soon as you start getting orders. Also get some of that stock ready to send to Amazon so that come April 5th all you need to do is print the FBA labels, stick them and give them to your transporter. Consider pre-booking a pick up for that date in advance to make sure that your goods get picked up on April 5th.
If your goods are coming from aboard or you are not in the country you sell in?
The easy solution is can you find a local warehouse that can receive your goods in the country you are selling in and could ship your FBM orders out. If that is possible go for it.
If you cannot find one (and bear in mind that every other seller will be looking for one), then a warehouse that does not do FBM but can store your goods and send them to Amazon on April 5th is the next best thing. Again, the key thing is being prepared to move very quickly after April 5th as ultimately even if there are delays you want to make sure your goods are first in line in the queue.
If you buy from China, and ship your goods in by air then I would try and sent them to one of the above so that they are ready to go as soon as you are able to ship to Amazon again.
If you ship by boat then send your goods in now without the UPS / Amazon labels and get the warehouse in the country to stick them on. Yes it will cost more than having the factory in China do it, but it is not worth waiting 3 weeks to get the labels while your goods sit in a warehouse in China.
The key thing to remember is if everyone goes out of stock whoever gets his stock back in the quickest will have an opportunity to gain market share.
Conclusion: Expect an increase in sales and prepare to have stock available to send in as quickly as possible after April 5th.
Aren’t factories in China still closed because of the Corona Virus?
Factories in Wuhan are generally still closed (although a few key industries have opened up again in Wuhan) and factories in Hubei have just started to very slowly open up.
Factories in most of the rest of China are open and operating again. I work with over 10 different factories and all but one are able to produce goods with a similar timeframe as they would normally do. The one factory that could not produce my order actually found me another factory they knew that could produce it so I do not expect that order to be delayed by more than a week or two.
I have already got items shipped out of China that have arrived in the Europe and NA since China closed down before Chinese New Year.
How to manage my FBA Stock?
Now that you know exactly how much stock you have available for the next 3 to 6 weeks then you should take action to avoid going out of stock.
In the same way as I don’t advise doing big discounts around Prime Day or Black Friday / Cyber Monday, because a lot of sellers will get excited by the increase in traffic and sales and then go out of stock leaving you with a few weeks with a lot less competition. I think a similar thing will happen in this case.
So you need to plan how you are going to slow down your sales to stretch out your stock. The first obvious port of call is your PPC campaigns. I would recommend doing one of the following depending on how quickly you are going to sell out:
- Reduce your daily campaign budget
- Reduce your bid on all and / or on your least profitable keywords
- Pause your PPC Campaigns
This should spread out your sales over the next few weeks and because you will not be paying any PPC increase your profitability. You can always reverse any changes you make if it has too much of an impact on your sales.
The second option is to pause any lightning deals, promotions, coupons or other incentive that you are currently running.
Finally, the last option is to increase your price. While I don’t like this option, because I think that we have a big enough challenge facing us right now as a society and that we should try to help each other out, the reality is if you sell out quickly and you cannot restock, then you will no longer be able to pay your staff or your bills so you need to protect yourself to an extent. Just don’t get greedy.
I am sure you will have all read about the people buying up thousands of bottles of disinfectant to resale at 10 times the price, getting kicked off Amazon. But if you are low on stock and you price your items a few dollars above your competition then that should not be a problem.
Conclusion: Plan, Plan, Plan. Everyone was caught flat-footed by this decision so you need to make sure you are putting plans in place to mitigate its impact. If you do a better job at planning than your rivals then you will gain market share.