Category restrictions, fluctuations in shopper demand and PPC jostling.
With Covid-19 and Amazon, there sure is a lot to talk about. We spoke with Bobsled CEO Kiri Masters about the main issues brands selling on Amazon should be thinking about at this point in time.
Hi Kiri! What do the Amazon Covid-19 category restrictions mean for brands selling on the channel?
Amazon is limiting the types of items sellers can ship to Fulfilled By Amazon (FBA) until April 5th, causing chaos for brands who don’t sell in the “priority’ categories of baby, grocery, health & household, beauty & personal care, pet, and industrial & scientific.
If they want their listings to stay active on the channel, brands on Seller Central who cannot ship to FBA must switch to Fulfilled By Merchant (FBM) or start using a 3PL. Vendors outside of priority categories can still fill their PO’s, but will likely see low or no POs in coming weeks.
What’s going on with shopper demand in light of the crisis?
Grocery is up considerably, which makes perfect sense. Beauty & Personal care is up 70% compared to the beginning of the month - perhaps this is due to the jump in remote working situations i.e. employees going the extra mile to look good on Zoom conference calls?
Toys & Games is up too. With more kids at home that need to be entertained, this aligns with expected consumer behavior. But Toys & Games is not listed as a Priority category for Amazon inbound inventory, so if you’re a brand in this category and don’t have a back-up fulfillment method beyond FBA, it could be a short term boon.
Last week each Bobsled client was offered a Covid-19 Amazon Risk Assessment. Interested to learn about how Bobsled could help protect your Amazon presence during this unprecedented time? Set up a free consultation call.
How is Covid-19 impacting PPC on Amazon?
The average CPC has increased significantly with more customers choosing online shopping whilst being forced or choosing to stay at home. Stefan Jordev, Advertising Director at Bobsled, pulled anonymized PPC data from 25 accounts across various categories and found that ad spend was up 21.61% (week on week) and total revenue was up 7.99% (week on week).
To me, this shift highlights the risk associated with pausing investment in PPC advertising during a period of high sales volume, as it will make the BSR (best seller rank) divide even greater between brands who double down on spending and generate more revenue, compared to brands that have paused campaigns and have downtrending sales.
On the left: Stefan Jordev, Bobsled Advertising Director
How will Amazon fare during the Covid-19 crisis?
I’d say out of most retailers & logistics providers, Amazon is one of the best-placed due to their reliance on robots and machines (less humans overall), extensive FC (fulfillment center) network, owned freight/last-mile capacity. They are also planning to hire 100K workers to cope with demand & potentially backfill workers who are ill or need to stay home, alongside a $2/hr wage increase and a raise in overtime pay.
However, all of this won’t prevent COVID-19 being transferred between workers and general productivity slowing down. Amazon needs to relax output to account for more frequent hand-washing and physical distancing of workers in the FC’s. Prime deliveries will be slower over the coming months but consumers will generally have more trust in Amazon’s infrastructure than independent websites.
While Amazon is bound to have issues with COVID-19, it will come out of this even stronger, as consumers change some buying habits permanently and many segments of brick & mortar retail bleed heavily.
Want More Expert Amazon Insight From Kiri?
The above is just a snippet of Kiri’s latest Amazon Weekly News Digest, which is delivered via email to subscribers every Friday.
For $20/month you’ll get a round up of the week’s biggest news and what it means for brands selling on Amazon. Also, as part of your subscription you’ll get access to our bi-weekly Office Hours where Kiri Masters and the Bobsled team conduct webinars, answer member questions and discuss Amazon best practices. To sign up, click the button below.
Tagged: Amazon Updates