As lockdown laws get relaxed globally, we’ve entered the next phase of the pandemic - check out these Amazon predictions and recommendations from the Bobsled braintrust.
Even when COVID-19 began impacting supply chains in China at the beginning of the year, no one envisaged the dramatic global turbulence that was about to unfold. Brands have been forced to roll with the punches and adapt to the stark changes felt across the retail landscape.
A lot has been written about how COVID-19 has already changed Amazon. Instead, the Bobsled braintrust have consulted their crystal balls, and in today’s blog post we’ll be looking to the future.
Of course, with so many unknowns in the mix, it’s impossible to get a grasp on exactly where things are headed. But as the Bobsled project team are in the trenches every day, analyzing changes within the Amazon marketplace and talking strategy with clients, they have a lot of insight about anticipated challenges on the horizon.
Jesse Chembars, Client Project Manager
- Amazon will use this experience to better prepare their logistics team for similar situations in the future. This could be in the form of specialized internal teams, a more robotic workforce, or changes in Fulfilment Center (FC) storage limits.
- Amazon will private label and heavily stock all pandemic-related items such as toilet paper and cleaning wipes.
- Brands will try and improve their Fulfilled By Merchant (FBM) capabilities in order to be better prepared for any further Prime disruptions.
- Get serious about your marketplace diversification efforts.
- Look at different ways to secure FBM (3rd party logistics providers, additional in-house fulfillment staff) as a way to mitigate future disruptions to Prime.
Lauren Sutehall, Client Project Manager
- Amazon will unlock the Promotions features with a vengeance, almost certainly before Prime Day. Currently setting up new promos (except Prime Day Deals) isn’t possible, but brands are chomping at the bit to set up Promotions that will help them outshine the competition.
- Because of Amazon’s shipping delays during the start of COVID-19, some brands that shifted to FBM will find they prefer this shipping method (more cost effective, streamlined the fulfillment process internally) and may avoid going back to FBA.
- Look further into the future when making inventory projections. Incurring Long Term Storage Fees (LTSFs) will be a minor consideration compared to the threat of stockouts without an ability to resupply.
- Expand into different categories on Amazon where that makes sense for your brand e.g. if you sell kitchenware exclusively perhaps you could start selling spices in the grocery category? COVID-19 taught us that not all categories are impacted equally - there’s a huge benefit to diversification.
- Following the previous bullet, brands will expand further into grocery since so many shoppers in the US have ‘discovered’ the benefits of buying and receiving groceries through ecom rather than in person. Brands should try to identify a niche in the Grocery category because of expected growth in this area.
Nikola Basic, PPC Manager
- Local brick-and-mortar stores will start to reopen, and when this happens Amazon sales will flatten, slightly.
- Brands that experienced Amazon sales growth during the first phase of COVID-19 will prioritize the channel moving forward in a big way. They will find ways to maintain a positive sales trend and look at services such as Amazon Demand Side Platform (DSP)
- Luxury brands that saw demand dip during the first phase of COVID-19 will see an uplift in sales over the next 3 months as consumer spending recalibrates.
- From the advertising standpoint, brands should pay close attention to their daily budget caps. Over the last couple of months Amazon search volume increased on the whole which resulted in a higher number of clicks and an increase in daily ad spend. Most advertisers likely increased their daily budget caps as search volume was surging. Now as we move into the next phase of the pandemic, and if the increased daily budgets are still efficient, brands could experiment with increasing them further. If ROI starts to slip, adjust the daily limit but don’t remove it entirely - the market is still volatile and you want to ensure that your spend is as lean as possible.
- Find ways to boost your Best Seller Rank (BSR) before Prime Day so that organic sales can do most of the heavy lifting if and when the retail holiday rolls around. This will help you save valuable advertising dollars for Q4.
- If Amazon sales are strong in May and June, consider placing additional advertising budgets into parallel funnels such as Google Ads, Facebook Ads, and Instagram to your Amazon pages, or the retargeting feature that’s available on the DSP platform.
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Armin Alispahic, Client Project Manager
- Amazon will grow even bigger. Most consumers that shifted to online shopping during the crisis will maintain this pattern of behavior.
- Increase in usage of Amazon devices such as Alexa will accelerate the growth of smart homes.
- Many brands that have been ignoring and/or neglecting ecom will be forced to finally acknowledge its power. They will invest more into their ecom channels which may ultimately result in higher competition/broader product selections online, higher Cost-Per-Clicks (CPCs) on Amazon, and an increase in demand for ecom professionals who understand the mechanics of marketplaces.
- If your brand doesn’t have a presence on Amazon, consider addressing that oversight immediately!
- Prepare for voice search, more services being sold through Amazon - are you in a position to capitalize on this trend?
- Traditional companies should start investing more into online sales channels, changing internal processes, hiring more ecom professionals and providing training to existing staff.
Jordan Ripley, Client Project Manager
- Brands that under-index on Amazon relative to their traditional retail or non-ecom channels will be forced to allocate more resources to Amazon. This means increasing assortment to liquidate SKUs that were formerly exclusives on other channels, spending more ad dollars on brand terms to ensure they’re retaining and converting customers that might’ve purchased pre-Covid 19 via other channels, and even adjusting supply chain processes so inventory gets prioritized and prepped for Amazon vs. other channels.
- Brands without a strong Direct To Consumer (DTC) presence will start building one. While Amazon is the ecom behemoth, its mercurial policies and lack of transparency in decision making continues to leave brands on the wrong side of a dramatic power imbalance on their platform. As retail shifts online, DTC is the best way to hedge risk that comes from Amazon being the dominant player in ecom.
- Brands conservatively test other marketplaces (Walmart, Rakuten, Target) for the same reasons it’s become important to invest in DTC. International marketplaces that historically have felt too small and were instead left to localized distributors will become appealing as growth opportunities, especially for brands looking for any way to weather an economic downturn that’s pronounced in the US.
- Ensure you have capacity to self-fulfill products rather than relying entirely on Amazon for fulfillment.
- Diversify online channels as much as possible.
- Diversify into new marketplaces as much as possible.
- Reduce operational costs where possible to preserve margins. Ecom business will only grow more competitive as brands fight for space on fewer channels (Amazon being the most crowded channel of all) to reach customers, so having cash on hand to invest in advertising and optimization will be hugely advantageous.
Ross Walker, PPC Manager
- Amazon will likely have their capacity upgraded to the point where they can take their hands off the wheel from a product listing, pricing and fulfillment standpoint. I anticipate this will lead to a flood of entrepreneurial activity on Amazon, as the pent up energy and demand for goods not available through retail gets channeled back to Amazon.
- Brands may not be able to go back to the way things were from a sales channel standpoint, due to the ongoing uncertainty caused by the pandemic. It is likely many brands will abandon certain traditional channels, and commit more ad spend and resources to Amazon as a safer long-term play.
- From firsthand experience, I know big brands that had Amazon on the back-burner will start attacking the channel with all of their might. That likely means elevated creative talents pushing up standards on Amazon as brands improve the look and feel of their fewer revenue streams.
- Be prepared for disruption. Leverage the grassroots of your organization and develop products that people want now. That demand is unlikely to go away anytime soon.
- This is a marathon, so budget accordingly. Plan to allocate more ad spend to capture the more in-demand ad placements.
- Put some fresh talent on your ad creative, A+ content and images - all cost-effective ways to edge out the competition.
Do you see what we see?
If you have questions about our predictions and recommendations, or perhaps you think we missed something important, please drop a comment below. We’d love to hear from you!
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