Impact of Covid-19 on Amazon Sellers

Impact of Covid-19 on Amazon Sellers

The current pandemic has greatly impacted the entire world and will certainly be the most significant factor that shapes people’s lives when history looks back at the year 2020. Amazon has managed to play a very prominent role in pandemic retail and have a profound impact on the way that people have been coping with living under the restrictions imposed by the pandemic. 

Amazon sellers have been affected by the pandemic as well. Overall, the effect that the pandemic is having on online retail is positive when it comes to sales. There have been quite a few emerging trends and a lot of opportunities for sellers to find new items to sell on Amazon

According to the 2020 online marketplaces report, a survey was conducted among a relatively small group of sellers. They were asked about their growth during the pandemic and here are the results:

It’s not just the Amazon sellers that have noticed this. Data shows that traffic on Amazon has been noticeably higher than the same time last year:

This is all great news, as far as selling on Amazon is concerned. However, most of the challenges that sellers are facing are related to inventory management issues. It would seem that while sales demand is high, there is often  manufacturing, shipping or inventory issues in FBA warehouses.

The lockdown in China

Since China was the very first nation to be affected by the pandemic, many factories were temporarily closed across the country. Because the nation had a set of very strict measures in order to handle the pandemic, factories had no choice than to close their doors. China is still the number one country when it comes to supplying Amazon sellers and this lockdown affected many. If you were lucky enough to have placed an order to be shipped out right before the rapid spread of the virus, you were one of the lucky ones. Luckily China's pandemic control measures have been effective and their factories have largely reopened since the end of March. 

The increased air shipping rates 

Another issue that Amazon sellers have been dealing with since the pandemic began are the increased prices of air shipping rates. This problem has arisen due to 2 factors:

  1. Many of cargo flights were being used by governments to supply essential medical supplies across the world. 
  2. The lack of commercial flights to carry commercial goods dropped down to nothing overnight. The fact that there were basically no commercial flights to speak of reduced the ability of any item to be shipped out via air. 

This issue forced sellers to either pay higher air shipping rates or make arrangements to send their cargo via sea. This posed, and still poses, many challenges in terms of timelines and finances for Amazon sellers.

The Amazon temporary ban on items in non essential categories 

On Thursday March 14th, Amazon made a sudden announcement that any items that they deemed to be “non essential categories” would be allowed to be shipped into any Amazon FBA warehouse until April 5th. This decision was made due to increased demand for essential products and the fact that people were heavily reliant on shopping with Amazon as opposed to going out. 

Many Amazon sellers found themselves going out of stock, having to temporarily use a different fulfilment service or fulfilling the orders themselves. What was even worse is that the ban wasn’t lifted on April 5th. Amazon ended up gradually allowing for more categories of times to be able to start creating shipping plans over the following weeks. 

Amazon limiting the number of units you can bring into FBA 

Currently Amazon has added a new system where it calculates the number of each one of your ASINs that you can ship to your FBA warehouse. Amazon has decided to do this because of the pandemic, as well as the fact that we are approaching the holiday season which is always an enormous strain on the FBA network. You can see the exact quantity of each of your ASIN that you can order by simply starting to create a shipping plan. When you get to the point where you put in the number of units, Amazon will show you your limit. This is a new variable that makes inventory management on Amazon more challenging than ever. 

In conclusion, Amazon has proven itself to be a monolith that has occupied a significant place in the minds of shoppers around the world. In this time of crisis, many people have turned to Amazon to provide them with the goods that they need. The fact that Amazon’s sales and visits are growing is a testament to that. 

This is actually a good time to be an Amazon seller, even though it’s not really a good time to be a human. The tradeoff for this unprecedented growth of Amazon in this unprecedented time is trying to manage the logistical side of things. Amazon is doing the best that they can to make sure that they stay operational. They certainly don’t want to do anything that might impact your sales negatively. They want you to make money, since then Amazon makes money. 

The best you can do as a seller during a pandemic is to be watching for any sudden changes. Also, really audit your inventory management system and spend some time planning your shipments. Selling on Amazon is more profitable and more difficult at the same time during a pandemic.



Author: The FINANCIAL