Less than two weeks ago, Fulfillment by Amazon announced a freeze until April 5 on receiving “non-essential” inventory. FBA is accepting only these categories: Baby, Health & Household, Beauty & Personal Care, Grocery, Industrial & Scientific, and Pet Supplies.
FBA has turned away inbound deliveries of non-essential goods, leaving sellers to fend for themselves.
Moreover, many sellers with non-essential FBA inventory have seen customer deliveries pushed up to a month. Amazon is struggling to fulfill the spike of orders, even hiring 100,000 workers. But Amazon could extend delays and restrictions; the virus has hit workers in at least 13 of its U.S. warehouses as of Saturday, March 29.
Having no access to the FBA program, some sellers could lose an entire month of revenue.
What Sellers Can Do Now
- Convert FBA listings to Fulfillment by Merchant. This will ensure your items can remain in stock until you can replenish at FBA when it lifts restrictions — likely in mid-to-late April, if not longer.
- Diversify fulfillment. The situation around Covid-19 is unpredictable. Relying solely on one entity for all fulfillment could put your business at risk. To minimize disruptions, diversifying your FBA operations with a combination of internal warehousing and outsourced providers.
- Diversify sales channels. Shipping delays are potentially disastrous if your business relies exclusively on Amazon. The Covid-19 pandemic is an opportunity to consider other sales channels such as your own ecommerce site, eBay, and the Walmart marketplace. The added benefit is that these channels have less competition.
- Improve liquidity through assistance programs. It’s unrealistic to expect non-essential sales to return to normal levels as soon as the restrictions are lifted. Make sure your business has the cash to cover expenses as you weather the storm. We’ve addressed available grants and loans for U.S. merchants, at “Covid-19 Grants, Loans Could Help Ecommerce Companies.”
- Maintain advertising campaigns. Many sellers are cutting back on advertising and promotion. But now is the time to expand your business as consumers cannot shop in-store. And fewer competitive ads likely translate to bigger returns for your own campaigns. If you’ve set up your non-essential fulfillment internally or via a third-party provider, it’s time to expand your customer base and boost sales.
- Increase your essential goods catalog. If you can’t fight them, join them. With FBA restricting non-essential goods, consider adding essential items if possible.
- Take advantage of wholesale discounts. The shutdown of brick-and-mortar retailers could lead to excess inventory at wholesalers — and deeper discounts. Try to hold extra cash to benefit from this opportunity.
The Covid-19 pandemic calls for sellers to rethink their fulfillment strategy — to incorporate flexibility, resilience, and scalability.
“Flexibility” is the ability to shift fulfillment locations rapidly (often using outsourced services). “Resilience” in fulfillment means operations can continue during disruptions by reducing dependence. And “scalability” is having multiple fulfillment options and the technology that ties them together.