How Amazon Sellers Should Respond to FBA Delays

23/03/2020

UPDATE, 24/03/2020: Amazon announced that it is pausing removal operations in some fulfillment centers and waiving long-term storage fees. The full statement:

To ensure the capacity to receive, restock, and ship high-priority products like household staples and medical supplies, we have temporarily paused removal operations in some of our fulfillment centers. You can continue to create removal orders, but there will be delays in completing the requests. Similarly, auto-removals will be delayed. As a result, we are waiving the April 15 long-term storage fees for inventory stored in the United States, United Kingdom, Germany, France, Italy, Spain, Poland, and the Czech Republic. You can review the status of your removal orders here and find more information on this Help page. Please note Selling Partner Support does not have further guidance. We know this is a change to your business and we did not make this decision lightly. We are working around the clock to increase capacity and appreciate your understanding as we temporarily prioritize household staples, medical supplies, and other high-demand products for customers.

17/03/2020

As our clients try to navigate the COVID-19 crisis, we see first-hand the many challenges that brands and retailers are facing every day. And it’s our job to help find solutions. So as we continue to work with our clients to mitigate these new e-commerce challenges, we wanted to keep you updated on industry changes and offer channel-specific strategies for all businesses to keep in mind. 

On March 17, Amazon US announced that it would be limiting inbound FBA shipments to six high-demand categories — such as household staples and medical supplies — to ease the growing burden on its fulfillment centers and increase supply for these necessary products. 

On March 22, many Amazon sellers and customers noticed a four-week delivery time on many in-stock Prime items — with April 21 being the estimated arrival time for many categories. 

In a statement to Recode, an Amazon spokesperson clarified:

“To serve our customers in need while also helping to ensure the safety of our associates, we’ve changed our logistics, transportation, supply chain, purchasing, and third-party seller processes to prioritize stocking and delivering items that are a higher priority for our customers… This has resulted in some of our delivery promises being longer than usual.”

Meanwhile, reports from Europe say that Amazon will no longer allow consumers to purchase non-essential items in Italy and France. While there’s no indication that this same progression of restrictions will reach the US, the implications are significant. 

It is hard to say exactly what the impact these current delays in the US will have on sales volume for sellers. In normal times, we would confidently say that delays would result in significantly lower sales. But these are hardly normal times. Loyal Prime customers may, in fact, see delayed shipping dates for their desired Prime products and start looking for alternatives — whether those alternatives are non-Prime (non-Buy Box) sellers, different marketplaces or different products altogether. Or they could stick with what they know and accept the new shipping norm. Regardless, many sellers will see the effects. 

If you’re dependent on FBA to ship all or most of your inventory and don’t have shipping capabilities yourself, see our previous post on using third-party logistics providers (3PLs). But if you’re not dependent on FBA, here are some strategies to help you mitigate the impact of these FBA delays on your business.

Amazon Strategies to Consider if You’re Not FBA Dependent

1. Incorporate a Merchant-Fulfilled Model

Some sellers call it Merchant Fulfilled Network (MFN), while others refer to it as Fulfilled by Merchant (FBM). Either way, you’re no longer relying on FBA warehouses to store, pack and ship your orders. 

If you’re a ChannelAdvisor customer, our platform helps control your FBA vs. FBM inventory automatically through our auto-flip feature, but there are also ways to turn that functionality off. (Read more about auto-flip capabilities on ChannelAdvisor Community.)  

Amazon provided a list of reminders and recommendations this week for MFN sellers:

  • Provide valid tracking information — Amazon customers depend on these tracking numbers to find out where their orders are. In these times of delays and uncertainty, transparency is more important than ever. Sellers are required to provide tracking on all MFN orders. Read a list of FAQs on valid tracking rates
  • Manage your delivery time — Give yourself a reasonable window for handling and transit time when communicating shipping dates to your customers. With FBA delivery in flux, and consumer expectations evolving, you may have more leeway. Choose the carrier and shipping time that fits your business model and ensures accuracy. ChannelAdvisor customers can make changes to lead time within their Amazon template
  • Establish your process for returns — A reliable and consistent returns experience is still very important for Amazon shoppers. Make sure that your Amazon account has been updated with valid return instructions and a valid return address.
  • Monitor your fulfillment metrics — If you do consider fulfilling directly as a merchant, please make sure you understand Amazon’s seller fulfilled SLAs.
  • Adhere to Amazon’s Drop Shipping Policy — You’re allowed to let a third party fulfill orders on your behalf as long as you meet the requirements of Amazon’s Drop Shipping Policy, including identifying yourself as the seller of your products on all packing materials and taking responsibility for processing returns.
  • Use proven software to help you manage shipping — ChannelAdvisor’s Shipping Management Suite allows you to connect to numerous shipping partners — like USPS, UPS, FedEx and Pitney Bowes — as well as print labels across carriers, create branded packing slips and more from a centralized platform. If you’re not a ChannelAdvisor customer, Amazon’s Buy Shipping also allows you to buy shipping labels, confirm your orders and track shipments.

2. Create New SKUs for New Category Items 

If it isn’t viable to take your FBA inventory and move it all to MFN, you could also look at prioritizing the creation of new catalog items to Amazon. These new ASINs are not yet correlated to FBA SKUs, and you could try fulfilling these products with your own warehouse system (see the section above on best practices). On newer listed ASINs, we recommend you try out the earlier reviewer program to help lift your item on Amazon’s Best Sales Rank.

3. Diversify Your Selection

Listing and selling your products across multiple marketplaces is always a smart strategy to minimize the risk associated with a single-marketplace approach. If your sales on one marketplace are down, focus your advertising and optimization efforts on your other marketplaces. If you don’t currently sell on other marketplaces, start looking at the various options that would be a good fit for your products, including Walmart, eBay, Wish, Rakuten, Newegg and more. ChannelAdvisor has integrations with over 140 marketplaces across the globe and can help you find new audiences for your products. 

4. Keep an Eye on Your Advertising

The impact on consumer behavior due to FBA delays will certainly vary greatly by product type as well as geography (in some regions we are still seeing 1-2 day Prime shipping on non-essential items). Now, more than ever, when it comes to advertising on Amazon, you should be taking a data-driven approach to optimization. To the extent that performance drops significantly, you might be better off deferring some of your advertising budget to next month. Regardless, we would recommend that you continue to protect your brand with Sponsored Brands campaigns. Not every click leads to a sale in the same session, and you still want to be sure you are continuing to drive upper-funnel demand while keeping competitors at bay.

5. Open up Seller Fulfilled Prime

Amazon isn’t accepting any new registrations for Seller Fulfilled Prime status at the moment, but if you’ve been accepted in the past and aren’t currently using your status, it might be a good time to consider it. If you can meet your fulfillment and shipping obligations, you’ll be in a great position with consumers looking for products quickly. However, be sure you stay up to date on any evolving requirements from Amazon. Read more about how to activate your Seller Fulfilled Prime status here

As always, if you have any questions or concerns about how the current COVID-19 crisis might affect your business, we’re here to help. Please reach out to your Account Manager, visit ChannelAdvisor Community or contact support@channeladvisor.com. For more industry trends, analysis and other COVID-19 resources, see our other blog posts here.