I have been quiet for the last few weeks, and I’m sure you understand why. The COVID-19 pandemic has taken over the world like nothing we have ever seen before. Everyone’s lives are affected and every business is affected by this virus. It’s a true global crisis, and for Amazon FBA sellers, this is the FIRST real crisis we have ever faced. For the last twelve years, we have seen nothing but smooth sailing and double-digit growth year after year.
The good news is that while the world’s economy is on the edge of going into a deep depression, eCommerce sales are actually increasing as more people have started to shop online for items they would usually buy in their local store. This especially applies to grocery items, alcohol and everyday essential items. We’ll talk more about this and how it can open up new opportunities for Amazon sellers later on in this post.
I have also received emails from my customers/blog readers asking if I’m ok. Yes, so far, I have been able to stay virus-free, and the same applies to my family and close relatives. I even travelled abroad in early March and, coincidently, I had planned a business trip to Milan (Italy) just a few days before they closed down the borders. I did cancel that trip, though, as I couldn’t risk bringing the virus back home.
Anyways, in today’s post, I will share the latest Amazon FBA news and my thoughts on various aspects of managing a business in these difficult times.
Please note that these are only my personal thoughts, and I don’t have any more information than you do. So, I think this is the perfect timing for EVERYONE to use their critical thinking skills and make decisions that are best for YOU and YOUR situation.
Ok, without further ado, let’s get started! I will divide this post into smaller sections to keep each issue separate. We’ll start off with the latest Amazon news/announcements that are valid/active as of today, the 26th of March, 2020.
Amazon Temporarily DISABLES
This is the most important and most radical change that Amazon announced on the 17th of March, and I don’t think anyone could have expected this. I definitely did not.
Basically, Amazon’s infrastructure and warehouses can’t withstand the sudden increase in demand for household staples, medical supplies, groceries and other high-demand items during this crisis.
So, they have decided to temporarily NOT accept any new shipments from FBA sellers until the 5th of April 2020 OR until further notice.
They might lift these restrictions sooner or they could extend it further. We can only wait it out to see what happens in the next ten days. This is the exact message Amazon sent out to sellers:
Temporarily prioritising products coming into our fulfilment centres.
We are closely monitoring the developments of COVID-19 and its impact on our customers, selling partners, and employees.
We are seeing increased online shopping, and as a result some products such as household staples and medical supplies are out of stock. With this in mind, we are temporarily prioritising household staples, medical supplies, and other high-demand products coming into our fulfilment centres so that we can more quickly receive, restock, and deliver these products to customers.
For products other than these, we have temporarily disabled shipment creation. We are taking a similar approach with retail vendors.
This will be in effect today through April 5, 2020, and we will let you know once we resume regular operations. Shipments created before today will be received at fulfilment centres.
You can learn more about this on this Help page. Please note that Selling Partner Support does not have further guidance.
We understand this is a change to your business, and we did not take this decision lightly.
We appreciate your understanding as we prioritise the above products for our customers.
Thank you for your patience, and for participating in FBA.
Luckily for me, I sent a LARGE shipment to Amazon just a few weeks before the COVID-19 situation was on the horizon, so I’m not too worried about this temporary restriction as I have at least three to four months of stock available in Amazon warehouses.
I do understand that for other sellers, this can create a massive problem as we all know how “going out of stock” can badly affect listing rankings in the search results. I don’t know whether Amazon will temporarily introduce changes to the algorithm or not (so as not to punish listings that are out of stock?), but we do have to assume that it won’t happen. What’s the solution?
There are two options:
- Just wait out and hope for the best;
- Create an FBM listing for your item and start sending out orders on your own.
If you’re already out of stock, I highly recommend that you start using the FBM option as soon as possible so you can sell your item without the use of FBA.
If you know that you will run out of stock in a week or two, I would probably do the same, as I can imagine that after the 5th of April (or whatever the date will be), there will be massive delays in processing inbound shipments at fulfilment centres, and the situation could be similar or worse to what we experienced during Christmas 2018, when you couldn’t get stock to Amazon from early November up until Christmas.
I’m not an expert on FBM, so you will have to learn how it all works from Amazon’s help pages or other resources (YouTube, blogs, forums, etc.), but one thing I can recommend is that you DO NOT change your existing listing to FBM! This can create inventory issues and other problems when you want to switch back to FBA. Simply create another offer for the same EAN using FBM. You can even run both offers (FBA and FBM) at the same time—it’s perfectly fine.
Personally, I am in a good position because I already have stock in Amazon’s warehouse. This time, I got lucky with this. If Amazon lifts this restriction on the 5th of April, I assume that inbound shipments will go back to normal by the end of May or so. But still, don’t wait until that happens! Create a shipment and send in stock IN ADVANCE, expecting that there will be a delay of one to two months to get your stock into Amazon’s warehouses.
Amazon WAIVS Long-Term
A more recent announcement by Amazon, made on the 24th of March 2020, is that they have PAUSED removal orders in select warehouses, and in other warehouses, removal requests will be delayed. Amazon mentions that auto-removals will also be delayed.
Well, it’s obvious that Amazon wants to concentrate all their resources on order processing and NOT getting your old items removed or disposed of.
I totally understand why they’re doing this, and I don’t think it will cause a lot of issues—especially as this announcement was coupled with another message that:
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.
So, if you can’t get your items removed from Amazon in time because of the crisis, you won’t get charged a long-term storage fee on the 15th of April. Amazon doesn’t say anything about the “regular” storage fees, so I assume that these will still be charged.
Again, if you need to remove items from Amazon, try creating a removal order. If the system allows it, place your order so you’re in the line when they start processing them. Most likely, just like with the inbound shipments, there will be massive delays once the doors are re-opened.
Sales & Demand
Another hot discussion right now on Amazon seller forums, the Amazon Sharks Facebook group and other places is: how has this crisis affected sales on Amazon?
After seeing/hearing results from dozens of people, I can categorise the results into four large groups:
- Sales are the same as before.
- Sales have slightly increased.
- Sales have slightly decreased.
- Sales have DRAMATICALLY decreased.
And by further researching individual cases, it’s obvious that sales volume right now highly depends on the type of products you sell:
- If you’re selling face masks, your sales are skyrocketing.
- If you’re selling cat litter boxes, your sales are plus/minus the same.
- If you’re selling home gym equipment, your sales are increasing.
- If you’re selling school lunch boxes, your sales are down.
It simply depends on what you sell. Even though it’s too early to tell how long the crisis will go on for or how it will affect the economy, chances are that sales for high-end/luxury items are also going to decline rapidly, as many people, including me, are already preparing for the worst and are cutting down on unnecessary spending.
Personally, for me, I see all of the previously mentioned scenarios in my businesses/niches, starting from increased sales in one business, ending up with sales close to ZERO in another business.
Another interesting thing I noticed with one of the businesses is that for a period of seven to ten days, sales sort of slowed down. That was at the beginning of last week, when people realised how serious this is. But then, this week, sales have started increasing rapidly, and I’m actually seeing record sales days now:
Whatever the results you’re seeing in your business, my recommendation would be to wait it out at least a few weeks before you make any major changes, like drastically reducing the price if sales are down.
At the moment, everyone is in chaos mode, and we need to wait at least until the middle of April, after Easter, to see how the situation progresses. At least, that’s what I’m planning to do, unless there are major breakthroughs before that.
Another situation that some people may be in, especially my Amazon Sharks customers, is the product launch phase! You have done all the hard work over the last three, four or six months, your product is ready to sell, and… BOOM! Coronavirus happens. You’re really feeling how bad the timing is, right?
Trust me, I know how it feels, as for the last few months, I have been working on a new OFFLINE business in the leisure industry and have made significant investments into a lease, renovations, equipment, etc. We should have been opening in a month or so, but right now, it’s unclear whether we’ll open that soon at all or whether there will even be demand for the service anymore.
So, I get the pain, that’s for sure. Your situation is not unique. Many businesses are suffering right now, and many of them are being hit much harder than you or me.
If you have stock sitting in Amazon’s warehouse, I don’t think you need to delay the launch process, especially if the item you’re selling does not show massive signs of sales decline.
How do you check sales data? I hope you have followed my advice and are tracking your competitor’s listings in the Jungle Scout product tracker! If you are doing this, it will be super easy for you as you can see the last sixty days of sales data! This will instantly show you whether demand has stayed the same, increased or decreased for your item.
If you have a small quantity of goods in an Amazon warehouse and the rest of it at your house or prep centre, then you may want to wait until the 5th of April to see whether Amazon removes the shipment restriction or not.
Alternatively, you can still start the launch process and start running PPC ads—but be ready to use the FBM method when the FBA stock runs out.
If you’re not ready to do FBM, it’s probably best to wait it out a few weeks until you start the launch process, as there’s no point in doing it and building up sales velocity if you know that you will run out of stock very soon and won’t be able to replenish it.
Still, you can use this time to generate your first thirty reviews using the Vine program, OR if that’s not available to you, get at least two to three reviews in from friends or family to “prepare” your listing for a PPC launch.
As we all know, the spread of the COVID-19 virus started at the end of last year (2019) in China. China was the first country affected by this crisis, and I clearly remember that everyone over here (in Europe, the US, etc.) were basically laughing at it all. You know, it was happening somewhere far away to other people, and it had nothing to do with us. Look at us now.
For more than two months, most of the factories in China were closed down and the supply chain was seriously affected. Luckily (or not), the spread of this virus basically overlapped with the Chinese New Year celebration, so that might have somewhat helped us with our expectations, as everyone knows that during the Chinese New Year, almost all of the factories in China are closed down for at least three or four weeks.
This year, this time period was extended, but as of now, most of the factories are working again. This is mostly thanks to the draconian lockdown that the Chinese government implemented in Hubei province, where the virus started its spread.
If, right now, you’re at the stage where you need to place an order with a supplier, contact them and ask them if they’re working again at full capacity, how long it will take to fulfil your order, etc. Even if you don’t need new stock in the next few months, I would still highly recommend that you keep in touch with your suppliers in China at all times so you can project the right time to place a reorder. And at this time, it’s always a good idea to stay ahead of everything and work with an error margin of one to two months, as delays can happen at every turn now.
If you’re at the market research stage and have identified products with good potential, you can still use Alibaba’s platform as usual, find and contact suppliers, get samples, etc. None of that process has stopped, and for the most part, business is back to normal in China. Obviously, many factories will be very busy right now catching up with delayed orders, etc., but you can still make those contacts and move along with your plan.
If you’re at the market research stage and following my Amazon Sharks system, you can still continue working on this task, but you have to use common sense and do extra research to determine whether or not the product/niche you’re researching is affected by the crisis and lockdown.
The easiest way to do this is, again, using the Product Tracker function in the Jungle Scout web app. Add ten to twenty top-selling listings to the tracker. At least a few of them should already be in the database, which means you will be able to see sales for those items for the last sixty days. A sudden decrease in demand will clearly show up there. If you see a sharp decline in sales, it’s a clear sign that the item/niche has been affected severely and is NOT a good choice for the current climate.
If you see that sales are steady or show a slight increase or slight decrease, it’s all good. It simply means that the item is in demand no matter what happens in the world (within reason, of course). You have to understand that even though COVID-19 has caused a massive disruption in every possible way, people still need to buy socks, shower curtains or LED bulbs.
Furthermore, many categories (like board games, home gym equipment, etc.) have seen an increase in demand simply because people are bored at home and looking for ways to spend quality time with their kids, on hobbies, etc. Craft items and DIY items are also in massive demand right now.
So, it’s not like this virus has ceased demand for everyday items. I would even argue that, unlike in 2008, which was the last economic meltdown, this time we’ll see an increase in eCommerce sales in many goods categories because people simply prefer to shop online rather than going into a physical store. It could be that some goods categories in bricks-and-mortar stores will never recover from this crisis, and from now on, people will choose to buy those goods purely online.
With all this, there’s no doubt that markets are very volatile right now, and things could change any day in any direction. So, if you’re just starting out and doing market research on Amazon or planning to launch your first product, it is probably a good idea to wait it out at least a few weeks before you make any final decisions, like placing an order with your supplier.
You can still do research, identify opportunities, contact suppliers, order samples, etc., but don’t place any orders for at least the next few weeks. Wait until Easter or so to see how the situation progresses. By the middle of April, we should have a clearer, long-term view of what will happen. Then, you can move ahead and place orders with suppliers and execute your next steps.
Selling Face Masks,
Gloves and Hand Sanitizers!
There are people/companies out there that are acting fast on the current situation and are going all-in on selling masks, hand sanitizers and other protective equipment for premium prices to make a quick profit. I won’t even get into the details of this or discuss the ethics of it—who am I to judge anyone, right? But personally, I have never been a huge fan of trendy items, and I’m simply too risk-averse to suddenly start selling face masks.
It may not be a correct comparison, but this does remind me of fidget spinners a little bit. Yes, everyone needs masks right now and will need them for some time. But at the same time, lots of large manufacturers in China will start producing them and will supply everyone. My guess is that in three or four months, the supply will exceed demand. And then you will be left with stock you can’t sell as everyone will be selling these masks. Maybe I’m wrong, but that’s my gut feeling right now.
If you decide to get into this game and plan on sourcing masks, gloves or hand sanitizers, be extremely careful of scammers on Alibaba!
I have already received multiple messages from people who have clearly been scammed. Basically, the same people who “sell” PlayStation consoles and iPhones on Alibaba, now sell face masks and hand sanitizers. Please, be extra careful as scammers are using the situation to make money from people.
If you do want to source such products from China, make sure you deal with long-established, reputable factories, like Gold suppliers on Alibaba who accept Trade Assurance and tick all the other boxes. For more information, check out my Alibaba scams article here and TOP 10 Alibaba scams post here.
I’m not saying that selling face masks right now is a bad thing to do—if you have access to a source, you will only help people by providing them! But I do think it’s unethical to sell rubbish products that don’t do anything in terms of protection and basically take advantage of the situation.
Like this listing that has managed to sell 5000 packs of masks in the last thirty days, with an average rating of just two stars:
And when you read those reviews, it’s obvious that the product is totally unusable and basically a total scam.
I’m not personally interested in selling “hot” items in the crisis right now due to the high risk of failure, but my mind goes to longer-term business ideas, as I do think that this pandemic will change the world once again, just like 9/11 changed the airline industry and the way we travel today. But I will keep those ideas to myself for now.
This is how I see it, and these are my recommendations on what to do in specific situations if you’re an active Amazon FBA seller or just planning to become one.
I do think that this crisis is very serious and there will be long-term consequences, especially in the travel, tourism, catering and airline industries.
And if we look at the worst possible scenario, we’re looking at a pretty nasty economic depression and everything that goes with it. It’s still too early to tell how bad it will get, so I’m personally just monitoring the situation, hoping for the best, and not rushing into any decisions yet.
One thing is for sure, now is a perfect time to invest in the stock market! 🙂 And I have done exactly that with some extra cash I had reserved for other purposes. At the same time, it’s always difficult to go big in the market at such times, as you also have to be conservative, prepare for a recession, cut spending, etc. But if you’re into investing, I do believe that buying some SP500 ETF right now is a good, long-term (10+ years) move.
While everyone’s minds are busy with COVID-19, the whole Brexit saga seems secondary right now. And for that reason, I do think that talks will definitely be delayed and an agreement won’t be reached by the end of this year. Most likely, this means that everything stays as it is for at least the first six months of next year and maybe even for all of 2021.
This again proves my point that there’s no point in worrying about things we can’t control. I started to receive Brexit-related emails from Amazon sellers back in 2016, right after the referendum, asking, “What should I do?”, “How do I prepare for Brexit?” and “Should I stop expanding into the EU?”
It’s now four years later and nothing has changed, but there are still people who haven’t signed up for the pan-EU program, for example, simply because of what will happen after Brexit. When the agreement is reached, then we’ll know exactly what to do, but for now, I can’t see any reason to spend ANY time on it—seriously!
That’s about it! I would be very happy to hear from you, too! Please share your thoughts, observations and ideas on what you’re doing to get through this crisis in the comments box below the post.
Also, if I can help in any way, let me know, and I will get back to your questions as quickly as possible. This post seems long already, but I only wrote down maybe 10% of what’s on my mind right now, so I’m happy to expand on anything covered so far in the comments section.