Amazon’s move to temporarily block shipments to its warehouses in the US and Europe of all non-essential items, prioritising fulfillment of essentials ahead of all other products because of the Covid-19 pandemic is not just necessary, it’s the right thing to do.
Amazon is enabling itself to stay on top of delivery SLAs for the items that matter during this time. At the same time they are protecting against overcrowding in their warehouses, as they choose to prioritise essential purchases regardless of intent and demand in other areas.
However, at a time when sellers need them most, Amazon won’t be there for them. The impact of this will be far-reaching for many brands that rely on Amazon for fulfillment. Brands that are selling products via the online retailer which do not fall under the essential category, but are still in high demand will suffer greatly.
The Ability For Brands To Pivot
Splitting fulfillment between a retailer led strategy like the fulfillment service that Amazon offers and a self fulfillment strategy is obviously one way to insulate against mitigating external factors. However, many third party sellers on the Amazon platform are simply not equipped to deal with their own fulfillment. Until now, this hasn’t even been a consideration for many brands. This move by Amazon has only served to demonstrate how brands need to be continuously agile with their selling strategies.
Sri Ganesh Santhiram is leading Global Digital Marketing at Victorinox AG and he gave his thoughts on the needs for brands to be agile in the face of circumstances such as this that we find ourselves in:
“Overall, I believe the current changes imposed by Amazon further highlight the need for brands to have a clear Hybrid structure (1P & 3P) in order to mitigate such factors. In the event of 3P, having the right partners (i.e: 3PLs who can fulfill / are Prime accredited) will go a long way in maintaining success. Discretionary spending will clearly take a hit at the moment, but in our case, we’re looking at cutlery, as a category where people will start looking at home comforts and we need to be ready for that. Amazon remains a crucial cog in our set up and the ability to pivot between the 1P / 3P set up is crucial. In addition to that, having a clear idea of who our key online retailers are, that can offer the levels of services we’re striving for, further helping to reduce the reliance on Amazon”.
Sri Ganesh Santhiram, Global Digital Marketing, Victorinox AG
5 Actions Brands can take now to mitigate damage
- Get your brand site in order.
Help your customers by optimising your brand site for an optimal customer experience. Your customers need to find what they are looking for in three clicks or less. Don’t make your customer do the work.
- Don’t depend on Amazon (or anyone else).
If your fulfillment strategy is 100% dependent on Amazon, or anyone else for that matter, try to diversify to a more balanced model, splitting fulfillment between your retailer/s and your own self fulfillment. Chris Fesen, Marketing Director Food, Amcor Flexibles advises brands to consider ways to connect more directly with consumers:
“It’s a good time for brands to consider going back to basics with a direct mail and sampling campaign. Great opportunity to connect more directly with your consumers who will potentially be spending more time with your brand now they are at home. It will be costly but you get what you pay for. Offer a means to reorder directly and voila – you can potentially consider starting your own direct to consumer service, while leveraging a 360 digital path to purchase platform vendors like ChannelSight to present back to the consumer all available direct and indirect options to repurchase, then let them decide. That way you will also start to build your own database of insights of how and where people are finding and purchasing your products both online and off”
– Chris Fesen, Marketing Director Food, Amcor Flexibles
- Prioritise your retailers
You likely deal with multiple retailers. Of those that you work with, move to prioritise those retailers that will likely continue to have good stock. Continuously monitor your stock levels at your chosen retailers and adapt your strategy as circumstances change.
- Help your retailers
Make sure your content and your product listings are up to date. Introduce promotions and virtual bundles that help your customer make their choices. Offer logical substitutions in terms of size, colour and volume.
- Avoid temptations to price gouge
This is not Black Friday or Cyber Monday, even though the traffic levels suggest differently. If you have a Direct To Consumer e-commerce operation, the temptation may be to leverage the situation of retailers not having inventory by price gouging. While tempting, this will ultimately damage your relationship with the consumer and first chance they get they will defect to a competitor.