A Few Ways Coronavirus is Affecting Amazon So Far
Recently, the coronavirus has dominated headlines. Its prevalence has caused drastic shifts in consumer behavior and is having a direct impact on brands that sell on Amazon.
A timeline for this public health concern is unknown. Therefore, brands need to be aware of potential implications, so they can be proactive and agile in their response. Here we share our observations and how it is affecting Amazon and the e-commerce landscape.
Spikes in Disaster Preparation Keywords
Once the panic of the coronavirus began to spread, search queries used by shoppers on Amazon began to tell a story of how the public is reacting.
For example, keywords related to medical safety, disinfecting, and immunity, have been used between 100 - 1,000% more than usual. Because of this, items that make shoppers feel more protected have become best sellers.
Product Stock Outs and Third-Party Cash Ins
As we mentioned, pandemic-related products have experienced a dramatic increase in demand. To put this into perspective, items like hand sanitizer have completely sold out. And as a result, third-party resellers are selling products for dramatically higher prices.
A number of our clients that sell shelf-stable products have experienced something similar. Consumers are rushing to buy non-perishables in bulk due to fear of going without. What's happening is eerily reminiscent of recent major natural disasters such as Hurricane Maria and Katrina.
Amazon Fights Back Against Illegitimate Practices
To mitigate the price gouging being enacted by third-party resellers, Amazon has removed more than 1 million products that could take advantage of vulnerable shoppers.
Fortunately, Amazon’s catalog now has fewer products that claim to directly prevent or treat the coronavirus. And Amazon’s efforts also are minimizing listings with unreasonable prices. But despite the massive wave of removals, these issues can still be found and will resurface.
Cancellation Rate Complications
When a brand sells products that appeal to a panicked customer, stock-outs are more likely and pre-fulfillment cancellation rates can suffer. In recent weeks, Amazon has increased purchase orders to prevent this and other potential supply chain issues in the future. As a result, we've placed an increased focus on our clients' inventory levels and cancellation rates.
In fact, one MPS client operating via Fulfillment by Merchant (FBM), was forced to cancel thousands of orders due to an unprecedented influx of purchases. As a result, their pre-fulfillment cancellation rate grew by more than 3%. This is especially problematic because Amazon requires sellers to maintain a cancellation rate below 2.5%. Surpassing the 2.5% cap could result in account deactivation.
We’ve been working with this client to appeal to Amazon the reasons for this spike in cancellations. While we wait for word from Amazon, the client has had to remove 500 products that could lead to similar issues. Although this applies mostly to FBM brands, inventory levels and a proactive approach is important for all Amazon sellers.
It’s difficult to anticipate when a public health crisis will occur. But it’s possible to react to the frenzy and minimize negative repercussions. It starts with building your brand's awareness and developing an easy-to-execute game plan.
Natural events that are out of human control highlight the value of a strategic partner. When time is minimal and risk is high, it’s helpful to be able to lean on the support of experts.
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