How We Expect the Coronavirus to Affect Amazon's Holiday Sales
Brands in retail and e-commerce usually begin preparing for the holiday season several months ahead of time. It’s a peak time period that directly affects a business’s bottom line. But this year, the coronavirus could change the trajectory of Amazon’s holiday sales. Although the industry has started to stabilize, brands are still unsure what to expect. This added layer of uncertainty creates the need for brands to prepare for multiple possibilities. Continue reading for our predictions and most up-to-date observations.
What to Consider Before the 2020 Holiday Season
There are several atypical factors that could impact brand performance this year due to the pandemic. For example, supply chains and fulfillment processes are still rebounding and lingering for some brands.
In fact, when we polled our LinkedIn audience in early June, 75% said supply chain restrictions would be the brand’s most significant challenge related to the pandemic.
For now, the unemployment rate is declining but remains much higher than last year. This could affect how much shoppers are able and willing to spend. Not to mention, brick-and-mortar stores will likely see record-low traffic. As a result, many consumers may shop solely or almost entirely online.
MPS Predictions and Recommendations
At MPS, we've approached the upcoming holiday season with two priorities in mind: First, our clients must focus on having sufficient inventory from August through the holidays in December. Second, they must structure their marketing budget in a way that allows them to remain competitive throughout this time frame.
In addition to the considerations in the previous section, a delayed Prime Day remains a major factor. Usually, brands have several months after Prime Day to realign for the holidays. But as of now, there is speculation Prime Day will take place in October. With this in mind, brands now have to prepare for Back to School in July through September, Prime Day in October, and the holidays with perhaps no respite between.
It's important to remember, every brand will face unique challenges based on their category and how they've been affected by COVID-19. But a key concern for many brands will be pacing marketing spend and inventory to remain visible and available throughout the full time period, essentially from now through the end of 2020.
Regardless, identifying which peak season is most important could be key. From there, the appropriate budget and inventory decisions can be made. We've seen many of our clients so far prioritize Prime Day. With any approach, brands need to also identify priority items and then make sure inventory levels and marketing budgets are sufficient and align for the peak season that matters most.
We recognize the coronavirus continues to affect brands across the industry and will change the planning process for the 2020 holiday season. If you could use the support of a strategic partner, schedule a free consultation. And, as always, we’re here to answer any of your questions.
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