What you can do right now to keep your business afloat and continue selling in the wake of restrictions announced by Amazon
To continue selling on Amazon, Brands need to reimagine their Amazon strategy and look at new ways to protect their business in these challenging times.
With the coronavirus (COVID-19) situation developing rapidly and in constant change, more and more people are turning to online shopping as they increasingly have to stay at home.
One of the key developments for online shopping as a result of the pandemic is Amazon’s announcement that it is temporarily disabling shipments from Brands of certain “non-essential” products. Amazon said it has taken the drastic action as many were over stocking in response to Covid19 and “as a result some products such as household staples and medical supplies are out of stock”.
What exactly is the ‘Essential Goods Only’ Policy & what can you do if you’re impacted?:
Amazon has released the following list of product categories that covers “most” of the products its currently accepting via direct shipments (1P & 3P):
- Health & Household
- Baby Products & apparel
- Beauty & Personal Care (including personal care appliances)
- Pet Supplies
- Industrial & Scientific
Therefore, if you sell medical supplies, household staples or other items that are currently seeing increased demand from this list you should still be able to create an FBA shipment, however you may still experience delays.
No POs from Amazon?
Amazon is being selective about the SKUs that they currently carry. That could leave your Brand in a position where you are not receiving your regular order from Amazon, meaning a sudden sharp drop in sales. Brands of all sizes can face similar restrictions during the current crisis. The fall out of the suspension of non-essential inventory is causing mayhem to a huge amount of Brands.
Need a plan B?
The Amazon Hybrid Sales Model is the Plan B that Brands urgently need to stay afloat
Brands can safely turn to an Amazon 3P (3rd Party) even as a Direct, 1P seller
With a 3rd party seller, like Luzern, you can safely add your product catalogue to the 3P (3rd Party) Marketplace , regardless of whether your direct (1P) shipments to Amazon are ceased or not.
Luzern successfully manages a 3P “Hybrid” model for leading brands and is currently stepping up its support ensuring they stay in control of pricing, maintain the direct relationship with their customers, whilst managing inventory and driving sales of product lines that were being sold directly to Amazon (1P) and are not being ordered by Amazon because of recent restrictions. Luzern ensures your products remain in stock, that Brands can continue to own the buy box, and can continue driving sales by drop ship.
How it works:
FBM (Fulfilled by merchant) /Drop-Shipping
With so many Brands now experiencing out of stock and with long delays on orders with Amazon’s capacity issues and restrictions on FBA, now is a good time to switch to FBM (Fulfilled by Merchant) and ensure customers can get the products they want. Luzern can ensure out of Stock items can still be available to your buyers. If you are experiencing delays then now is the time to talk to us about switching to FBM. This gives more control to a Brand when it comes to inventory levels and delivery times. Luzern has access to booking slots and can get your products online immediately, with the current situation, many brands can be waiting several weeks for Amazon to upload an item. In the Hybrid Model, you have the option to distribute products via Luzern’s seller account, and the products you offer via Fulfilled by Merchant (FBM) do not have to be stored by Amazon.
Up & running in 48 hours
If you have stock in your own warehouse or even at other location you can still meet the demand from your customers by using FBM. Luzern can integrate directly to fulfil orders.
Luzern’s light-touch integration (XML, CSV/ FTP or even EDI) with your back end systems (CRM, ERP) and warehousing systems makes the process fast to get up and running and easy to manage. We take the complexity out, implementing the whole process for you.
By using Luzern and the FBM/ Dropship model, brands have more control over inventory and ultimately can keep the business moving at this difficult time. Luzern, as your third party provider, can assist with warehousing, order processing and delivery, ensuring supply, in stock and ready for sale on Amazon. When a customer places an order it can be shipped directly to them.
Brands are experiencing higher risks of delays and experiencing more stockouts. Therefore it’s vital to have inventory management with 100% accuracy during this time. It’s important to keep communicating with suppliers, as well as with customers, to keep everyone informed and to set expectations. Customers that are relying on your products at this time need to have up to date information as much as is possible right now. Open and clear communications with customers advising of stock shortages and possible delays in delivery services could prevent disappointment in the long run. High value loyal customers will appreciate being kept in the loop. They may also be interested in hearing how the Brands and companies they buy from are handling the situation when it comes to safety and precautions, so be clear about the measures your company is putting in place.
However, there are measures you can take to continue to sell on Amazon and proactively control SKU range and selection.
Less Margin Pressure & Price Wars
Many Brands are currently finding themselves under extraordinary margin pressure and this isn’t helped by the price war to win the buy box.
Amazon will, of course, seek to curtail price gouging whilst maximizing their margins and push what is selling best. Amazon is sending a clear message to Brands that they must prioritise Essentials therefore need better prices or they will stop ordering some or all of the products. This can equate to lost business if the “demands” aren’t met. However, With Luzern as your vendor via the 3P Hybrid model, Brands have price autonomy over their products. Luzern facilitates independent price changes to suit your strategy when it comes to pricing. The Hybrid Model delivers flexibility and gives more control back to the Brand.
Some customers have reported that Amazon is reducing the Buy Box share for FBA merchants, therefore FBM sellers are gaining the Buy Box in more cases. Shoppers are more likely to check delivery dates on the products they want right now, regardless of whether they have the Prime badge or not, which could be sooner for FBM products.
Futureproof your business
A Hybrid Selling & Fullfillment model enables you to build up listings and history, growing sales and margin across 3P as well as protecting any existing direct relationship with customers, avoiding channel conflict or any “race to the bottom” pricing battles.
If you, like many brands at the moment, are experiencing difficulties with 1P, with Amazon cancelling orders or you’re impacted by restrictions, please don’t hesitate to contact us.
Luzern.co can help you manage sales and meet your customer demand through our 3P or dropship capabilities.