Amazon is under stress and stressing brands – here’s what you need to do
The strain on the world’s largest online retailer has created new, tricky challenges for brands. Travis Johnson of marketplace consultants Podean explains what is happening, why and what brands need to do about it before the holiday rush hits.
The impact that Covid-19 has had on e-commerce, and on the 800-pound-gorilla that is Amazon, has been profound. According to Bank of America estimates, 44% of US e-commerce spend goes to Amazon and its Q2 earnings showed an increase of 40% – all this while dozens of bricks-and-mortar retailers file for bankruptcy.
But all that growth has not come without some bumps along the road, and on the road ahead. There are signs that Amazon may be under a lot of strain, even with its seemingly unlimited resources, massive workforce, technology and infrastructure.
As a consumer, this might mean your packages aren’t arriving as fast as they used to. But, for brands selling on Amazon, the implications are more severe. We’re seeing a lot of challenges that brands and their partners need to overcome if they are to maximize their Amazon sales. This is especially true as we head into the critical holiday sales period when many brands generate the majority of their annual revenue.
So, here’s what you need to do to prepare:
Allow more time to set yourself up
Due to the prevalence of fraudulent sellers, Amazon has significantly tightened the approval process for new sellers (even if the brand is already wholesaling to Amazon through Vendor Central). You need to provide a long list of documents and identification, including a driver’s license or passport of the account owner. For large corporations, how do they decide the account owner? Is it the sales director, finance lead or someone else? Understandably, many individuals are reluctant to provide their personal ID to Amazon on behalf of their company. And even once they do, they should anticipate a video call with Amazon to further verify their identity. Who wants to do that?
So what can you do? Not much, unfortunately. Understanding all of the minute details around requirements will ensure you don’t submit docs, get it reviewed and then rejected weeks later because the image you sent was in black and white when it should have been color. The process is painful but careful attention will mitigate delays.
Have a backup plan
Amazon (or at least the algorithms and bots that monitor the site) have become even more trigger happy when it comes to de-listing products. This has accelerated after the California Fourth District Court ruled that Amazon can be held liable for defective products sold on its marketplace. Being responsible for the billions of products sold would make any company understandably nervous, so at the slightest hint of consumer issues or harm it will remove you and ask you to prove why it should let you return. If a review says your product caught on fire, you’re gone. Another says the food made them feel sick, you’re removed. Another says the toy broke into little pieces, deleted.
To combat this, you need a strong plan as you’re not just battling Amazon but also competitors who may use dirty tricks to post fake reviews and have you taken out. First, have your brand registry set up – all your patents and trademarks must be registered with Amazon. Then, set alerts for when a 1-star review is posted so you can quickly respond as well as other alerts notifying you of any changes to the content on your product pages. Finally, have enough products for sale (or bundles) that if one product is removed, you still have other similar ones available that you can focus on – and drive media to – while you fix whatever issues were flagged.
Don’t expect your Amazon contacts to help (too much)
Amazon is big, with lots of teams that have specific areas of responsibility, and these teams are notoriously lean. So don’t expect your Vendor Manager and Advertising Manager to be quick to respond to your products being de-listed, considering the volume of brands they manage and because this capability sits outside their wheelhouse. Sometimes, the issues are so obscure you’d never guess why you were dropped (and email responses won’t explain – you’ll just get a generic reason). For example, one client had a product removed because it mentioned what power pack to buy for it (a 120V Adapter) and that it included a warranty. Both were considered by Amazon to be “promotional in nature”. Huh? Curiously, another similar product with identical copy wasn’t flagged, so it’s a game of whack-a-mole.
Quite simply, you need to be monitoring issues 24/7, know who to contact at Amazon (even on weekends), know how to troubleshoot and have a backup plan in place.
Don’t cut things too fine
Once upon a time, you could determine the volume of product you wanted to send to Fulfillment by Amazon and create a shipping plan that would mean your stock would be ready for sale in a week or two. We’re now seeing Amazon take up to three weeks to pick up stock and another couple to receive and inventory it. And it’ll limit the amount of stock you can send due to lack of warehouse space.
Tackling this takes a lot of coordination between the sales, logistics and marketing teams to get the balance right. Because if you run out of stock, you’ll be in a world of trouble. Not only will you miss out on potential sales, you’ll also invite third parties to price gouge, potentially provide poor customer service and modify the content on your own product pages.
The solution is a familiar one. Allow more time. But also, tighten your forecasting and ship more frequently to ensure you don’t run out. You should also be set up as both a vendor and a seller, so that you can flip to a third-party logistics company for fulfillment – or even your own Seller Fulfilled Prime capability to get your products delivered into the hands of consumers if Amazon runs out of your product.
Change, change, (no) change
Updating product information in the backend of Seller Central or Vendor Central used to take around 15 minutes. That grew to 24 hours, then 48 and is now often 72 hours. If you’re trying to get A+ content approved quickly, good luck. Further complicating these delays are how often changes don’t save in the backend like they should. The actual software platform seems to be under a lot of strain and often a support ticket and manual intervention is required. So don’t hesitate to log a whole lot of tickets and work closely with actual humans at Amazon who can fix the problems.
Prime Day, Black Friday, Cyber Monday, oh my!
We’re getting into sales season and Amazon has a lot of them. It wants your lowest prices to deliver great deals to customers and your advertising dollars to promote such offers. Not to mention, its vendor managers and advertising account managers have big targets to hit and a lot of pressure to deliver.
Think carefully about your strategy. Throwing advertising money on top of heavy discounts, intense competition and clutter may not be the best approach. Perhaps you upweight in the days leading up to sales when consumers are conditioned to start researching? Or perhaps you heavy-up a couple of days later when consumers buy items they previously added to their cart or when they’re returning items? Unfortunately, there is no single strategy for all brands, but whatever you do, think it through and don’t just take the advice of your Amazon contacts.
With the pressure of Congressional inquiries, anti-trust investigations in Europe, increased competition from the likes of Walmart, Lazada and others, as well as a seismic shift in consumers shopping online, Amazon is clearly under strain. That strain manifests itself in every aspect of Amazon’s operations, from logistics to retail support to marketing and this will only be exacerbated in the during holiday sales period.
The brands that are well prepared and have the right partners will thrive, while those who do not will suffer and bemoan the complexity of dealing with one of the world’s most successful companies. Yes, it’s complicated and a daily struggle, but the upside can be astronomical.
Travis Johnson is the global chief executive of marketplace marketing agency Podean.
To keep up with all our dedicated US coverage, sign up for the free daily briefing newsletter.