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Closure of Fulfillment Centers, FBM offers winning the Buy Box, the definition of “essential items” and PPC lessons from the last recession.
With the Covid-19 crisis changing the Amazon landscape daily, it’s in your best interest to stay ahead of the curve. We spoke with Bobsled CEO Kiri Masters about all the key developments that brands on Amazon need to be tracking.
Hi Kiri! Everyone is talking about the closure of some Amazon Fulfillment Centers (FCs). What should brands be thinking about at this point in time?
The Bobsled team developed a rudimentary tracking report, with data sourced from:
- The shipping plan and the BOL (although it's not 100% correct because the units can be transferred)
- The FBA Event report (note that this only shows historic data)
The idea is to track exactly where inventory is located, so in the event of more FC closures we’ll have a better idea of how much inventory has potentially been impacted. Every brand is worried about distribution at this point in time, so getting more clarity on the current spread of inventory is a no-brainer.
What’s happened over the last week in respect to FBA vs FBM shipping times?
In light of Amazon not temporarily accepting “non-essential items” and longer FBA shipping timelines, some brands shifted from FBA to FBM, but found that Amazon was still awarding the Buy Box to FBA items with long shipping times, even if you had created an FBM offer with faster shipping.
Has this been resolved? How should brands be thinking about
FBA vs FBM?
It appears that Amazon listened to the outcry and is now modifying their systems to give the Buy Box to FBM offers over FBA when the shipping time is shorter. At Bobsled, this is something that we’re currently verifying and testing as we speak, but other voices in the industry seem to be echoing this observation.
Above: LinkedIn post by Joe Kovacs from Brand Guarde discussing the algorithm shift.
However, before you go ahead and put your eggs in the FBM basket, I would urge you to tread cautiously.
In our spot-checks for client accounts we are seeing FBA delivery times with wide variances, from a week to a month, for non-essential items. Considering the turbulent times, expect this unpredictability to continue. But don’t forget the fast shipping FBA model is Amazon’s bread and butter, and they’ll be doing everything to get back on track asap. If you overcommit to resourcing FBM right now (e.g. hiring in-house fulfillment staff), this could hurt your bottom line as FBA begins to regenerate.
How is Amazon determining what constitutes an “essential item”
right now?
The following is from Bobsled Project Manager Jordan Ripley.
“Tip for those navigating the restrictions on inventory restocks - it appears that Amazon factors in prior sales history of a product if it's within an "essential" category to determine how essential that product actually is.
I now have 2 clients in essential categories (baby and grocery) that should be able to restock products, yet they can only send in units for products with consistent sales history.
Any newly launched SKUs without prior sales are getting blocked by the "non-essential" warning in shipment creation.”
Above: Bobsled Project Manager Jordan Ripley
So it appears that just falling into the essential items categories isn’t enough. However, an Amazon Business Development Manager has let Bobsled know that Amazon is pivoting multiple times a day with their practices to effectively manage the Covid-19 fulfillment crunch, so we expect the essential item parameters to remain in a constant state of flux for the foreseeable future.
How should brands be thinking about PPC advertising during this tumultuous time?
In the aftermath of the last recession in 2008, ad spending in the U.S. dropped by 13%. But in 2009 when the recession was still alive and kicking Amazon sales grew by 28%.
Although the natural inclination for advertisers is to cut back on advertising during a recession, there is significant upside potential for brands that can maintain their ad budget, especially during this very moment when competitors are being sidelined by logistical headaches. So don’t pause or immediately reduce your ad spend - find ways for your budget to work harder instead
Want More Expert Amazon Insight From Kiri?
The above is just a snippet of Kiri’s latest Amazon Weekly News Digest, which is delivered via email to subscribers every Friday.
For $20/month you’ll get a round up of the week’s biggest news and what it means for brands selling on Amazon. Also, as part of your subscription you’ll get access to our bi-weekly Office Hours where Kiri Masters and the Bobsled team conduct webinars, answer member questions and discuss Amazon best practices. To sign up, click the button below.
Tagged: Amazon Updates
