Amazon (AMZN) is slowly expanding the list of “high-priority” items at its fulfillment centers, offering glimmers of hope to sellers left in the lurch by an earlier ban on all but essential items. But brands are still navigating a highly uncertain path, as the e-giant shifts strategies during the coronavirus outbreak.
Starting in mid-March, Amazon implemented a handful of practices aimed at addressing the surge in online shopping tied to COVID-19. The e-commerce behemoth told merchants it is prioritizing shipments of household items and medical supplies at its fulfillment centers, and soon after suspended its two-day Prime delivery promise.
The inbound fulfillment directive, which left thousands of vendors frantically searching for alternative paths to market, was initially supposed to last through April 5. That deadline and policy shifted last week, when Amazon informed selling partners that it was “selectively bring[ing] in more products to our fulfillment centers,” a spokesperson told FreightWaves in an emailed statement.
The e-giant also launched a new tool for sellers, allowing them to check whether their products are eligible, the spokesperson said.
The coronavirus pandemic has highlighted the extraordinary power Amazon wields over retailers in the United States. Around two-thirds of Amazon sellers rely on “the really vast ability” of the company’s logistics network to get items to customers quickly, Ryan Culver, vice president of operations and logistics at SupplyKick, told FreightWaves.
“When that script gets flipped like this, it’s then up to sellers to try other options,” said Culver, whose agency helps consumer brands maximize their presence on Amazon.
Vendors can take on the task of shipping items themselves, he said, but unless they have multiple options around the United States it’s going to be much more expensive. Third-party logistics companies are another option, but due to labor shortages, these businesses cannot operate at their usual capacity, according to Culver.
Under the latest Amazon directive, third-party sellers who offer products outside of these categories can still send orders to customers by using Amazon’s Fulfilled by Merchant service, which allows them to list products on Amazon’s site and ship out orders themselves.
But nothing, Culver concluded, “is going to be as suitable” as Amazon’s in house logistics service, from a cost and time perspective.
Mitchell Bailey, chief operating officer of Etailz, echoed those sentiments.
Brands using alternatives to Amazon fulfillment “are walking up the cost curve to do so,” said Bailey, whose firm helps retailers grow their presence on Amazon. It’s universally more expensive to use non-Amazon parties, he said, “because what we know with Amazon is they are subsidizing their rates.”
Like many others, Bailey is trying to work with Amazon to make the case that items not typically considered high priority are just that during a pandemic. The company’s brand partners include toys, games and outdoor equipment — items that are primarily in the nonessential category.
But in a context of millions of stir-crazy Americans under lockdown and desperate for entertainment — “parents are going absolutely bananas right now” — there’s a case to be made for categorizing these products as essential.
Instead, those orders are being pushed back, setting in motion a disaster scenario for the brands, which face an unforecast spike in orders just as fulfillment is being cut off at the knees.
Slow delivery times lead to higher cancellation rates, Bailey noted. “If I want to buy that for my daughter and it’s not going to ship until the end of April, I’m going to question whether I need it.”
Some sellers are seeing an 80%-plus drop in sales due to Amazon delaying shipment of many Prime items by over a month, the company’s virtual cancellation of Google Ads, and shifting consumer spending toward the essentials, Culver said.
Despite the gloomy statistics, Bailey and Culver both see bright spots, such as Amazon consistently outperforming its quoted service times. “If they say three weeks, I’m seeing one,” Bailey observed, noting Amazon might be overstating the length of time it takes to deliver nonessential items “to manage customer expectations.”
They also gave Amazon credit for offering sellers free warehousing and storage for the next couple of weeks to accommodate languishing inventory.
Still, certainty is hard to come by as Amazon and sellers navigate a brave new world.
According to Culver, products listed on eBay had been shipping out within two or three days, compared to the same item on Amazon, which was taking one month.
That’s in part because the eBay marketplace does much less volume than Amazon. Plus, Culver speculated, the e-giant might be less likely to upset “external partners” like eBay (many sellers utilize Amazon), even while delaying outbound shipments on the Prime side.
But over the weekend, Amazon appeared to be canceling eBay marketplace orders, Culver said, “which is super weird.”
On Monday the Amazon spokesperson denied canceling the eBay service. But in the emailed statement last week, the spokesperson said the company is doing its best to feel sellers’ pain.
“We know this is a change for our selling partners and are working hard to help them during this difficult time.”
In addition to adding more products to the “essential item list,” and adding to vendor tools, the statement said, Amazon is hiring over 100,000 workers across the U.S. “to help us meet growing demand from people who need critical supplies and assist employees in our fulfillment centers.”
Fired by dash cam
Maybe if they would quit blocking people from using prepaid gift cards to buy something when they submit at checkout with that pop up box saying your card was turned away , they wouldn’t have problems