As we are all aware, COVID-19 continues to spread and create challenges for every industry, including our partners’ retail businesses. We want you to know that we are monitoring the situation in real-time and are staying up to date on all new developments. We are also monitoring all news coming from Amazon and will report it through our social media channels. We want to serve as a resource to help you navigate through this difficult time.
Below you will find our best attempt to discern the implications and effects of COVID-19 relative to doing business on Amazon and their recent announcements.
Amazon FBA and Vendor Central POs are Focused on Essential Items
As demand on Amazon increases, particularly for essential items in specific categories, Amazon has made the decision to prioritize these items and restrict any additional, non-essential items from being shipped into their warehouses for FBA. They are also not sending POs for non-essential items on the Vendor Central side. This is expected to last until April 5th which has the potential for stock outages for certain products.
Guidance on Essential Items
These “essential” items include things like household staples and medical supplies. All other shipments of “non-essential” products will be not be allowed to ship into Amazon’s fulfillment centers for the time being. Product that was already on its way when this announcement was made will still be accepted. Customers can also still buy product from Amazon that is in stock. However, once the product runs out of stock in the Amazon store, more product will not be allowed to ship into Amazon’s fulfillment centers for now. If sellers have the capability and are willing to ship product to customers themselves, they can do so. The following Amazon categories are ones that they say should cover most of the essential products that they are currently accepting:
- Health & Household
- Baby Products
- Beauty & Personal Care (which includes personal care appliances)
- Pet Supplies
- Industrial & Scientific
DISCLAIMER: Just because a product falls into this category does not mean that it is considered essential under Amazon’s guidelines. There still seems to be some confusion from sellers on whether their products are eligible for approval. Hopefully, Amazon will provide further clarity as the situation progresses. Another thing sellers are concerned about is whether the events happening now, and the new restrictions put in place will affect their IPI, or Industry Performance Index. This is a performance metric that is determined through things such as inventory, sales and other calculated factors. If a seller has a low IPI, Amazon can impose storage restrictions and overage fees. If vendors cannot replenish their inventory, their IPI can be negatively affected. It is unclear if Amazon will still be using this system during the current crisis.
How Non-Essential Brands Can Navigate The Next Month
Amazon has not limited Sellers who use Fulfilled By Merchant (FBM) to ship orders during this time. We are working with our clients to set-up FBM capabilities to allow them to continue selling and fulfilling product in the short term. For brands that sell through their own DTC site and fulfill products separately from Amazon, they can use existing infrastructure to leverage FBM.
Additional News from Amazon
Amazon has announced that they are planning to open 100,000 new full and part-time positions in their fulfillment centers in order to keep up with demand. This effort will take some time to ramp up and Amazon has been delaying Prime deliveries from standard next-day and two-day shipping. There are reports that they have deprioritized non-Prime orders. Some non-Prime orders are seeing delivery dates 20 – 30 days in the future.
Since people in specific industries such as hospitality and food service have already been economically impacted, Amazon’s hiring could be a way for people who need to work are able to do so. At their headquarters, Amazon is instructing all employees who can perform their jobs remotely to do so through April 10th. They are also establishing the Amazon Relief Fund which focuses on supporting their independent delivery service partners, as well as their drivers, participants in Amazon Flex and seasonal employees who are under financial distress. People in this program will have the ability to apply for grants that equal roughly two weeks’ pay if they are diagnosed with COVID-19 or placed under quarantine.
In these uncertain times, it helps to communicate as much as possible and have partners who you can trust and rely on. By working together, we can navigate Amazon’s changing parameters and keep business running smoothly.
• Amazon announcement to suspend non-essential items
• Amazon Seller Central forum discussion for: Temporarily prioritizing products coming into our fulfillment centers
• The United States Center for Disease Control (CDC) COVID-19 website