Ecommerce channel diversification - surviving Amazon's FBA suspension

This guide has been written for ecommerce retailers who are being impacted by decisions Amazon has made in the light of the current COVID-19 pandemic. The objective is to help you understand exactly what steps you can take to navigate the new challenges you are facing, with the end goal being helping more businesses like yours buck the trend and survive during this difficult time.

In this guide you will learn:

  • Exactly what the impact of Amazon’s business decisions will be for retailers just like you;
  • The exact step-by-step strategies to implement that will help save your business, your staff, and your profits;
  • How you can take the power into your own hands by selling direct to consumers and what platforms you need to utilise to do this;
  • How you can reach out to past customers using a cost-effective approach, boosting initial revenue;
  • What ongoing strategies will help you continue to increase profits and market share, securing your business in the long-run.

Table of Contents

Amazon is no longer the seller’s dream

With news on the impact of Coronavirus, or COVID-19, appearing on every media channel and as the leading topic of discussion across the world, it’s no secret that every individual and business is – or soon will be – struggling with the fallout. And with brick and mortar businesses forced to close, most are relying on online orders and deliveries to ensure their survival. But what happens when the largest third-party ordering platform, Amazon, can no longer continue to serve businesses selling “non-essentials”?

On March 23, Amazon officially announced that they were delaying orders of any products deemed non-essential by as long as a month, allowing them to focus on completing deliveries of medical supplies, sanitisers, and household essentials across the United States. In countries hardest hit by Coronavirus, like France and Italy, Amazon is declining any orders that aren’t in their essentials category altogether. It’s highly possible that this suspension of fulfilment services for non-essential items will spread to other countries like Australia shortly.

The “essentials” categories according to Amazon are:

  • Baby
  • Health and household
  • Beauty and personal care
  • Grocery
  • Industrial and scientific
  • Pet supplies

However, not all products within the above categories are deemed essential. With these new strategies in place, plus the real risk of Amazon shutting down facilities altogether as they continue confirming cases of staff testing positive for COVID-19, where does this leave the millions of companies impacted by these changes?

What do retailers do next

The impact on businesses relying solely on Amazon

For these businesses that once relied on Amazon for the bulk of their revenue, this announcement may be a deathknell. If you’re one of these companies that sell products deemed “non-essential” by Amazon, you’re likely well aware of the impact. With the Amazon supply chain drastically impeded for at least a month (and potentially longer), the immediate impact for you will be felt as lost revenue. Not only this, but as many of your former competitors drop off completely, there is the threat of other competitors emerging as they find ways to aggressively counteract these constraints, resulting in your loss of market share.

One of the biggest issues Coronavirus presents to businesses is uncertainty – nobody can predict how long the implications will last. Some say months, while others are envisaging years before the world fully recovers… In fact, some predict that when the world does finally recover the ways of doing business will look vastly different.

With no clear idea of when business will go back to normal, staff will inevitably lose their jobs and many companies will go under unless they take immediate action.

“The most important factor in survival is neither intelligence nor strength but adaptability” – Charles Darwin

 

There is a solution… but you need to act fast

When each day poses uncertainty and new laws and rules are put in place restricting businesses and individuals, speed is of the essence if you want your ecommerce retail business to survive. The actions that you take now will not only help you immediately while Amazon restricts your sales channel, but can help secure success in the long run.

While the news appears bleak, studies of companies who persevered through past global economic events such as 9/11 and the Global Financial Company (GFC) demonstrate there is no greater time for you to strike than now, as many of these companies emerged stronger after investing intelligently through the downturn. As Warren Buffet says, “Be fearful when others are greedy, and be greedy only when others are fearful.”

If you want to maintain business revenue and potentially gain market share, we recommend implementing the following immediately.

1. Take the power into your own hands: Build an eCommerce store and sell direct

Develop an ecommerce storeIf your customers can no longer buy your products from Amazon, then you need to move swiftly to bring your products to consumers direct by getting a functioning ecommerce website up as quickly as possible.

If you have an existing brochure site (which contains information about your company but doesn’t have the ability for customers to purchase directly through here), the fix could be as simple as incorporating ecommerce functionality, depending on what Content Management System (CMS) your website was built on. However in many cases, starting from scratch to develop an ecommerce website will be the most effective course of attack.

With time of the essence, we recommend focusing on starting with your minimal viable product (MVP) – what is the minimum you need to get up and running so that your customers can buy from your website directly? At this stage, it’s important not to waste time getting hung up on small details like font choice or colour palette – this can be addressed as you iterate with a phase two version of your site. However, remember that offering a poor user experience (UX) is nearly as bad as not offering any. Ensure there is a good UX when navigating your new ecommerce website, and that there are no barriers to conversion (e.g. no obstacles preventing your customers from being able to complete a purchase).

For this reason, many companies choose to hire an experienced third-party to develop their site. When it comes to choosing an ecommerce web design agency, ensure you are very specific about the timeframes you need, and your expectations for your MVP site.

2. Bringing the control back: Utilise the services of alternative outsourced fulfillment logistic companies

Find alternative logistics company

One of the key reasons Amazon has seen such a large success has been a result of their processes which allow them to take care of nearly every aspect of the selling process. Their fulfillment logistics, in particular, have been advantageous to businesses, and now with the temporary pause of non-essentials, many companies who previously utilised the Fulfillment by Amazon (FBA) service are at a loss as to how to store, pack, and deliver their products.

There are alternatives however, and the right one for you will depend on the type of products you offer, and the quantities you’ll expect to store and deliver. Some of these third-party providers, with links, include:

Note that at the time of writing this article, the above third parties are still operating, although some are experiencing delays due to COVID-19. We recommend checking in on their delivery updates regularly and consider having a backup fulfillment company. 

3. Take advantage of what’s readily available: Use Email Marketing to reach past customers at minimal cost

Utilise email marketing

Even if your marketing and sales to date has only been through Amazon, you should still have a database of all past and current customers, including their name and email address at a minimum. Here, we want you to capitalise on what you already have right in front of you to get your business back off the ground, through email marketing. This is one of the most cost-effective ways to encourage new sales directly through your website – by reaching out to those who already know your brand and products.

If you already have an email marketing program set up, then it could be as easy as making sure your database is up to date before sending your first email (which we will discuss in more detail shortly). If you don’t have an email marketing account, there are a number of low-cost platforms that are incredibly easy to set up and get started; these include well-known companies like MailChimp, Active Campaign, and Campaign Monitor. You may also be able to set up email marketing from within your existing website (through apps or plugins), or your CRM, if you have one. Alternatively, hiring an email marketing agency to manage this process could allow you to focus on the fulfillment aspect of your business, while this runs seamlessly in the background.

Once the database is up to date, create an email strategy aimed at educating and persuading your past customers to buy direct.

Below are some observations to note:

  • There are a lot of emails being sent by companies currently, who are determined to keep their customers in the loop about what COVID-19 means to their business and customers, so your strategy needs to stand out.
  • Take a personal approach and be wary with your brand messaging – align your email communications in a way designed to help your customers, not push aggressively for sales. This is very important! Brands seen to be only seeking profit and financial gain during this time will develop a negative reputation that may be irreparable.
  • Develop a strategy of how often you will email your database, as well as the type of content you will include in each email.
  • Look at any automation solutions your email marketing platform may provide that can assist you in increasing your conversion rate. Abandoned cart emails are a fantastic, free way to do this.
  • Finally, again, we need to emphasise that speed is of the essence. It’s important you contact past customers and inform them of how they can continue to support your business, as quickly as possible.

4. The key differentiator: Set up digital marketing to drive additional demand

Drive demand with digital marketing

While reaching existing customers in your database can result in a solid return on investment, you’ll still need to gain new customers to fill the gaps left behind by Amazon. The best way to do this – harnessing the power of digital marketing.

Many companies have been and will continue to reduce or turn off their online advertising during this time as an automatic panic mechanism. This presents the perfect opportunity for businesses like yours to gain a competitive advantage, not only to increase customers and revenue in the short-term, but to ensure you are strategically placing yourself as the market leader in the long-term as the economy recovers.

“Great businesses are built out of times of extreme chaos.” – Evan Cunningham-Dunlop, CEO, Living Online

There are two key reasons why digital marketing is key to prosperity in this arduous business environment.

Less competition and lower advertising costs

With fewer companies advertising across key platforms, many industries are seeing core metrics like Cost Per Click (CPC), Cost Per Thousand Views (CPM), and Cost Per Acquisition (CPA) drop drastically. And with Amazon also reducing their ad spend across Google Shopping and Google Ads, there is even more opportunity for retail businesses to get in front of their ideal target market through paid marketing. In other words, it is a fair assumption that not only will it be cheaper for you to advertise, but you have a higher chance of getting in front of your target customer and making that sale.

Tip: Online advertising platforms, aware that marketing spend is often the first cut made when finances get tight, are also looking at ways to help businesses survive during economic downturns. Recently, Facebook has announced a USD $10million grant program for small businesses affected by Coronavirus. Google has also just announced they are handing out $340 million in Google Ads credits for SMBs.

“… when you see your competitors closing down or slowing down on their marketing, the goal is to double down. You may not see the biggest return right away, but in the long term, you will. And it could mean the difference between your business dying or surviving.” – Neil Patel

Changing consumer behaviour: more time online = more sales opportunity

With many individuals forced to stay in their homes more as a result of the strict laws being put in place to minimise the future impact of Coronavirus, screen time is on the rise. Online shopping will also continue to be key as individuals look to fill time or obtain “non-essential goods” they are no longer able to drop into shops to purchase. While your overall customer base may be declining, being present through strategic, highly targeted paid advertising can help ensure that, if somebody is searching for a product you can deliver, they find you.

Companies are already seeing positive uplifts in online consumer buying. Forbes noted that “in Target’s recent investor call, the company discussed how creating convenient ways for people to shop with pick-up, drive-up and same-day delivery has changed the behaviour of its shoppers, creating higher spending and a more loyal customer”.

A study of 5.5 billion anonymous U.S.-based consumer retail visits by predictive retail analytics firm Quantum Metric is also promising. They found that retailers who had both ecommerce and brick-and-mortar stores had a 52% increase in revenue growth rate for their online channel between January 27 and February 23, 2020 (when Coronavirus began heavily impacting other countries outside of Asia). They then went on to note that conversion rates had also increased by 8.8% compared to the same period in 2019.

Social media use increases

Benefitting your company, your staff, and your customers

In the short term, acting fast on the above to adapt to the new challenges will greatly benefit your business. Instead of dying a slow, or potentially fast, death, you will not only survive, but you’ll be able to sell your products, likely keep a percentage of your staff employed, and keep your business moving and growing.

With individuals and businesses unable to get the goods they normally do from China, nor from Amazon, they are getting desperate. If you are able to find a solution to sell them the products they are looking for, while ethically making a profit to keep yourself in business and your staff employed, then it’s a win-win.

Long term, as the economy recuperates, there will also be numerous benefits :

  • Reduce your reliance on one channel (Amazon);
  • Mitigate your risk;
  • Increase overall revenue; and
  • Become better equipped to deal with similar situations as they arise in the future, safeguarding your company’s continuity.

In fact, the Australian Government agency Austrade is encouraging businesses to think long-term, recommending that exporters “prepare a plan for when the pandemic effects ease so you can scale up delivery and promotion of your product or service” on their official website.

Whenever there have been global events that have wide-reaching effects, such as the Global Financial Crisis, or 9/11, history has shown that those who move quickly to adapt not only survive during these tumultuous times, but come out the other side stronger.

 

To recap: Every problem has a solution, this is yours

By reading this guide, you should now clearly understand the impact that Amazon’s fulfilment constraints are having, and will continue to have, on retail companies just like yours. However, you should also now be well equipped with step-by-step strategies designed to help you take back control and not only weather the storm now, but to emerge on the other side as a market leader and success story.

The problem in summary

  • Amazon is delaying any orders that are deemed “non-essential” across the United States by up to a month.
  • In other countries, Amazon has completely stopped the sale of any “non-essential” items.
  • It’s highly likely that Amazon sellers in Australia will face these same constraints shortly.
  • Coronavirus cases in Amazon warehouses suggest that full closures may come into effect.
  • Whether you rely on Amazon completely, or partially, your business revenue is likely to decrease or stop altogether.
  • This means your staff will lose their jobs and you may be put in a precarious personal financial situation for the foreseeable future.
  • This could spell the end of your business.

 

The solution in brief

  • Stop relying solely on one third party channel to sell your products and instead set up an ecommerce store to sell direct to customers.
  • Identify and engage new fulfillment logistics companies who can completely manage the storage, packing, and delivery of your items, removing the need to solely rely on Amazon moving forward.
  • Utilise email marketing to past and existing customers, directing them to purchase from your online store.
  • Drive additional demand (customers and revenue) through highly targeted digital marketing, taking advantage of less competition and increased internet usage.

 

A final note: Pounce before the opportunity passes you

Unless you sell “essential” goods, it may only be a matter of time before your business begins suffering considerably, if it hasn’t already yet. To counteract the lost opportunity and profits, we recommend implementing your COVID-19 survival strategy as quickly as possible.

At Living Online, we’ve worked with hundreds of companies across various verticals, and understand how quickly being able to adapt to changing environments is key to business success. We’re experienced with all aspects of business strategy and digital marketing, and can move quickly to get your ecommerce store, email marketing, and digital marketing set up and ready to go while working with you to get your fulfillment logistics organised.

It’s time for companies to work together to support each other. We’re only a phone call away – so if you’re a retailer who is feeling the pinch as a result of Amazon’s new changes, or from the Coronavirus pandemic in general, reach out to us today. We can help you get on the front foot and give you the strategic advantage you need to not only survive, but to thrive in these new economic circumstances.

Learn more about how to grow your business with Ecommerce by partnering with an experienced WooCommerce agency (who also offers Amazon advertising services) that understands what it takes to achieve success.

 

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