How does COVID-19 and Amazon Policies Affect FBA and MFN Sellers?

The world is your oyster, wash your hands.

These are challenging times, and we can make them more manageable by taking precautions, staying informed, and positive. At this writing, the number of reported cases in the United States is 7,038 (CDC). The number of people infected with COVID-19 is rising, and no one can say how many more will be infected. One thing is certain that it has affected the whole world. Everyone is living a different life today due to COVID-19. How will it affect the third-party sellers on Amazon?

CDC has the most current information on COVID-19

The first to be affected will be the FBA sellers. Amazon has asked FBA sellers to stop shipping most goods to its warehouses. Amazon is dealing with a rise in demand for medical supplies and household products due to coronavirus related shopping.

Amazon has notified the FBA sellers “household staples, medical supplies, and other high-demand products” unless Amazon already has other purchased items on hand in its warehouses.

Amazon is prioritizing shipment of essential items.
Amazon is prioritizing shipment of essential items.

The policy will be in effect at least until April 5th and will apply to Amazon shipments in the U.S. and European Union. Products already in Amazon warehouses or those that are currently in-transit to the warehouses will not be affected.

Products that Amazon is prioritizing for shipment must fall into one of six categories listed below:

  • baby products
  • health and household products
  • beauty and personal care products (including personal care appliances)
  • grocery products
  • industrial and scientific products
  • pet supplies

Waits for some products have gone into two weeks regardless that they are listed as Prime. Many everyday items, such as hand cleaners and diapers, were listed as unavailable on Tuesday.

“We understand this is a change to your business, and we did not take this decision lightly. We are working around the clock to increase capacity,” Amazon wrote in its note.

Amazon has faced a steep rise in orders as coronavirus preparations set in throughout the U.S. As lines at the stores are long, and shelves are empty more people are shopping online. Amazon has announced that it would hire 100,000 additional workers globally to deal with the “unprecedented” labor needs.

MFN sellers will not be affected by the temporary change in policy at Amazon. But they will be affected by the change in the buyers’ practices.

As this crisis unfolds, all third-party sellers are sure to feel the pain. Purchases will be fewer and concentrated on household essentials and medical supplies. Fewer people will be buying their next dress/pants in the next few days.

The Bay Area in California, which includes San Francisco, San Jose, Mountain View, Santa Clara, etc. has been under shelter-in-place order since Tuesday, March 17th. The Bay Area is home to such iconic companies as Google, Apple, Facebook, Tesla, and Twitter. Amazon has software development offices in the Bay Area. Here in the Bay Area, all schools and offices are closed. Most schools are closed for the year. Only essential excursions to the store are allowed. While people are trying to make the best of the situation, things are different. Productivity in these circumstances may slow down.

California counties affected by lock down.
https://www.sfchronicle.com/local-politics/article/Bay-Area-must-shelter-in-place-Only-15135014.php

It is to be expected that as a result, the economy will be affected. The sellers need to be prepared to ride out the storm. The government is talking about financial relief. Amazon is stepping up to help small businesses in Seattle and Washington D. C. The financial planning needs to start (if it already has not) on the part of the sellers.

Talk to your supplier. Would they be willing to negotiate prices? Can the minimum quantities be adjusted? Keep in mind that they are also impacted and need to keep the chain intact. Be fair.

If you are an FBA seller, should you sell as MFN temporarily? Do you have room to house your wares? Should you invest in shipping supplies?

Talk to your bank. Can you renegotiate your loan/mortgage terms? Would it be prudent to take out a loan, or would it be added liability?

These are tough but relevant questions and need to be pondered.

Whatever you do, be prudent. Don’t be like the guy who went around buying hand sanitizers and acquired 17000 bottles of it. His aim was to sell them on Amazon for jacked up prices. In normal circumstances, it would be considered a good eye for business. But these are not normal times. Needless to say, Amazon closed him down. Discussion on ethics aside, consideration towards Amazon reaction needs to be weighed into the decisions you take. So be wise and do not put your business at higher risk than it already is.

Most importantly, stay informed. CDC is the best place to get the most recent information on the virus and related news. Be aware that there is a multitude of misinformation going around. You will have to sift through articles, tweets, and posts to get to the facts. It will be best to go straight to the source. Amazon will notify you of any changes. But if you are going through the forums, use insight to find facts. Not all rumors are true.

Stay calm and take precautions

Lastly, here at Alpha Repricer, our thoughts are with those who are impacted by COVID-19 already. We hope they recover fully and quickly. We also want to express admiration and send out a great big thanks to the medical professionals who are at the forefront of treating those who are ill. These are unprecedented and unpredictable times. But this too shall pass like other diseases and economic disasters. Stay calm and act with compassion and foresight.