- The pandemic has thrown the ecommerce ecosystem for a loop, causing massive delivery delays and business interruption.
- Amazon cut off access to its warehouse and logistics network to nonessential businesses for weeks, leaving entrepreneurs scrambling to find alternative solutions.
- Sellers navigating these unprecedented times are using every trick in the playbook to keep their businesses running as smoothly as possible, including preempting returns and repurposing shuttered storefronts as mini warehouses.
- Aim to keep returns low by setting customer expectations from the get go, have a backup plan in place, and address the circumstances given the current global situation.
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For ecommerce businesses, these are the best of times and the worst of times.
Thanks to nationwide stay-at-home orders requiring people to stay indoors and compelling millions of businesses to close their stores, online sales are booming. Last month, online sales in the US soared 49%, according to a new report from Adobe’s Digital Economy Index.
However, the massive surge in traffic and demand for online goods has also put a strain on logistics and ecommerce platforms across the board, affecting even the Seattle-based behemoth Amazon.
Amazon sellers who rely on the company’s warehouse and logistics network to deliver their products — called Fulfillment by Amazon, or FBA — had limited access to these services from March to May, mainly because their products were not considered essential. The move not only hindered sellers’ access to their FBA inventory, it left them scrambling to ship their own orders and reassess their marketing strategies.
As Business Insider previously reported, Amazon is now working to restore normal operations and has lifted restocking restrictions. Shipping and delivery times, however, are still experiencing some delays.
Business owners who have been dealing with these and other disruptions spoke to Business Insider about what they’re doing to keep their businesses thriving. Here are their top three recommendations.
1. Manage customers’ expectations to keep cancellations and returns low
As more people buy things online, the number of refunds and returns is likely to rise as well, said Fahim Naim, founder and CEO of eShopportunity, an Amazon consulting agency that’s been helping businesses sell their products on the platform since 2014. To minimize the risk, Naim recommended going through all the reasons customers return your items and addressing those issues up front. It could be as simple as adding an extra detail to your product description or uploading a quick, short video showing how your product works.
“Don’t be scared that a customer won’t buy because you’ve said they require a subscription,” he said. “It’s better to bite the bullet and be up front about it than risk receiving a negative review.”
Also, consider changing expectations around “fast” shipping and delivery, added Mike Vroom, customer service director at Untuckit, a New York-based apparel startup that has been selling on Amazon for the last three years. “We’ve adjusted the verbiage on our shipping options, as well as our order and shipping confirmation emails to show extended delivery times,” he said.
Sellers shunned from FBA’s delivery network had to pivot to fulfill orders themselves — which in some cases meant adopting a new, unfamiliar process — at record speed, said Risa Barash, cofounder and CEO of Fairy Tales Hair Care, a brand of children’s shampoos based in Fairfield, New Jersey. Barash, who has been selling on Amazon for six years, said that spending time forging a relationship with your local post office is paramount.
“FBM [Fulfilled by Merchant] is a really good idea, but you really need to understand how it works and understand some of the challenges,” she said. “Understanding how to pack and ship Amazon products is probably one of the smartest things that a small business can do.”
Amazon offers prep and packaging guidelines on Seller Central, a microsite loaded with information and discussion forums for sellers. All liquid, cream, and gel products, for example, must be packed to withstand a three-foot drop test without spilling. “Packing guidelines are the same for both FBA and FBM,” added Barash.
Of course, knowing how to ship an item is immaterial if you don’t have access to your inventory.
Some businesses with shuttered retail locations are repurposing their spaces as small warehouses and fulfilling orders from there, noted Laura Behrens Wu, cofounder and CEO of Shippo, a shipping startup that has been working with Amazon sellers since 2017. This allows companies to expand delivery coverage and in some cases cut down on delivery time.
It’s also good business to have a backup stockpile you can access easily, said Kunal Chopra, CEO of Etailz, a 12-year-old company that manages Amazon accounts on behalf of about 1,000 brands. Otherwise, “if Amazon has another lockdown, you may be stuck,” he added.
Right now, Etailz’s orders are fulfilled by Amazon, but only about 50% of them are shipping the same week they are ordered, said Chopra, down from about 85% pre-pandemic. Cancellation rates have remained stable, he said, which is why he’s sticking with FBA for now. Still, Chopra said they’re ready to move into FBM if needed.
“Don’t put all your eggs in one basket,” he recommended. “Diversify your shipping strategy.”
While the coronavirus pandemic has thrown marketing budgets into disarray, it has also pushed more people to spend more time online.
“Now is the time to spend money and acquire new customers,” said Barash from Fairy Tales. The idea is that businesses that continue to engage with their customers will outperform those that opt to decrease or cease all communications. “Now is not the time to take a backseat and get lost in the shuffle,” she said.
A study published in 2005 in the International Journal of Research in Marketing found that while businesses can profit from proactive marketing during a recession, the move is not a one-size fits all. For example, if you’re currently struggling with manufacturing or supply issues, the last thing you want to do is to put more pressure on your business by attracting new customers.
Sometimes a small change can go a long way, said Behrens Wu. “One thing that shouldn’t be underestimated is being clear about whether or not your items are in stock,” she said. “If they are in stock, you should advertise that.”
The key is adjusting the marketing dials to match your current situation, added Chopra from Etailz. One of Etailz’s clients, a toy and games brand, had to quickly adjust its budget to avoid running out of stock following the FBA shunning. They lowered their ad spend temporarily, said Chopra, and switched the remaining ad dollars to boost excess inventory.
“Not only did the brand’s overall [advertising cost of sale] drop by 44%, but sales on the [products] still being advertised increased significantly,” said Chopra. “The top seller this year is seeing a year-over-year sales increase of 10x.”