Preparing Your Amazon Channel for a 2nd Wave of COVID-19

Amazon COVID 19

Covid-19 caused a shutdown in the beginning of March 2020 that came as a surprise to most and impacted everyone. More so, it disrupted what we thought at that time to be business norms. Shoppers flocked to online stores since traditional retailers were either closed or mandatory lockdowns prevented shoppers from leaving their homes. Businesses were flocking to obtain any online sales they could to stay in business and prevent their top line from tanking as a result of lost retail sales. Businesses had to pivot and adapt almost overnight, except for the few who were deemed as essential businesses. Looking back on the 1st wave and hearing speculation of a 2nd Covid-19 wave coming sooner rather than later, what did we learn and what can we do now to prepare and be ready when it comes?

What Didn’t Work

Let’s start with what didn’t work so we can end on a positive note. To keep it simple and to the point, here is what we found didn’t work:

  • Not having a well-established D2C distribution
  • B2B with independently owned stores
  • Not having an established national distribution in major Food Drug Mass chains (FDM)
  • Amazon PPC (which we will discuss later)

Brands that did not have a strong and well-established D2C distribution did not have that layer of protection. It’s important to note that a well-established D2C strategy includes more than having a killer website and/or Amazon listing. In retail, unless considered an essential business, many brands saw a sudden drop in sales because of the majority of independently owned stores that shut down leading B2B to not produce the “normal” and expected sales, except for essentials who had well established national distribution in major Food Drug Mass chains (FDM). These national distribution chains like Target and Walmart saw growth in almost every department they sell in because traffic was funneled to them in unprecedented numbers.

During this time, adjustments needed to be made to adapt your campaigns to new KPI’s. Not adjusting your PPC and DSP campaigns could have led to a higher spend and lower conversion rates as the amount of traffic going to Amazon dramatically increased. Knowing this, if you had campaigns that were not specific enough or able to adapt, you probably felt those repercussions. We discuss later about how to solve some of these issues.

What Did Work?

Now for the fun stuff, what did work for us. The first and probably the most obvious answer to our overarching question is diversifying e-commerce channels. Brands that already had diversified their e-commerce platforms didn’t take as hard of a hit. With Amazon changing the algorithm virtually every day and without notice to sellers, changing the priority of products being shipped out, setting ‘Limited Stock’ inventory, and sellers losing Prime shipping for a period of time, many ventured to find other platforms to sell on and it worked well. It created a great opportunity for other platforms to take some market share away from Amazon. From this, we saw a rise in platforms such as Walmart, Shopify, Target and more. In short, consider expanding your horizons as a safeguard to protect yourself. Just like any smart stock investor, you should diversify your e-commerce channel “portfolio” to hedge against these kinds of marketplace swings.

With Amazon restricting many sellers and products from being sold through Fulfilled by Amazon (FBA), or at least delaying shipping times by a month or two, the next best way to sell on Amazon is by doing Fulfilled by Merchant (FBM). By having FBM listings built out and having logistics nailed down, you can be prepared to pivot your distribution from FBA to FBM with the click of a button. Selling FBM gives you more control over your shipping time and procedures in these cases. We also found that Amazon temporarily gave the buybox to FBM offers, even though an equal FBA offer was active, since they knew FBM offers would most likely get to the customer sooner. Don’t get too comfortable with using FBM though, because you’ll want to utilize all the perks Amazon provides when using FBA once it is running normal again. Check out our blog about ‘Setting Up Self-Fulfilled Offers on Amazon (FBM).’

PPC Insights

Kenshoo’s VP of Client Success, Kevin Weiss, had a few insights they found worked during Covid-19.

“We learned that shipping delivery windows must be monitored and acted upon quickly by ensuring that your PPC ads are running for products with delivery dates as close to ‘normal’ as possible…conversion rate can swing by 50 pts in either direction when delivery windows change, which will obviously affect ACoS significantly…this is not something that Amazon reports in any API nor to advertisers, so it is often overlooked.”

He also stated;

“Single ASIN Ad Groups (a.k.a. “SAAG Method”) as a structural best practice became increasingly important as supply chain issues became more widely pervasive for advertisers…with this structure, advertisers can better control their campaigns to ensure that targeted keywords are triggering ads for the best possible ASINs in the catalog.”

As every brand can have different wins/losses with advertising, we recommend researching to find exactly what performed well for you specifically during the 1st wave. Internally, Pitted Labs found Amazon DSP to be a valuable asset to use because of the unique ad placements on and relatively “un-messed-with” audiences (compared to the A9 algorithm).

Inventory Limits

Lastly, Amazon has recently announced they are putting ASIN-level FBA inventory ‘Limited Restocks’ on sellers starting August 16, 2020 to prepare for a wild Q4 with Prime Day / Cyber Monday / Black Friday / Holiday shopping all falling within 3 months of each other. To prepare for this, keep an eye on your Inventory Performance Index (IPI). Sellers below an IPI of 500 are subject to the most strict ‘Limited Restock’ according to Amazon. You can find your current IPI under the ‘Inventory Dashboard’ on Seller Central. Run a ‘Restock Report’ to find your ‘Limited Restock’ numbers. To best prepare FBA inventory in preparation for Q4: 

  • Send inventory no later than September 1st
  • Expect inbound delays of up to 4-6 weeks
  • Utilize Amazon’s new virtual bundles tool (see our blog Amazon Virtual Product Bundles to learn more)
Preparing Amazon for COVID by Pitted Labs

Of course, this is all speculation, but we must learn from history. Even though we can’t plan for something like this to happen, we always need to stay nimble and be able to adapt. We would rather speculate now and be prepared for the upcoming months versus panicking and falling behind the curve if everything points to that direction again. As big and dominant as Amazon is, they have never dealt with this before either and are figuring out the best way to cope.


Hunter Stutz

After graduating from Westminster College in Salt Lake City, Hunter took his passion for business and entrepreneurship to the Amazon stage. As a successful Amazon Private Label seller himself, he has the proven knowledge and experience needed to help growth-stage businesses and brands successfully launch, grow, and sustain on Amazon.