untitled-2_35.pngAmazon took a dramatic step today help it quickly restock critical supplies.  Effective today all inbound FBA orders (except for groceries, household supplies and medical products) would be paused until April 5th.  In addition, Amazon has suspended all new purchase orders for all 1P customers, except for the same critical group of items.

This pause will impact brands across multiple categories; everything from clothing and office to sporting goods and electronics.  Grocery, base household supplies, and most medical products are unaffected.  

Yeoman considers this a smart move by Amazon.  We have seen a dramatic shift in consumables and grocery buying on the site, with some categories up 500% vs prior week.  Putting basics at the top of the list helps Amazon get products out to quickly and offset some of the stockouts that are being seen around the US.

"We understand this is a change to your business, and we did not take this decision lightly," Amazon said in its announcement, and said it was working around the clock to increase capacity.

 
The new policy takes effect today, March 17, through April 5, 2020. FBA Shipments and Purchase Orders created before today will be received at fulfillment centers. 
 
For brands there are several contingency / action items to consider:
 
  1. Brands sell via 1P only (vendor central): 
    1. If you are part of Amazon's drop shipping program these orders are unaffected.  You can expect an increase in volume and should plan with your warehouse
    2. You should immediately review your current stock levels at Amazon paying particular attention to the last 4 day shipments.  Your team should be able to estimate stockout dates
    3. Sweep your brand to understand who deep your ecosystem of 3rd parties is.  Remember, FBA orders are also suspended.
  2. Brands that are 3P (seller central) and 1P (or just 3P):
    1. Fulfilled by Merchant (FBM) and Seller Fulfilled Prime (SFP) orders are not affected.  You can expect an increase in volume and should plan with your warehouse
      1. Consider expanding your SFP shipping range
    2. Add additional items that are not currently in your 3P account but were on your 1P.  You can serve as a backstop if Amazon runs out
    3. You shoudl also sweep to see how many of your retailers are currently selling and their levels of FBA. While they may not

For every brand we recommend caution as it relates to increasing your prices.  Amazon has always watched price increases, but is especially critical during this pandemic.  We recommend against increases and aggressively reaching out to any retail/industrial partners that start to raise prices.  Amazon has (and will) shut down any listings it feels are price gouging.

Contact Yeoman today if you need assistance analyzing your brands footprint or updating your forecast.  Amazon will continue to see a rush of customers during the next few months with most brands seeing some growth, but it is unlikely to offset the drops that will be seen in other channels.

 

 
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