With its stock surging by 20 points since January 2020, Amazon has shown, once again, the strength of its cloud-computing powerhouse amid the COVID-19 crisis. The Seattle-based, global eCommerce company is one of the few tech companies whose financial estimates have improved since the start of the year.
It is still uncertain how this pandemic will change consumer behavior in the long-term, but one thing is clear – consumers have put their trust in Amazon once again; first seeking quick delivery of essentials and later for convenience as physical retail shut down, making it an increasingly important channel for DTC brands.
If your brand is not yet on Amazon, now is the time to reconsider. In light of Amazon recently lifting the restrictions on non-essential products, we will explore why it might be a good idea to “open up shop” on Amazon in Part One of this article. If you are a merchant already established on Amazon, jump ahead to Part Two – Amazon Best-Practices In a COVID-19 World to read the advice of our Amazon team for short- and long-term best practices in a COVID-19 world.
Part One – Why You Should Consider Selling On Amazon
1. Diversifying The Way You Reach Customers
If there is one lesson DTC brands should take away from the 2020 pandemic, it’s that it’s never a bad idea to diversify the way you reach customers.
DTC brands that only sell through one channel, and have seen that channel dry up during the last few weeks, have likely found themselves between a rock and a hard place. But for brands that have diversified their channels, leveraging Amazon, Walmart Marketplace, Target, etc., in addition to DTC, they may have been able to make the best out of a bad situation.
For example, one of our health and wellness clients has seen Amazon sales skyrocket and outperform its DTC digital storefront through March as people looked for ways to boost their immune system while taking advantage of Amazon’s expedited fulfillment options. Picking up on this new product trend early, our Amazon team adapted their strategy and kept investing in marketing spend to make the brand’s products even more visible. This resulted in a 151% increase in ROAS and a 376% increase in sales YoY.
Even brands considered “non-essential” have been able to find a silver lining.
Our client, Jlab Audio, sells award-winning personal audio products, including headphones and speakers, and recently launched their lightweight wireless earbuds.
Thanks to their diversified selling channels (Amazon and Target marketplace in addition to DTC) the brand was able to keep steady sales through March and into April as customer demand shifted from reactive products only (dietary supplements) to include non-essential items that enable “Work From Home” (WFH).
JLab successfully leveraged Amazon’s “Fulfilled By Merchant” (FBM) functionality to workaround Amazon inbound shipment restrictions, allowing them to avoid skipping a beat in terms of potential sales.
2. In Amazon We Trust
At this point, you might still be skeptical about jumping on the Amazon wagon, after all, if you already have a functional DTC website why would you need Amazon?
Here are some stats that may change your mind.
During a 2019 study, Feedvisor surveyed 2,000 consumers about their shopping habits and found the following information:
- 89% of consumers are more likely to buy products from Amazon than other eCommerce sites
- 66% of consumers start their search for new products on Amazon
- 74% of consumers go to Amazon when they are ready to buy a specific product
Another study by Georgetown University and NYU found that Amazon is the second most trusted institution in the United States, after the military.
And what do people do during a global crisis? They stick to what they know and trust.
Clearly Amazon was already consumers’ go-to shopping platform before COVID-19 and it seems the trend hasn’t let up. If anything, it has only accelerated.
With everyone confined to their homes and having limited access to stores, people naturally turned to Amazon to purchase necessities such as masks, hand sanitizers, gloves, toilet paper, soap, etc.
But now that most people are fully stocked and things appear to be getting better, peoples’ needs are changing. They are looking to make themselves more comfortable by buying office furniture for their home and investing in new hobbies to pass the time… and one thing remains the same people keep buying on Amazon.
Part Two – Amazon Best-Practices In a COVID-19 World
1. Amazon Lifts Restrictions on Non-Essential Brands
With a pandemic in full force, Amazon started prioritizing the stocking of household staples and medical supplies over products considered “non-essentials.” With the restrictions lifted just a few weeks ago, it is still unclear how well those products will perform in the next few months, which is why we have gathered best practices from our Amazon team to guide essential and non-essential brands in their short- and long-term Amazon strategy.
Selling Essential Products on Amazon during COVID-19:
- Keep spending on advertising. Many of our clients selling essential products have seen an increase in ROAS in the last few weeks, and you probably will too!
- Make sure you have enough inventory on hand. With demand being unusually high, leverage the Amazon dashboard reportings to predict your inventory needs.
- Stay-up-to date with new Amazon Policies. Things are changing every day so if you have an agency in charge of your Amazon account, make sure they are taking those new policies into account.
Selling Non-Essential Products on Amazon during COVID-19:
- Reduce ad spending and focus on your most loyal or past-customers.
- Tweak product descriptions and copy to fit your customers’ needs. We are seeing a lot of loungewear/clothing brands marketing themselves as “work-from-home essentials.” Whether or not you sell yoga pants, you should give some thoughts to optimizing your product copy during this pandemic.
- This crisis shined a light on the benefits of leveraging your own fulfillment methods when non-essential brands were restricted from access to Seller Central. Amazon has since lifted restrictions on non-essentials, but just to be on the safe side you should prepare a backup plan for fulfillment if Amazon’s policy shifts again.
- You may want to pull back on data mining marketing campaigns, but keep conversion-based and branded campaigns live so you can appear when your repeat customers search for you.
- Take the time to capitalize on low hanging fruit. Refresh your PDPs, brand store, QA variations, and set-up new product launches for post-crisis. Get ahead of the game as much as possible so when the world is “normal” again, you’re set up for success!
2. Predicting Trends & Customer Behavior
The best practices listed above will help you act in times of crises, but if you want to take it up a notch and start being proactive with your Amazon account, you may want to look at trends and behaviors in your clients’ purchases to plan short- and long-term strategies that you can rely on, even in times of uncertainty.
Product Lifetime:
Whether you are selling essential or non-essential products, you should know the lifetime of your products. How frequently do repeat customers buy your products? Will the current situation accelerate or slow down their purchase frequency?
Anticipating your customers’ needs will allow you to be more proactive, timing your marketing spend and inventory just right.
Pushing the Right Product:
Look at what people are searching for. Back in March, the trend in keywords was targeted around pandemic essentials such as “masks,” “gloves,” “toilet paper,” etc. Now we are seeing people search for “puzzles,” “desks,” and “wireless headphones” as they try to keep themselves busy through the rest of quarantine.
Trends move fast, which is why our Amazon team is always keeping an eye on leveraging, or creating, opportunities for our clients by selecting the right products to push and creating a narrative around them.
Our client PACT sells organic clothing. Clothing may be considered a non-essential product at the moment, but with people staying at home and wanting to purchase comfortable, casual loungewear, our team took the initiative to tweak product descriptions anyways to help the brand position itself as a work-from-home essential in their short-term strategy.
Predicting Inventory:
Given the current situation, supply chain and inventory health is more important than ever for Amazon sellers. As we mentioned previously, a great tool to predict inventory is to look at your Amazon dashboard reportings. Our BVA Amazon Team delivers weekly inventory reports to our clients to make sure they stay fully stocked and can handle potential surges in demand.
Take a Closer Look at Conversion-Based Campaigns:
If you’re a non-essential brand, you probably want to lay low on some things like ad spending and data-mining right now. Instead, keep monitoring your conversion-based campaigns to understand how trends might change; as you come closer to your ROAS goals, you can determine when it’s time to start data mining again.
A Hopeful Closing Thought
We might not be done fighting COVID-19, but at least we’ve learned a few things during the last couple of months. Brands are looking to the future with new knowledge under their belts, such as the importance of channel diversification, meeting customers where they shop (in this instance, Amazon), and utilizing this time to plan short and long-term strategies.
There might still be uncertain times ahead, but brands are not alone. Our Amazon team specializes in finding untapped opportunities for our clients to increase the visibility of their brand and bring new customers through the door. Through our holistic approach to commerce, providing solutions for storefront optimization, media, strategy, Amazon, and much more, BVA incubates and grows the brands that people love.
Cecile Nicholson
Cecile Nicholson is the Agency Marketing Coordinator at BVA. She writes about the latest eCommerce trends, marketing strategies, and tactics to advise direct-to-consumer (DTC) brands.
This article originally appeared in the BVAccel blog and has been published here with permission.
