As we prepare for the largest Q4 online shopping season ever, Buy Box Experts is pleased to launch its newsletter. Each month we synthesize key issues on 3-4 key stories and offer our point-of-view on the expected impact these developments will make on sales performance for 3P sellers and brands across the Amazon marketplace.
Amazon DSP—Target Competitors’ Customers
We are excited about this platform for several reasons: a) While competition for on-Amazon advertising inventory has caused bidding prices to skyrocket over the past 5 years, there is considerably more ad inventory available on the Amazon DSP platform (leading to very strong ROAS levels today). b) Far fewer brands participate in this form of advertising, which was partly driven by Amazon’s earlier constraints on who was offered access to the platform. c) We love that brands can target other brands’ Amazon shoppers, making it much easier to pursue relevant customers at the bottom of the sales funnel. To learn more about how DSP can help your Amazon business, contact Buy Box Experts today at firstname.lastname@example.org.
Prime Day 2020 will be held October 13-14
Our enthusiasm for the event this year is tempered by several factors: a) The proximity of this event to Black Friday and Cyber Monday will likely cause many shoppers to pick one event over the other—just as brands will likely choose one promotional event, but not both. b) Prime Day is too far out from Q4 holidays to be gifting orders to others months in advance, so most purchases are likely to be shoppers buying for themselves—yet given the uncertainties of the job market, generally lower customer confidence, and a highly unstable back-to-school environment, we don’t anticipate consumers will be splurging extensively this year on themselves. Of course, Amazon will continue to use Prime Day to sell Amazon equipment (e.g., Echoes, Kindles), Amazon’s own private label brands (e.g., apparel, batteries, vitamins), and Prime memberships, but Amazon continues to need time to reinforce its Prime shipment capabilities, as Prime orders continue to experience spotty delays across the country after the massive ramp-up in COVID-driven online orders.
Sellers and brands on Amazon should be careful about how they leverage Prime Day this year. While companies may discount or clear out older inventory, don’t anticipate the usual level of customer demand as past years. We are also skeptical that customers will buy as many high-end items (even if nicely discounted) due to waning customer confidence in the pre-election event.
Preparing for Q4
Outside of the anticipated October Prime Day event, a much higher November/December crush of orders is expected this year. Shoppers remain disproportionately focused on online shopping, making brick-and-mortar stores slow to recover. Amazon has been experiencing Prime Day-like levels of demand every day since March, which has forced them to ramp up their order fulfillment and last-mile delivery capabilities. Going into Q4, they are limited in creating additional warehouse space (which is typically maxed out during Q4). For instance, Amazon placed inventory restrictions on FBA sellers. Sellers with an Inventory Performance Index score under 500 will have difficulty sending in products into FBA facilities, and many product shipments will be limited to 200 units of inventory.
Buy Box Experts anticipates FBA sellers and 1P brands to experience significant delays in having their inventory received at Amazon fulfillment centers. We encourage companies to get their inventory into FBA by the end of October, if possible. Sellers and brands should also have backup inventory ready to be shipped weekly throughout November and December. Q4’s average receiving times take more than two weeks, so do not expect to replenish FBA inventory after December 10 for a sale before Christmas. Merchant-fulfilled (FBM) orders is a very useful backup plan for anyone experiencing higher-than-expected sales while experiencing delays in receiving FBA inventory. Stay in stock no matter what—even if that means offering only FBM orders for those days between FBA stockouts. We encourage companies to use Amazon’s inbound shipping services (FBA) whenever possible, as other carriers are likely to have increased challenges securing time slots to have trucks received and unloaded. We also encourage firms to prepare to do smaller LTL shipments more often throughout Q4—especially on hero products—in order to ensure best-selling products don’t sell out.
Preparing for Brexit on Amazon UK
We encourage sellers currently selling in Amazon UK and other Amazon EU marketplaces to secure FBA inventory in the UK well before the end of 2020 to ensure a smooth transition at the beginning of 2021. If too much FBA inventory is stored in the UK or another EU facility to support 2021 demand in either of these newly separated regions, move inventory between locations before the end of the year. Keep in mind Amazon prioritizes fulfilling customer orders over moving inventory between facilities in late Q4 so expect delays.
Join Buy Box Experts on October 1 for our upcoming webinar: “How to Convert Your Amazon Competitors’ Shoppers into Your Customers.”
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