Insights

Amazon’s Slow Recovery: What’s Back & What It Means for Brands

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After months of limitations and delayed shipping, Amazon’s capabilities seem to be on the road to recovery. FBA eligibility has opened back up, inventory caps have been removed, and deal options are once again available.

Forward motion is a good sign, but for brands on the marketplace, it’s still a long way back to business-as-usual. Here’s how Amazon’s most recent changes affect brands.

 

Lifted FBA Inventory Caps

In mid-March, Amazon limited FBA eligibility to only include high-demand, essential items. Those limitations were slowly dialed back, and now FBA eligibility is available for most items without inventory caps.

FBA still isn’t what it was. Guaranteed one-to-two-day shipping through FBA isn’t a reality for many non-essential items. Because of this, Amazon has adjusted the way its algorithm works. It used to be that the best-priced, FBA-eligible items were given priority, but now the items with the fastest available shipping (through SFP, MFN, etc) are given preference.

For brands that previously relied primarily on FBA, these algorithm changes require dynamic fulfillment capabilities to stay competitive. It’s difficult to say if and when Amazon’s algorithm will return to the way it was, but brands should be flexible with their fulfillment capabilities in the meantime.

 

Deal Options Opening Back Up

Discounting and deals have always been a powerful way to drive sales on the marketplace, but that wasn’t necessarily a good thing during demand surges brought on by COVID-19. Amazon’s supply chain was already flooded and overcapacity. As a way to ease some of that pressure, the company put a damper on consumer spending by removing their coupons and deals pages from their site in April.

Deals opening back up are a signal that Amazon’s capacity has recovered enough to actively promote sales on non-essential items. That’s great, but it’s difficult to say whether or not those discounts will have the same allure on consumers that they had before.

Consumer spending is changing. In particular, shoppers seem to be spending less on discretionary items — such as apparel, footwear, and accessories — and focusing more on household staples. After a spike in March, retail sales have been estimated to be down as much as 8.7%. Most likely, some of those sales will return as stay-at-home orders loosen around the nation.

 

Final Thoughts

Amazon is slowly making its way back to normal operations, but there’s still a long and uncertain road ahead. Brands should do everything they can to stay up to date on the latest trends and changes, both in consumer spending and on the marketplace. What’s best practice today could quickly change tomorrow. There will likely be many more dramatic shifts as economies reopen and stay-at-home orders loosen.