Amazon has long held the title of marketplace platform giant, but lately, the online shopping hub has implemented important changes in light of COVID-19. Since the inception of their Prime membership program, Amazon has given Buy Box preference to sellers who use the Fulfillment by Amazon program. That was until a few weeks ago when everything changed.
In case you missed it, Amazon briefly tweaked their Buy Box algorithm to elevate listings from merchants who self-fulfill rather than from FBA sellers. Instead of relying on Amazon to process and fulfill the order themselves, sellers could ship orders from their own warehouse facilities via the Merchant Fulfilled Network (MFN) method. For a time, buyers saw faster shipping options from many third-party retailers.
Amazon has walked back those changes, but some sellers are thinking that a move in-house or to a 3PL might benefit them in the long run.
This blog will highlight the Amazon changes we have seen so far, and the changes you can make right now to keep your operations responsive and flexible.
The Amazon changes we have seen so far
It’s no wonder consumers turned to Amazon for essential items when COVID-19 began spreading across the US. Shoppers were, and still are, wary of entering brick-and-mortar stores to stock up on items like hand sanitizer and gloves. Unfortunately, the shortage of these essential items has been felt in all aspects of the supply chain. As a result, Amazon began making changes to expedite deliveries and reduce out of stocks.
Disablement of FBA shipments
On March 17, Amazon announced that it had disabled shipment for FBA merchants in non-essential categories. Instead, they prioritized essential categories such as grocery and medical supplies to fight the shortage of these goods and their subsequent delayed shipment times.
According to Amazon: “We are temporarily prioritizing household staples, medical supplies and other high-demand products coming into our fulfillment centers, so that we can quickly receive, restock, and deliver these products to consumers.”
*Update: Amazon lifted these restrictions to allow third-party sellers to ship non-essential items to their facilities again on April 13.
Amazon pauses “Amazon Shipping” service
On April 8, Amazon announced they would pause their “Amazon Shipping” service, which only operated in a handful of big cities like Los Angeles and New York. The last pickup for customers will be June 5. Amazon stated this move is not in relation to COVID-19, but many see the correlation as this shipping service was available to Amazon’s third-party logistics service only.
Amazon pauses account suspension for order performance
On April 13 Amazon said they have been, and will continue to, cease the suspension of selling accounts for high cancellation or high late shipment rates through May 15. This change was appreciated by FBA sellers who were surprised by Amazon’s previous change, and was also another monumental change in Amazon’s typical seller performance policies.
Amazon thanked their sellers by saying, “Making reliable promises for customers remains particularly important at this time, and so we appreciate everything you are doing to fulfill your orders successfully, and we encourage you to put your account on vacation if you are not able to do so.”
What the MFN change means for sellers
Amazon’s change left some sellers thriving and some scrambling. Some saw higher-than-peak season sales. It’s not difficult to sell your own items on Amazon. But you must consider logistics carefully.
The MFN program requires merchants to consider their process and add additional responsibilities to their plate. Potentially even hiring new staff. Merchants now have to think about how to process orders correctly and deal with customer service related questions. When you sell via MFN, there is no blaming Amazon FBA for shipping errors.
Amazon provided a list of reminders and tips for MFN sellers, including:
- Always provide valid tracking information
- Manage delivery time
- Set default return instructions
- Confirm your account is updated with a valid return address
- Comply with their drop shipping policy
- Fulfill with Amazon’s Buy Shipping to purchase labels, confirm orders and track shipments
In order to become an MFN seller quickly, there are two options: choose an inventory and warehouse management system like SkuVault to help accommodate high order volume or use a third-party logistics provider. If you decide to move off of FBA, even temporarily, SkuVault can make the transition easy.
Again, this kind of sudden change proves the importance of creating a supply chain operation that’s flexible enough to adapt.
How FBA sellers can create a flexible supply chain
Use an inventory management system
If you weren’t already using an inventory management system to keep track of all inventory activity, including FBA, now is the time. Not only does an IMS like SkuVault give you complete inventory visibility into the activity, quantity, and locations of inventory across warehouse facilities, it can also help mitigate the confusion an unexpected influx in orders can cause.
Often, when online retailers experience a rapid increase in orders, late shipments, out of stocks, and confusion are the results. SkuVault eliminates all of that. If you need education on how to switch from shipping bulk goods to single piece shipping, for example, our team of experts can help you on that front as well.
New or current SkuVault clients can reach out to their account representative or contact us and learn how to quickly transition to MFN with help of an IMS. We’re ready to help you implement processes to handle a large increase in volume accurately, and quickly.
Use a 3PL
If you don’t have the time or resources to quickly make the switch to self-fulfillment, utilizing a 3PL is a great option to manage the fulfillment for you.
What sellers can learn from these Amazon changes
Amazon is the lifeblood for many online merchants. We all know they hold sellers to a high standard. But the COVID-19 pandemic is a different ballgame for both sellers and Amazon.
The biggest takeaway from this is to not put all your eggs in the one basket. It’s best to have a merchant-fulfilled plan in place to ensure the flexibility to switch plans quickly. When you do so, you need control over the destiny of your business to ensure success.
Putting a merchant-fulfilled plan in place makes you more resilient, which is the name of the game in times of uncertainty. As the tides turn, and per Amazon’s timeline of a return to ‘normalcy,’ sellers can easily send more and more back to FBA. But in the short term, increase sales now with the help of an IMS or 3PL.
The Coronavirus pandemic has affected the supply chain heavily. Merchants have had to shift practices quickly and adjust to the “new normal.” Even Amazon is having trouble keeping up with the daily shake ups.
Overall, we’ve learned it’s best to be proactive rather than reactive. When you prepare for every situation possible, you’re securing a spot for your business to thrive now and in the future. Amazon’s change to favor MFN for the Buy Box is not permanent. FBA will come back, whether it follows the same guidelines or not. And when it does, now is the time to prepare your business to handle and conquer either solution with a flexible supply chain fulfillment model.