It's been a roller coaster year for everyone and Amazon sellers are no exception.
Although the coronavirus pandemic has been a horrendous global disaster, the impact on sellers has been variable. Sales are up overall but some categories have been decimated while others have seen unprecedented growth.
It's too late to worry about the things we wish we knew before this started, but in this article, I'm going to share the things you should know about how the pandemic will impact Amazon sellers going forward after the world goes back to normal.
Note: These are my predictions. Some are really obvious while others are based on my own opinions. I could be wrong so let me know in the comments what you think!
#1 Increased Sales Are Here to Stay
Many people have wondered what is going to happen to their sales once people can go back to their typical shopping patterns and back into retail stores safely (and legally).
Assuming their is a fast acting resolution such as an approved and effective treatment or a preventative vaccine, sales will take a very subtle but temporary drop but will rebound quickly.
The gap between brick and mortar shopping and e-commerce shopping has shrunk year over year and that movement was expedited due to the pandemic as Amazon's sales revenue grew 26% from January-March 2020 compared to the same period the year prior.
#2 Negatively Impacted Categories Will Increase in Sales But Profitability Lower for at Least a Year
Several product categories have been hit much harder than others.
People will be very excited to travel again (and airlines and hotels will make the prices extremely tempting).
People will return to work and need formal clothes again (maybe new clothes since they'll need larger sizes after the quarantine 15).
Sports seasons will return and equipment will be needed.
You'll be competing for the buy box with people who have watched their products collect dust and storage fees for months.
Although production of many of these items has been slowed tremendously, there will be a surplus of them and a race to the bottom to get them sold as quickly as possible.
Takeaway: Be careful diving back into the categories that are about to recover. There are big profits to be made but you will be fighting an uphill battle for many months.
#3 Positively Impacted Categories Will Decrease in Sales and Competition Will Be High Going Forward
Pretty obvious prediction here but the takeaway is to be wary of entering these categories now.
New sellers will want to diversify into these categories to hedge the impact of a future pandemic (God forbid) and the barrier to entry will be extremely high.
Although not as extreme as the increase in demand of the products in prediction #2, there will inevitably be a lowered demand for items that have seen a rise in demand due to the pandemic. Especially for items that saw a spike due to being hard to find in retail stores.
No one likes the idea of making money from tragedy, but many sellers were able to ethically do this and were rewarded for it. People who were on the ground floor selling masks, disposable gloves, baby products (diapers and wipes mainly) and at home workout equipment had tremendous sales numbers but it would be wise for them to eventually use some of those new profits and diversify into things that will sell well after the pandemic.
For now, if you're selling these items, it's most likely a better bet to continue to use as much of your earnings as possible on restocking since , unfortunately, the pandemic isn't nearly over yet (as of time of writing on May 18th, 2020) and there is still plenty of room for continued sales.
#4 Amazon's Battle Against Price Gouging Is Here to Stay
Amazon isn't shook by most of the negative press they receive, but drawing the ire of the internet after reports of price gouging on critical supplies like gloves, masks and hand sanitizer clearly got their attention.
Oh, read my article about how they tried to hide from other sellers using their mysterious second identity Michelle Clark.
Amazon suspended more than 6,000 sellers for alleged price gouging and clearly built up quite a backlog for themselves at seller performance.
Suspended sellers are reporting weeks between replies from Amazon regarding their suspended accounts and many sellers have been shut down for things as small as listing one (1) Zicam Nasal Spray for 40% over MSRP.
Although it's clear that the products drawing the most attention are things related to the pandemic, Amazon appears ready to police what they believe to be overpriced listings beyond these (arguably) essential items.
Takeaway: Be careful with pricing. If you use a repricer, be sure to set limits on things that could be deemed as essential during a crisis.
#5 "Back to Normal" Won't Happen Overnight
Let's say that a vaccine for COVID-19 was produced and approved today.
Sales on Amazon wouldn't tank over night. Many people will still be uncomfortable going out. Many people will not trust the vaccine. Many people will be so disturbed by everything that they've become a bit agoraphobic and won't go out for awhile.
#6 More Sellers Will Join the Party
Two types of new sellers will join.
- Traditional workers looking to diversify their earnings
- Brick and mortar companies looking to hedge risks
If you've ever been laid off, you know the terrible feeling of not having control. My prediction is that many people will start taking on side hustles like selling on Amazon to help hedge their risks if they lose their jobs in the future or to just help build up some savings.
Many brick and mortar companies were rocked by the loss of foot traffic and will be forced to accept that having an online presence isn't optional any more.
Profitable Amazon to Amazon flips will be all over the place once the market turns around. These are products that you buy from Amazon and then sell back at higher prices. With many sellers liquidating products that are temporarily down, there is a great opportunity to find them and sell as they correct. To learn more about Amazon flips, read my article here.
Thanks for the thoughts.I literally started my Amazon business in the middle of this pandemic, NOT as a result of the pandemic.So in my case the timing is a coincidence.It is very interesting for this newbie to hear your predictions.I appreciate your helpful thoughts.
Thanks for article. Agree with all you say. One other result will be many more local sourcing options from brands and distributors as they diversify from bricks & mortar. I’m already seeing brands opening up to AMZ-sellers for first time at great prices to re-sell.