Recession-Proof Your Amazon Business

 

Ways your Amazon business can power through the pandemic

Forward-thinking entrepreneurs can add real value to people’s lives and will be monumental to the way this economy moves forward, both during and post-coronavirus. 

Since the global outbreak of COVID-19, the economy has taken a significant downturn. Although experts were raising some red flags earlier in 2019, COVID-19 has shocked the system with unforeseen problems. Recessions are a part of the churning economic cycle – a devastating time with years of recovery to follow. 

Even now, business owners are finding themselves bracing for more potential economic ‘unknowns.’ The prudent entrepreneur should make sure that they are prepared and properly positioned for any impact that this pandemic might have on their Amazon business. 

 

How can you recession-proof your amazon business?

First of all, let me start off by saying that no product or business is 100% recession-proof since there are so many moving pieces that can impact the health of your business. However, I’ll be sharing time-tested (and Great Recession of 2007-2009-tested) strategies to help you plan for and safeguard your business.

Protect your Supply Chain

It’s no secret that the outbreak has affected global supply chains, especially manufacturing that takes place in China. Communicate with your suppliers! Your suppliers should have an idea of how this might affect you. Talk to them and see how you can work together to mitigate the disruptions. You can also discuss what products are more crucial to your business and should be placed on priority. In this way, if there is a delay, you are at least equipped with your best sellers. In tandem to this, look for alternative suppliers. You should understand that your suppliers may hit more road blocks that are unforeseen right now. 

Diversify Your Selection

Broadening your line-up may be the key to surviving during this global health crisis. If you are still not selling items in some of the recession-proof and COVID-19 trending categories, now is the time to look into it. Also, be sure to review your inventory management. See if there is anything you can do to lower inventory expenses without sacrificing the quality of your products. Ask yourself is there a drop-shipping alternative that will work for you so you can eliminate shipping and warehousing costs?

Communicate with your Customers

Make sure you let your customers know what is happening and what your plans are for the coming days, weeks, or months. Practice transparency by publicly addressing common customer frustrations like delivery delays, stock outs, and share internal sanitation procedures. 

When this is all over, business owners who continued to connect and engage their buyers will come out in a better position than those who decided to stop, drop, and hide when business got tough.

Maximize Digital Channels

Use social media to communicate, educate, and understand your customers’ needs and challenges during these unprecedented times. Ensure that good information about who you are and your brand is still out there and attracting some followers. If your brand is well presented, when “normalcy” returns, you’ll be able to get the ball rolling with your business.

What thrives during recessions?

While a lot of businesses across major industries struggle during times of recession, there are a handful of business that are sustainable during these times. 

Investopedia lists the top 10 companies that did well during the last Great Recession of 2008.

Company Name (Ticker)	1-Year Total Return	Industry
Dollar Tree Inc. (DLTR)	60.8%	Discount Stores
Vertex Pharmaceuticals Inc. (VRTX)	30.8%	Biotechnology
H&R Block Inc. (HRB)	25.8%	Personal Services
Amgen Inc. (AMGN)	24.3%	Drug Manufacturers-General
Old Dominion Freight Lines Inc. (ODFL)	23.2%	Trucking
Walmart Inc. (WMT)	20.0%	Discount Stores
Edwards Lifesciences Corp. (EW)	19.5%	Medical Devices
Ross Stores Inc.  (ROST)	17.6%	Apparel Retail
Alaska Air Group Inc. (ALK)	17.0%	Airlines
Hasbro Inc. (HAS)	16.8%	Leisure

Source: YCharts

Key Takeaways:

• Even when times get tough, and consumers are earning less, they need basic, staple products like food and household supplies. To save money, people turn to cheaper alternatives – hence, the discount stores do well. And the Walmarts of the world make the cut as an affordable alternative.

• Recession or not, you need healthcare. Especially amidst COVID-19, this recession is more in need for healthcare and medical supplies than any other economic downturn. Who could’ve guessed that we’d be hit by a global pandemic the same time the economy was projected to spiral downward?! 

• The trucking or airline success in the 2008 recession is not so relevant now. In these weird times, even travel and freight is taking a hit. 

 Product Tips:

• List discounted essential items, preferably those with a longer shelf life – such as canned goods, dried fruit, kid-friendly snacks, and pet foods. 

• Sell health-related goods such as saline solutions, toilet paper, baby wipes, towels, gloves, masks, sanitizers, cleaning supplies, and first aid kids. With the current pandemic, don’t be lured into driving up costs for these in-demand goods – Amazon has slapped many with price gouging suspensions.

• Offer affordable entertainment and learning opportunities. At-home learning items like jigsaw puzzles and board games have been top sellers on Amazon in the last month. More kids are learning and gaming at home. 

• DIY, gardening, gaming, home gym equipment, arts & crafts = everything that people can do while they are at home. That being said, when you list products in these categories you’ll be catering to the new “COVID-19 at-home trends” and may be able to power through this pandemic and hard economic time. 

Ways to Power Through This Recession

Although, you may feel the urge to huddle up and ride out this economic storm, it’s prime time to take some action, make some changes to your Amazon product line, and let the sales slowly follow. 

If you need help streamlining your Amazon business and want to intelligently manage your inventory and restock in these times, the SellerMobile team is available to guide you through the process. It’s more important than ever, to manage your cash flow, prevent over-purchasing, and plan around your suppliers’ new lead times!

About SellerMobile

SellerMobile is an advanced cloud-based software solution, created to help Amazon merchants gain a more competitive edge in the marketplace. They offer a full suite of mobile and web-based tools and analytics. Their tools include: automated pricing; inventory and order management; analytics and reporting; buyer/seller messaging; feedback and reviews and more.

Vendors are getting ripped off by Amazon at the warehouse level

 

How many millions does Amazon owe to its 1P vendors, and why won’t they pay out?

For years, I’ve heard horror stories from Amazon third-party sellers about inventory lost, damaged or destroyed by Amazon fulfillment centers (FCs). But just when I thought these tales couldn’t get any worse, we started getting calls that 1P vendors are getting ripped off by Amazon at the warehouse level. Amazon owes them hundreds of thousands of dollars, and the e-commerce giant won’t pay up.

How common is this? Probably more common than most people would imagine, since the cases just keep coming in to Riverbend, where we specialize in helping sellers and vendors deal with Amazon problems.

Check out these recent scenarios:

• A snack food vendor shipped product to an Amazon FC. Amazon then put about $40,000 worth of the product on a truck to send to another warehouse. The truck was involved in an accident, and the product was destroyed. The carrier (hired by Amazon) filed a claim with its insurance company, and the vendor was told to expect a resolution and reimbursement in three to five business days. Six months later, no money had come. The vendor hired Riverbend, and after an executive escalation, the vendor finally got their payment from Amazon.
• A long-time Amazon vendor of beauty products had many, many shipments that were not received in a timely manner at the Amazon FC. They filed claim after claim, and Amazon eventually “found” the inventory and paid the vendor for the items. But, even for payments made after two, three or more months, Amazon automatically deducted a quick-pay discount of 2 percent. This discount should not have been taken unless the invoice was paid in less than 30 days. The fraudulent discounts added up to over $300,000. The vendor hired Riverbend and asked us to go after the most recent two years of fraudulent discounts. After multiple executive escalations, we helped them shake $76,000 out of Amazon. Now, we are going after the balance.

We are currently working on more of these appeals, for companies whose inventory was delivered at the FCs but never received. Amazon refuses to pay up, saying they don’t have the items. Yet approved carriers show a signature at the Amazon dock.

These stories bring up many questions:

1. Why is there no easy way for vendors to get paid when out-of-process exceptions happen? It seems like there should be some simple methods for vendors to follow, such as reaching out to the Vendor Support team or Accounts Payable. But these emails get no results. Instead, the vendor is told their items is being “researched” by the “appropriate team” – sometimes for months or even years!
2. Why does it take Accounts Payable so long to research, respond to and reimburse these issues – which are often quite simple? When a truck crashes and food items are destroyed, clearly the vendor should be paid. There’s no two ways about it.
3. What kind of (bad) incentives are in place to encourage this kind of terrible behavior by Amazon team members on behalf of their employers? Amazon’s vendors are – in many times – small businesses. They cannot afford to be ripped off, or even to have payments delayed for months at a time. Yet Amazon FCs feel justified in delaying receipt of goods to positively impact their numbers and slow payments. Amazon Accounts Payable has no problem holding funds – indefinitely – that do not belong to them. In fact, they have no problem wrongly taking millions in discounts – and refusing to reimburse them.
4. When Amazon is being watched by the Federal Trade Commission, why would they allow such blatant fraud, abuse, and breach of contract to occur on a regular basis?

If your Vendor account has been stiffed by Amazon, or you have missing 3P inventory that Amazon won’t reimburse, please reach out to our team. We can help.