The 2020 selling environment was challenging for many sellers. It’s fair to say most people were relieved when the new year rolled around, business owners included. Economic models were affected dramatically, with booms in some areas and declines in others. It doesn’t take one long to see the lasting effects of a volatile year on numerous enterprises. And of course, one company and its correlated marketplace stand out in particular: Amazon.
By: Jake Rheude, Red Stag Fufillment
Amazon was among the most prominently impacted retailers in 2020, and not in negative ways. The company saw a massive surge in value and orders in a year when most businesses suffered losses. Businesses that sell their products on Amazon benefited from Amazon’s popularity. A rising tide floats all boats, and there are myriad lessons learned that can be applied to 2021.
1. Be Mindful of Amazon's Selling Restrictions
If you’re not a seller on Amazon, you’re probably in the dark about how much red tape is associated with making your products available for purchase via the Amazon Marketplace. These restrictions include everything from FDA regulations to categorically prohibited goods like some art or home decor restrictions. Even further rules and restrictions are tacked on in certain states like California, making matters more complicated. Undoubtedly, 2020 was a year of booming digital commerce, and many would-be sellers had to discover these regulations the hard way through trial and error.
However, 2021 can be a different story, with several resources available for review beyond Amazon itself. An excellent way that many sellers have avoided these issues is by selling their items on more marketplaces to help prevent some of the more stringent restrictions, mainly if it heavily affects their products.
Given that these restrictions and regulations can shift on an annual basis (if not more often), it’s more important than ever for vendors to have as much information as possible on the subject to conduct successful business. Do your research to keep your business out of trouble. A tremendous reliable resource to start with can be found here.
One of the biggest lessons of 2020 was how quickly scarcity could play a significant factor. We are seeing this trend continue in 2021, but we also know that it’s not just product availability that needs to be considered. Shipping restrictions or delays are also a significant part of a vendor’s success when sales reach peak levels during the holiday months. Not having enough supply is devastating, regardless of the reason, and with the unreliability of mass shipping, there is a lot to be cautious about.
Waiting on orders to arrive is just as painful for you as it is for your customers, with every second wasted meaning money lost. As it stands, having enough stock on-hand before the holiday rush is vital, and even despite shipping and supply delays, savvy vendors are finding ways to bolster their inventory.
By locally sourcing products and commissions, placing bulk orders in conjunction with similar businesses, or paying attention to freight trends and ordering early, you can reinforce your chances of better sales numbers before the holidays end. Diversification is key. Don’t get held up by running short on supply at times when demand is highest.
Even though the Christmas season is the most significant influence on holiday sales, purchases don’t just stop there. Economical shoppers have figured out some of the best times to buy specific products after Christmas, resulting in a post-holiday surge of purchases. Toys and winter clothing are big sellers at this time, and fitness equipment is another example of substantial potential sources of sales for any distributing vendors. Purchases and the correlating shipments don’t stop after Christmas, and with the new year looming, they can ramp up quickly despite the conclusion of the holidays.
January is also a peak time for new year purchases year after year, including some of those hot-ticket items that customers may not have been able to get by Christmas. Pay attention to the trends from the last year to see if there’s something you clear room for in your warehouse, as positioning yourself for any potential sales surge is critical.
Sometimes gifts don’t quite work out the way one might intend. Maybe a shirt was the wrong size, or the recipient had other ideas in mind regarding their home design. Whatever the reason, the post-holiday season is filled with millions and millions of returns. Learning how to manage them appropriately can make your business stand out. Have a clearly defined return policy and use inventory management software to track your stock.
Also, be mindful of costs for freight and shipping, having enough room in your warehouse to house the returns. Investing in resources to handle the influx of customer service needs. It is all about covering your bases.
Another important lesson learned in 2020 by many vendors was how best to manage their own business outside the Amazon Marketplace with the massive increase in online ordering. Given the monolithic reach Amazon currently possesses, this task can be a tall order for any aspiring vendor, but it’s not impossible if handled appropriately. If you are making the transition to managing orders on your own, be sure to let all of your existing customers know exactly where to find your store, whether online or at a brick-and-mortar distribution center.
Incentivize customers with clearly established policies, and you can even go a step further by providing discounts or bundles to any customers that buy directly from you rather than through other outlets. Weigh whether the fees of utilizing the Amazon Marketplace are outweighed by the benefits of handling your own fulfillment of orders, then proceed accordingly with the next steps.
Start looking at 3PL (Third Party Logistics) companies that may be able to handle your needs more effectively, and make sure you pick a great one by examining their KPIs. Even though managing your own fulfillment comes with greater complexity, the benefits may be worth the extra resources.
Key Takeaways for Sellers on Amazon
2020 was filled with many valuable lessons and insights into the digital marketplace and arguably the global markets by extension. Things can change quickly in any atmosphere, most notably the holiday season. With change comes opportunity, and by staying on top of trends, policies, restrictions, and the logistics of fulfilling orders, you can position yourself to take the best advantage of any economic climate.
Consider which circumstances best benefit you and your business, whether that’s utilizing Amazon Marketplace, working with a more intimate third-party fulfillment provider, or going it on your own. Cross your T’s and dot your I’s, and be ready for the multifaceted nature of managing your orders with more independence.
Jake Rheude is Vice President of Marketing for Red Stag Fulfillment, an eCommerce fulfillment warehouse born out of eCommerce. He has years of experience in eCommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.