Real effect of Covid-19 on Amazon
With nowhere else to go, the consumers have shifted their focus to Amazon, making it the top supplier of products during the Covid-19 outbreak.
While some sellers are burdened up with the pressure to meet demands, others struggle to stay in business with shifting buying trends.
Let’s look at the key forces behind this change.
The Story at the Consumer End
The Spike in Demand
The global pandemic’s inception in early 2020 brought about some major buying pattern shifts amongst consumers staying under isolation around the globe.
Even before the pandemic, a whopping 89% of buyers chose Amazon over other companies for shopping and the pandemic has only resulted in increase in demand.
The e-commerce topper has seen a sales surge as high as 26% garnering $75.5 billion in the first quarter itself.
Amazon’s declared Q1 results
The Effect on Coronavirus Related Categories
With hygiene being a prime focus and kids being at home, it is little wonder that wipes, cleaning essentials and snacks showed a huge spike.
People also stocked up on cough and cold medication which were out of stock at offline drug stories and nobody wanted to hit the doctor’s clinic for regular ailments.
With uncertainty over availability of perishables, grains and canned foods were piled up in fridge.
Sales index for Coronavirus related categories
The Best Affected Categories
Certain categories showed the bulk-rush.
The need to bulk-buy is not as much physical as psychological, displaying herd behaviour. The following categories had a logical impact.
- Categories which were largely dominated by offline retailers, came online. It included groceries and household basics
- Categories which will were tagged survival – health and hygiene were bought in bulk
- Categories that meant entertainment – video games, toys and hobbies soared well too
- Categories that were linked to office supplies rose on the back of the new work from home culture
Survival mode on, the trend of bulk-buying is likely to continue until the scare is over.
Top 10 sub-categories in the U.S
The Worst Affected Categories
How did the other categories, especially luxuries get affected?
Clothing, shoes and jewellery were the worst hit Amazon products, with going out becoming impossible. They registered negative growth.
Other outdoor categories like beauty also saw a steep drop. With people losing jobs, consumers were possibly holding on their cash reserves.
Here is a snapshot view:
Category trends in e-commerce – Amazon & Walmart
The good news? All categories are bouncing back, slowly but surely.
The Story at Amazon Seller End
Product Sourcing Hit Hard
The epicentre of coronavirus – China stagnated and shut down factories, leaving majority of Amazon sellers handicapped.
The situation is worse than ever as sellers have to look outside China for product sourcing.
In India as well, we have suppliers and Government looking for alternate sources.
Category wise sourcing choices chart
Amazon Fulfilment Affected
The e-commerce giant had suspended (in March 2020) the shipment of non-essentials products to its FBA (Fulfilment by Amazon) warehouses to meet the current demand of market.
Since May they have resumed non-essentials but the volumes remain low.
With 87% of active Amazon retailers using FBA, the suspension is a big blow.
All sellers can do now is – either sell products on their personal websites or wait for the company to waiver policies and resume sales of the leftover categories.
Amazon’s memo to the retailers
The Bright Side for Amazon Sellers
The demand is online and predictable now. Traditional shoppers have also reached out to ecommerce. If you are a new seller, don’t be late for the party.
Amazon confirmed a spike of 50% in seller registrations in India.
‘Sell on Amazon’ has become a buzzword and a major search keyword in India.
Trend chart for keyword ‘sell on Amazon’ in India
Watch out for new trends
We might see new categories making it back to top positions by the end of the year. Greatest year for Amazon sales or not, only time will tell. Watch this space for more updates.