Many Amazon retailers had to change their strategies. As the percentage of people who shop online has grown due to many stores closing, their ad spends increased. Besides, first and third-party sellers both encountered problems with products out of stock and product supply.
Here are some of the main problems that sellers who advertise on Amazon had to overcome:
First of all, different brands that sell their products on Amazon had a problem with suppliers because many factories have been closed due to a state of emergency which was caused by coronavirus. That resulted with lots of products being out of stock. Since Amazon has the functionality to pause sponsored ad campaigns if promoted items go out of stock, the advertisers could have a piece of mind but the problem of product availability still remained.
Overnight, products categorized as "non-essentials” had significantly longer delivery times which also had an impact on sales. In reality, those items got to customers faster, but that kind of information on the product page led customers to decide to buy items which had shorter delivery time. That’s why sellers had significantly lower conversion rates. This happened because people who clicked on their product had cost them money and didn’t place the order when seeing how long they had to wait to get to their wanted product. In short, some brands didn’t sell products which, in normal circumstances, would have been sold.
One of the problems was also the growth of advertising costs since campaigns started to catch a lot of different search terms that advertisers didn’t bid on. Terms such as “30 days food supplies”, ”bread”, “medical face masks” were the reason for higher spending on advertising accounts. In response to the crisis, Amazon did restrict bidding on certain kinds of keywords like “face masks”, “hand sanitizer” and “surgical gloves” but this couldn’t stop the customers from searching. Coronavirus has brought a lot of attention to these products which resulted in high search volume and the end in higher advertising costs for sellers.
Some brands made a great profit out of this situation. On one hand they had enough supplies to fulfill market demand and a clear strategy during the pandemic. On the other hand some say that the higher profit was a matter of luck since these brands sell products that were needed more in this specific situation. Either way, these are the main reasons some brands succeeded to manage these problems better:
This depends also on how organized is their supply chain and which type of product they are producing, but it is clear that this is the main factor which can result in higher profit and beating the competition. The sellers who managed to have a shorter delivery time have won this battle since buyers decided to place an order of the product they didn’t have to wait for a month.
In this situation, there was a high demand for products like home fitness equipment, pet supplies or video games, so brands specialized for this kind of item had their sales hit the roof. This was lucky since no one predicted people will be stuck at home in isolation and have a higher need for products like these.
In the future, we can expect that some sellers cut their advertising budgets while they get back on track. Meanwhile, others who have managed to resolve the problem of product supply and fill their warehouse with items will aim to sell as much as they can through paid ads. One thing is sure, brands will have to continue embracing upcoming changes and adapt to any situation that comes their way.
Author: Emilija Kovačević, Content Writer and Social Media Manager at Sellers Alley
Professional team at Sellers Alley is highly committed to providing Amazon PPC services and exclusively tailored advertising campaigns. Our team completely understands the complexity of the Amazon marketplace and the unique challenges that your brand can face in such a competitive environment. That is why our approach to clients is different. We start with a bigger picture in mind, but along the way, we recognize and focus on details that can help us improve and set your product apart.
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