By Greg Mercer, founder and CEO of Jungle Scout, the leading all-in-one platform for selling on Amazon.
We’re nearly two years out from the start of a pandemic that’s rocked supply chains and has the world in flux. While Covid-19 continues to affect nearly every corner of the globe, some industries have experienced staggering growth — like e-commerce.
I’m the founder and CEO of a platform to help entrepreneurs build, scale and manage their businesses on Amazon. As a seller myself, I know e-commerce success comes with plenty of curveballs, like navigating supplier hiccups, managing inventory and combatting hijackers.
These past couple of years, sellers also had to figure out how to make their businesses work during an unstable time: That meant reevaluating supply, product demand and consumer trends. I took a look at what sellers did on Amazon to pivot and thrive amid new challenges and standards. Here are some successful strategies that entrepreneurs employed.
Switching Fulfillment Methods
One of the perks of the FBA (Fulfillment by Amazon) method is that Amazon handles all the logistics for you — like storing inventory, packing orders and shipping. But an unpredictable global supply chain meant that some sellers needed to take matters into their own hands (literally).
Back in the middle of 2020, Amazon announced that it was changing its FBA inventory policy to mitigate strains on supply chains: Sellers were limited to storing just 200 units of a product at a time in Amazon warehouses. This followed a previous announcement in March of 2020, where Amazon enacted a freeze on non-essential product shipments for third-party sellers. While these policies have since been lifted — the non-essential freeze in April of 2020, and the inventory limit more recently — they created significant obstacles for sellers using FBA.
I always advocate for someone to do the heavy lifting for you, but that wasn’t a viable option for sellers. Some switched fulfillment methods to combat these storage issues and shipping delays and had to teach themselves how to manage and ship everything, a method known as FBM (Fulfillment by Merchant).
According to my company’s 2021 State of the Amazon Seller report (registration required), 43% of Amazon sellers said they use FBM all or some of the time, compared to 34% from the previous year — an increase likely due to limitations of Amazon’s warehouses during periods of high demand.
Despite dealing with fluctuating supply chains and economic pressures, FBM gave sellers much-needed control over how consumers would receive their products. While I don’t think FBM is a sustainable substitute for FBA-supported products, it has saved some sellers during an unpredictable time.
Embracing New Product Demand
As consumers embraced life in lockdown, essential items like groceries and cleaning supplies began to dominate demand. But what other niches fared well?
Some sellers put seasonal items that centered around travel, events and social gatherings on the backburner to focus on categories gaining popularity: Fitness & Exercise, Garden & Outdoor and Home & Kitchen. These home-centric sectors are still going strong and have experienced a significant lift since the start of the pandemic.
Even without changing products, we found a surprising 44% of sellers on Amazon reported better-than-expected businesses performance in 2020 because of the pandemic.
This boost could be largely attributed to the rise of online shopping and the convenience it offered homebound consumers.
Taking Advantage Of PPC Advertising
With the boom of e-commerce came the rise of another industry: Amazon advertising. In Q2 2021, Amazon reached nearly $8 billion in advertising revenue — up 87% from the same period last year.
Sellers found themselves in a more competitive space as consumers flocked to online avenues to shop, with Amazon taking the cake — a trend that persists in 2021. This is where targeting the right shoppers comes in: With better conversion and more sales comes better rank on Amazon — and, ultimately, greater visibility for your product.
Sellers embraced Amazon pay-per-click (PPC) campaigns to attract ready-to-buy shoppers who used Amazon to browse for essential items and other products. As they should: 63% of consumers start with Amazon when they’re looking for places to shop. Leveraging ad campaigns continues to be an essential step to capture this audience and inspire purchasing.
While these past 20 months proved to be among the most challenging for sellers, they also provided one of the greatest learning opportunities. Resilience and new strategies have helped entrepreneurs successfully pivot and hone their confidence to win on Amazon.