COVID-19: Working with Amazon as priorities change - Kantar Consulting
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COVID-19: Working with Amazon as priorities change
COVID-19 has had an unprecedented Amazon has a huge range of grocery
impact on retail globally and will solutions including Fresh, Pantry and
undoubtedly continue to do so in the Prime Now serving a multitude of shopper
short-to-medium term. In the UK, as missions. Some of the top performing
in many countries worldwide, shoppers categories for Amazon grocery are home
are increasingly more housebound and cupboard essentials, snacks, alcohol and
looking to digital commerce players to cleaning products.
fulfil daily needs for food, medication and
entertainment. Alongside this, the retail giant released a
statement saying it plans to hire 100,000
Amazon, with its global network and new full and part-time employees across
‘unlimited store’ capabilities is now reaping its fulfilment centres and delivery networks
the rewards of being the ‘everything to meet the spike in demand driven by
store’ and a single retail platform where COVID-19 panic buying. Amazon also
consumers can shop a wide range of revealed it would invest over USD350
categories and solutions. It’s too early to million to increase pay for employees
see the uplift data for shopping on Amazon involved in the supply chain and those
Europe, but reports from the retailer itself making home deliveries.
tell a sure story of consumer demand;
so much so it is now seeking to prioritise
certain categories for purchase.
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Amazon’s response
“quickly receive,
On 17 March Amazon announced it would have instead been urged to find alternative
be restricting inbound shipments into its arrangements for warehousing and
fulfilment centres in a direct response to shipping provisions.
the outbreak. As sales of household items
Categories now considered high priority
and medical supplies spike, Amazon has
contacted selling partners directly to help by Amazon include baby products, pet
food, disinfecting wipes, medical supplies
restock, and ship
manage supply chains and prioritise goods
for over-stretched warehouses. and various household goods, including
personal care and groceries. these products
to customers.
In an email on 15 March, Amazon asked
sellers of non-essential categories Amazon said in a statement it is prioritising
that would usually use the Fulfilled By these categories in order to “quickly
Amazon (FBA) business model, instead receive, restock, and ship these products to
use alternative shipping options. The customers”. It added that “we understand
new policy, covering the US, Europe and this is a change for our selling partners
UK, will remain in place until the 5 April, and appreciate their understanding as we
and covers non-essential items such as temporarily prioritise these products for
fashion items, gadgets and accessories customers”.
and furniture, which will no longer be
accepted at Fulfilment Centres. Suppliers
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Fulfilment by Amazon
From today until 5 April* only products This poses a problem for brands with
Amazon determines to be essential will be products not considered essential by
accepted into Amazon’s Fulfilment Centres Amazon. At a time of increasing online
(FCs) (existing stock can continue to be shopping it is more important than ever
sold as usual). These changes impact to have products available on-site for
both Vendors, and Fulfilled By Amazon shoppers to browse and purchase.
(FBA) sellers, commonly known as 2P, who
use Amazon FCs to hold stock and fulfil
shopper orders.
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So, what should brand suppliers do about it?
Ultimately it boils down to reviewing Route and customer order management all need However, before diving into either
to Consumer options. With Amazon’s to be mastered and that’s forgetting the option it is important to consider:
inbound supply chain limited, the obvious last-mile delivery solutions that need to 1) What are the key logistical
next step is to review alternative solutions be implemented. However, getting it right differences between each fulfilment
to maintain online availability and continue during the current uplift in online demand model (both in terms of supply
fulfilling orders to shoppers. could pay dividends. chain and account management)?
And can each be achieved quickly,
One option may be to consider switching Alternatively, some vendors may be successfully, and in a way that makes
to a Merchant Fulfilled Network (MFN) able to maintain their Vendor Central the business case financially viable?
Seller account (in which brands handle business despite the recent restrictions. For 2) What are the downstream
fulfilment to the consumer). For those example, onboarding onto existing Amazon impacts on the wider channel
that have not previously ventured into the programmes can allow vendors to bypass and on relationships with existing
Amazon marketplace, taking ownership of Amazon FCs and ship directly to customers. distribution partners?
a seller account can be no small task. Seller 3) Amazon will want to return to
Central, product pricing, customer service business as usual, so suppliers need
to be agile enough to make the
necessary changes reversable, should
they wish to do so
Whichever approach is taken, these
questions each need to be answered
before any action is taken.
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Kantar’s Point of View:
• Amazon always prioritises shopper • Businesses need to respond quickly
experience. One could argue the shift in to consumer demand. Amazon will
strategy is an example of Amazon being be looking into new ways to manage
consumer-centric. Others more sceptical disruption and demand, and brand
might present a case for Amazon suppliers will be expected to be agile and
rallying behind an opportunity to sell responsive. Temporary range reviews
products that would not be as frequently to delist the long tail may be a relief
purchased. Either way, Amazon’s ability to to inventory management, especially
be agile in this way proves that it is once given volatility in other channels. Now
again both rewarding and challenging to more than ever proves the need for
work with as a retail partner. brands and businesses to engage in
• Shoppers are looking to digital fulfilment agile supply chains and ways of working.
during this time of uncertainty, for Sales, marketing and supply chain
products and services. Prioritising these operations need to work together to find
categories is key to more than retail quick solutions catered to the needs of
sustainability, but also household health consumers.
and happiness. But there is a cost. Those • Amazon will be following shifts: Both
suppliers who do not fit into the crisis Amazon and grocery suppliers will be
categories are equally looking to Amazon closely following the shifts in shopper
to provide a digital platform for goods behaviour under self-isolation and social
that they are currently unable to meet. distancing as the new lifestyle becomes
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Kantar’s Point of View:
a temporary norm for the coming weeks redirection may result in more disruption
and perhaps even longer. than benefit.
• Prime will be key to delivering valuable • Brands should expect similar measures in
services: Amazon will continue to deliver other markets and channels, too: As the
additional benefits and better service situation develops across the world, other
levels to Prime members to maintain its markets, not only in the US and UK, will
loyal member base. Prime’s fulfilment come under review. Category prioritisation
promise will be put to test, especially will be under review by Amazon, which
for 1-hour delivery of emergency items, may be relaxed or even become stricter
whether hygiene products or OTC drugs. over time as the situation develops, and
• For non-priority categories: There will be other channels and retailers are likely to
a race to redirect some of the planned follow suit as demand shifts.
inventory to either other online platforms, The Digital Commerce Practice of
or to other channels. There will be a Kantar offers senior-level strategic
need for short-medium-long-term guidance through scenario planning and
scenario planning to assess the impact management consulting. If you would like to
of Amazon’s current decision. However, learn more about how to work with Amazon
assuming that Amazon will be doing or new ways to strategize during the
its best to go back to business as usual COVID-19 outbreak, reach out to our team
as soon as possible, drastic inventory to understand our practice capabilities.
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Get in touch:
Harriet Leach James Spiers
Digital Commerce Practice Principal Consultant –
Harriet.Leach@Kantar.com Digital Commerce Practice
James.Spiers@Kantar.com
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