Could excess stock-piling purchases cause long-term issues for Amazon Sellers?
The coronavirus pandemic continues to turn most markets in the world upside down, including those on Amazon.
While many businesses have been decimated or severely affected by the events of recent weeks, certain others have been significant rises in sales, should they be selling items that are being highly sought.
Toilet roll has been the headline-grabbing item on both sides of the planet, with panic-buying leading to a shortage in stocks and subsequent rise in price at many outlets. Worried consumers have been stock-piling many other products, including hand sanitiser and soap, masks and gloves, long-life food like pasta and canned products, creating similar scenarios for those items.
Amazon ran out of some products so quickly, that they had to suspend accepting Amazon FBA shipments for many products to give their operations department breathing space to focus the on high-demand goods that customers are expecting the company to stock.
The dramatic increase in people working from home has also seen office supplies like chairs, desks and even laptops rocket in sales. And with social distancing measures come more and more to the fore in countries everywhere, shoppers are turning to online markets more than ever before.
All of this can be good for some Amazon Sellers- the ones that have decided against “price gouging” and have traded honestly during the pandemic. While other Sellers have seen sales drop to almost nothing in some cases, they have seen a welcome upturn in business at what has been a worrying time for most.
But there can be underlying issues further down the line that could have an adverse effect on Amazon Sellers.
Companies around the world are now reviewing their returns policies amid fears that people who have been hoarding and stock-piling will attempt to send un-used products back at some point. Companies like Costco and Publix have reportedly limited returns at their stores because of this threat.
Could high returns ruin your Amazon business?
So what could this mean for Amazon Sellers in particular? Thompson and Holt managing partner Craig Gedey says that being cautious is advisable in the current climate.
Gedey said: “For some Amazon Sellers these sudden spike in sales appear a real positive in uncertain times. But that uncertainty means we are not sure what lies around the corner for anybody. Unlike a ‘regular’ emergency or crisis - when the public buys products for a few days or weeks to cover a temporary disruption - this coronavirus pandemic has no definitive end date.
“The longer the crisis continues, the more acute the problem becomes as more everybody finds themselves with new financial dilemmas. A consumer may rather return a product for even a partial refund while their financial situation changes.
“Being both cautious and fully aware of your returns policy is advisable in this situation. It may be that Amazon amends its own returns policy at some point during this pandemic, but that is not something anybody can guarantee at this stage.
“At Thompson and Holt our advice would be for Amazon Sellers to be cautious before using the proceeds from any major increases in sales, keeping cash on hand to deal with the possibility of higher returns.
“Products vary of course - office items are less likely to be returned than the super high-demand categories we have seen across the media. But what looks like huge opportunities this week may have changed by next week, so make financial sound decisions that don’t put your business at risk if the marketplace changes dramatically again.
“Err on the side of caution when forecasting for the next month, keep cash reserves in place if you fear returns may increase and try and maintain a long-term view of your business even if the rapidly-changing marketplaces make it tempting to ignore that.”
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