A special message from Kristin Stevens, VP, E-commerce:
Over the last several weeks, vendors have been experiencing lower than average order volumes from Amazon. This may have come as a surprise following a stronger-than-expected July Prime Day; however, this is stemming from a strategic push at Amazon.
The top drivers for the decrease in POs appear to be:
- Labor constraints at FCs
- Right-sizing product mix before the holiday
- Reduction of inventory to pre-COVID levels
In addition, Amazon’s July sales trends for brands across the board were positive but took a slight step back in August to be more in-line with expectations as any halo effect from July Prime faded. Despite the slowdown, Amazon appears to be holding, if not gaining market share, as it continues to compete against its top competitors like Walmart and Target. They also continue to be heavily promotional driven. In addition, we also learned last week that Amazon has abandoned their “born to run” program, which helped us launch new items quickly by pushing inventory into the DCs.
How a Hybrid Model Combats the Issue
Many of you have probably heard me preach the value and need for a hybrid model. Unfortunately, this order slowdown is precisely why a blended model is critically important to your total e-commerce strategy. Amazon’s operational issues are dictating your order flow. They get a cold; you get pneumonia. Brands who have a direct shipment component to their Amazon model are not experiencing this order slowdown because they are directly controlling the narrative with the consumer and bypassing FCs.
Highlands’ 4 Suggestions to Help Increase Orders Over the Foreseeable Future
1. Prime Early Access Sale
Take advantage of Prime 2.0, now called ‘Prime Early Access Sale.’ It’s rumored to occur mid-October (most likely around 10/10 or 10/11) This additional buying event will help with excess inventory.
2. Bulk Buy Program
I have never been a fan of Amazon’s bulk buy program. I feel strongly that the orders will come organically, regardless of lower cost. However, in this case, a bulk buy order may incentivize Amazon to increase stock levels on your products prior to the holiday selling season. Please check the portal often for bulk buy opportunities.
3. Increase Marketing
Increase marketing efforts. Creating demand for your products will force Amazon to push orders.
4. Delay Price Increases
Understand that getting price increases approved is becoming more challenging than 6-9 months ago as the retail environment remains more competitive, I would suggest holding off as long as possible.
I hope you find these insights helpful. We are very happy to discuss each of these topics and see if they are appropriate for your business. Please feel free to reach out to me at [email protected] if you have any questions.
