9 Top Tips on How to Be Proactive for Your Amazon Business Facing the Coronavirus (COVID-19)
by Isaac Kuhlman
Today, I received an email from a colleague wondering how in the world were things going to turn out when it came to selling on Amazon with FBA during the Coronavirus outbreak, the outlook for sellers and what the ups and downs might look like in the coming months, but most importantly, what are some possible solutions to the challenges that may come about from this international health crisis.
Let me first acknowledge that I am not a financial insider, a medical expert or claiming to be a psychic.
These are just some observations that I have seen so far. On top of this, I have added a little bit of speculation to try to help people understand what some options are for being prepared for what’s still to come in case the situation gets much, much worse, which is likely at this stage.
This is NOT to cause panic. This is to be prepared and to be proactive.
Only negative minded people want to be in “reaction mode” for long periods of time.
Problem solvers want to be in “proactive mode” as much as possible.
This is where I feel especially comfortable. That is, when it comes to solving problems for myself, my family, or my business I can usually find pretty good solutions that limit risk and limit any sort of fall out on a big scale.
This, of course, comes from experience of either seeing others trying something that I also wanted to try and it failing or from testing things and seeing the results for myself.
You can’t get experience without the failures though. Anyone who says otherwise has never tried anything worthwhile.
You learn from failures, and all the experience gained from this and from seeing others’ experiences first hand have made it clear that there is ALWAYS a reasonable solution to every problem in the world.
Let’s first talk about some of the positive things that are coming out of this:
1 – More companies than ever, all over the world, are looking to take care of their employees as much as possible.
This is not to say that ALL companies are doing this. Sure, some of these companies may be doing it to gain public favor, but the point is that they are helping in ways we have never seen en masse before.
2 – People are helping each other again.
People all over the world are looking to help each other, support causes to help affected people, and to risk their own health to provide services such as medical, emergency and even everyday retail workers who are making sure we have access to basic needs during these crazy times.
3 – A lot of people are staying home to keep their family safe which means more family time.
This is probably the best outcome so far as family is incredibly important to make sure everyone is on the same page, happy, healthy, responsible and respectful to each other and to the rest of the world. This means that families can spend time together and be creatively engaged again. While a lot of people will just stick to their screen time, there are so many other families who are coming up with new ways (or bringing back past ways) to connect and grow together.
4 – As far as Amazon goes, a lot of sales are actually MUCH HIGHER than they have been the last few months during the past few days.
It doesn’t take much thought to understand why. People are at home. They are bored. They don’t want to go out and risk spreading the virus. People are preparing for quarantine, and Amazon is an easy way to shop for most people. Sure toilet paper and paper towels and such are still out of stock, but when it comes to products that can provide in-home solutions, these niches are doing extremely well right now.
Categories that are likely to grow over the next few weeks will include (but not limited to): fitness, games (board and video), cleaning products, art supplies, electronics and other media, organizing stuff, planners, learning/education products, and the list goes on.
But the news isn’t all good, obviously. We have a global pandemic that is likely to kill tens of thousands of people in the end.
Now let’s talk about some potential concerns when it comes to the Amazon business:
1 – People will start to ration money as they are going to be out of work with no pay.
This is definitely the case for the majority of U.S. workers anyway. This means that people won’t be able to buy as willingly as they have in the past for things that they WANT as opposed to things that they NEED, which segues into point number 2.
2 – People will buy only the necessities soon.
Let’s face facts. The U.S. has been in a bull market for about 11 years. EVERYONE knew something was going to cause the stock market to fall soon. It wasn’t a matter of “if” but “when,” as the experts say. Therefore, we can expect a recession for at least the foreseeable few months. Will it be a full on depression? Let’s hope not. This leads well into the third point though.
3 – Product opportunity diversity is going to be less abundant in the short run.
There WILL be more online shopping, but the types of products selling well won’t be as diverse for a few months in the near future. The basics will have to be met, and it might take a few months to get people back to a nominal or normative state before they can start spending more freely on things they enjoy versus things they need.
4 – With the sales increasing in the short term during the panic of this crisis, Chinese factories and Freight Forwarders are going to see even more stress put upon their already backlogged infrastructure.
It’s not as if China is free and clear of the Coronavirus (COVID-19) itself, and a lot of restrictions are still in place to limit the spread of the virus. These limitations are going to be hard on manufacturing and importing and exporting goods.
Having said all of this, there are some possible solutions to make sure you can keep proactively looking into GROWING your business and sustaining the viability of your company’s value.
Therefore, I wanted to share with you some ideas that may be of use to you in your Amazon business (which could also apply to other businesses as well).
Proactive solutions to consider:
NOTE: Your FIRST priority is your family and your own health. Once that is taken care of, then you can focus on your business.
1 – Everyone is going to immediately jump in and say, “You need to source from outside of China.”
That may work for some products and niches, but I can say that most other countries (aside from Taiwan and South Korea) have been very hard to find good factories that are reliable with good quality and good prices. Even countries like the United States, Canada, United Kingdom and Germany are hard to find many good manufacturers when it comes to private label products unless it is for cosmetics or health supplements.
So, instead of saying to scour the internet high and low for new countries to look to source from, it is probably not a bad idea to start looking at getting a second or third factory in China, Taiwan, or South Korea (yes, they have lockdowns right now too, but it won’t last forever) as a backup plan if your current factories can’t keep up with the demand.
India is a country most experts will point to, and while there are some products and niches that can be sourced from India, I just personally haven’t seen it be a great source of quality, and it is hard to know what factories are legitimate as India has had a lot of issues with online scams in the past.
If you feel you have a good backup option in India, though, yeah, feel free to get suppliers there. Just keep in mind that India is in the early stages of the Coronavirus (COVID-19) outbreak as well. This could get much worse for them very soon.
2 – Think of how your sales may taper off once the panic buying stops in the next 30-90 days.
You don’t want to order so much stock that you get stuck with it for 9-12 more months. BUT, this also might be a good way to get extra stock for Quarter 4 in early as well. As long as your stock doesn’t arrive in the next few weeks, you should be okay to have stock arrive in May or June and continue to have it in stock if the selling period right now slows down as “early stock” for your Quarter 4 inventory.
3 – Manage your cash flow right now for EXISTING products that you sell more than for launching new products for the most part.
If you haven’t gotten a product live yet, or you are in the middle of getting a new product live, continue as scheduled, but for the next few months focus on what you have and try to maintain that as best you can (as well as grow it). This will cause you to worry less about the challenges that new product launches create and allow you to stay focused for now on what you have.
4 – If your sales have NOT gone up from this period of manic purchasing, then just stay the course and launch products as you have planned for the year and be conscious that you may have to delay things due to supply chain issues.
The only thing that might hinder this is if income has been cut way back or personal financial situation has changed completely. Then, be responsible. Do what you need to do. Don’t risk what you can’t afford to lose.
5 – Work with your suppliers and freight forwarders to try to find the best solutions for your challenges as they arise.
You may have to pay for some air freight here and there to get products into Amazon as quickly as possible. It can hurt profit margins a little, but having no inventory in stock hurts margins much worse.
6 – Use your time at home productively.
I know it’s hard to keep a routine when things have been uprooted, but create a new routine for this period. Focus. Don’t let change cause calamity in your world. Get your Google Calendar out and start blocking off time slots for things you want to get done in the day. Don’t let your day end with you wondering, “How is it dinner time already, and I haven’t even gotten to my computer to do anything today?”
7 – Find “out of the box solutions” when you can…if you know of a way to grow your business that you haven’t had time to install until now, it might be a good time to test out this new idea.
This is the time to be bold in a world market that is afraid to make decisions on ANYTHING. Just make sure you aren’t putting yourself in danger if the idea doesn’t work out. Try new things, but ramp up the reward while keeping the risk limited.
8 – Make sure your business is as lean as you can make it for upcoming challenges with cash flow caused by economic downturn.
This may mean you have to cancel bloated software subscriptions or reduce spending on projects that aren’t vital to keep the company running. If you can “bootstrap” your business now, it will only help in the future as well. We have always preached the “Profit First” mentality from Mike Michalowicz of not going out and spending money to “look the part.” No offices required. No fancy cars required. Get your business running the right way on the things that matter most, and cut the crap out.
9 – If you are new to Amazon but thinking of getting started, you may want to wait 30-90 days to get started.
The data you can gain from products right now will definitely be skewed for reasons mentioned above, and that means you will be basing your business research on models of extraordinary times which can easily set you up for failure. Make sure you do research now and continuously. Don’t just assume it will all work out based on the data you get right now.
I hope you can take this information, use it in your daily life for the next few months, and make sure that you have a safe and healthy home environment as you continue to stay proactive about the world around you.
Don’t let fear cause you to shut down and hide. The world will still march on with or without you. Make sure to move with it or, even better, ahead of it.