Archive for August, 2020

New Amazon SFP Rules Coming in 2021

New Amazon SFP Rules Coming in 2021

Amazon recently announced changes to its Seller Fulfilled Prime (SFP) program, which allows Fulfilled by Merchant (FBM) sellers to ship items directly to domestic Prime customers from their own warehouse or a 3rd party logistics provider. By contrast, Fulfilled by Amazon (FBA) sellers pay the retail giant to store, package, and ship orders – guaranteeing them access to Prime customers. Launched in 2015, SFP is designed to provide three key benefits to sellers who prefer to use their own fulfillment methods:

  1. Reach the most loyal Amazon customers. With Seller Fulfilled Prime, you can offer your products to a wider network. Prime members will be able to easily find your products as they use Amazon on-site filters, giving your ASINs more visibility and discoverability.
  2. Compete more effectively for the Buy Box. Products listed with Seller Fulfilled Prime have increased chances to win the Buy Box. Winning the Buy Box means that when customers click on “Add to Basket”, their default option is to buy the product from you.
  3. Offer guaranteed delivery date messaging. Seller Fulfilled Prime orders display FREE Two-Day Delivery messaging to Prime customers, making them more likely to make multiple and repeat purchases.

Changes to Amazon SFP Effective February 1, 2021

In August, Amazon announced stricter delivery requirements for SFP sellers. In an email to sellers, the company wrote: “Prime members consistently tell us they want free and fast shipping. This is why Amazon is making significant investments in our fulfillment and transportation capabilities to make prime faster, transitioning from a 2-day to a 1-day delivery program. As we continue to improve the Amazon Prime experience for customers, we want to ensure SFP meets customers’ expectations of Prime.” The following SFP changes will take effect February 1, 2021:

  1. SFP sellers will be required to use shipping methods that support Saturday delivery and pick-ups to provide customers with a more consistent delivery experience throughout the week.
  2. Sellers will be required to meet targets for one-day and two-day delivery promises. These delivery promise metrics measure the percentage of customer page views that displayed a one or two-day delivery promise when your SFP offer was the featured offer, regardless of whether a purchase was made. The delivery speed targets ensure that customers have a consistent experience regardless of who fulfills their Prime order.
  3. To help you meet the targets for one-day and two-day delivery promises, Amazon is launching a new dashboard that measures the quoted delivery speed of your SFP offers. This dashboard monitors two new metrics: Percent of One-Day or less Detail Page Views and Percent of Two-Day or less Detail Page Views.
  4. SFP sellers will be required to have nationwide delivery coverage for all standard size delivery products. You can see which of your products are standard size or oversize on the Manage SFP page.

Why Sellers Need the Amazon Prime Badge

While the new changes will affect only a portion of Amazon sellers (the SFP program is not currently accepting new registrations), they underscore the importance of securing the Prime badge. For the customer, this means quick deliveries among other perks. Depending on where you live, Prime members are eligible for free two-day, one-day, and even same-day delivery for millions of items.

From a seller’s point of view, the Prime badge means access to the buying power of 150 million Prime members. This opens the door to exponential sales growth. A report from Forbes revealed the following statistics highlighting the purchasing power of Prime members:

  • 46% of Prime subscribers make weekly purchases, versus only 13% of non-Prime members
  • More than half (51%) of US households will be subscribed to Prime in 2020, an increase from the 45% last year
  • 70% of Americans with incomes of $150,000 or more who shop online have Amazon Prime memberships
  • Prime buyers tend to spend up to 4.6 times more than their non-Prime counterparts

Final Thoughts

Meeting the new SFP delivery requirements will likely be challenging for many sellers. Some analysts have argued that these changes are an attempt by Amazon to transition SFP sellers to utilize FBA services, which require additional fees and generate more revenue for the retail giant. Others argue that the SFP changes are simply designed to uphold delivery standards for Amazon Prime. Either way, it’s paramount that you retain your Prime badge in order to stay competitive on the platform. While these new requirements don’t take effect until next year, Channel Key advises all SFP sellers to begin making the necessary changes that will enable you to meet Amazon’s new shipping standards. To learn more about customizing a strategic plan that will help you keep your Prime badge as an SFP seller in 2021, contact us today for a free consultation.

REFERENCES:

www.cnbc.com/2020/08/18/amazon-pushes-sellers-to-meet-prime-delivery-guarantees.html

www.amazon.com/primeinsider/about

www.repricerexpress.com/amazon-statistics/

U.S. Pet Market Outlook 2020-2021

U.S. Pet Market Outlook 2020-2021

Online Sales of Pet Products Soar During COVID-19

Sellers of online pet products have reason to be optimistic. While many industries have taken a hit during the pandemic, the pet product market appears to be recession resistant. According to the American Pet Products Association, retail pet supply sales in the U.S are expected to reach $99 billion in 2020, up from $95.7 billion in 2019.

Many analysts attribute this to a surge in pet adoptions during the initial lockdown period after the outbreak of COVID-19. The American Society for the Prevention of Cruelty to Animals reported a 70% spike in pet adoptions in New York City and Los Angeles this spring, with many other rescue centers experiencing a similar surge of animals entering foster programs.

Despite this good news, pet brands need to adapt to consumer shopping changes to remain competitive. In 2019, the industry saw a 53% increase in e-commerce sales while brick and mortar sales grew by just 0.7%. With COVID-19 forcing consumers to stay at home for much of the year, this shift to online shopping is growing even stronger. Newly released data from eMarketer shows that pet supplies have become the 5th largest purchase category for Amazon Prime members, with 37% of users purchasing a pet product in June 2020 (up from 30% in February).

As a full-service channel management marketplace agency that helps businesses succeed on digital marketplaces like Amazon, Channel Key can confirm that some of our clients are experiencing changes that reflect these market trends. For example, one of our clients provides all-natural treats for dogs. During the initial onset of COVID-19, the number of units sold along with total overall sales increased by more than 30% MoM on Amazon.

The sudden spike created inventory issues for our client as they struggled to keep up with demand. To avoid the risk of running out of stock on these items, Channel Key helped our client pivot their marketing strategy to focus on products that were not bestsellers until inventory for their most popular products could be replenished. Despite challenges in the market due to COVID-19, our client saw a 44.12% total YoY growth in Amazon sales from 2019 to 2020 for the months of January to June, supporting market forecasts that online pet supply sales will continue to rise.

Four Predictions for the Future of Pet Supplies

It’s no secret that COVID-19 is changing the way consumers shop, or that adapting successfully to new market trends is paramount to success. In a time when uncertainty has become the new normal, research is more important than ever in forecasting changes in your industry. While it’s impossible to know what the future holds, the U.S. Pet Industry Spending Figures & Future Outlook offers four key predictions for the pet supply industry:

  • A continued surge in online shopping for pet products as pet owners flock to the internet for home delivery or curbside/parking lot pickup from brick-and-mortar pet stores and veterinarians
  • A sharp uptick on veterinary telehealth services
  • A private-label surge as cash-strapped pet owners face months (if not years) of economic uncertainty and a demand-driven uptick in store-brand production
  • A silver lining of increased dog and cat ownership among households eager for the emotional support and physical comfort of pets

One thing is certain: e-commerce marketplaces like Amazon are becoming increasingly important for brands in the COVID-19 era. The pet supplies market is just one example where the growth in online sales shows no sign of slowing, but there are many more. As a proven channel management marketplace agency, Channel Key pays close attention to market research and consumer trends in order to help our clients adapt successfully. To learn more about the latest market data in your specific industry, contact us today for a free consultation.

 


REFERENCES:

https://www.businesswire.com/news/home/20200409005391/en/U.S.-Pet-Market-Outlook-2020-2021–

https://www.americanpetproducts.org/press_industrytrends.asp

https://www.forbes.com/sites/richardkestenbaum/2020/06/22/change-is-coming-to-the-way-pet-products-are-sold-amazon-chewy/#91eb0fc72768

https://www.cnbc.com/2020/04/11/coronavirus-increased-pet-adoptions-now-rescuers-face-new-challenges.html

https://www.petfoodindustry.com/articles/8228-e-commerce-a-growing-pet-product-purchasing-channel?v=preview

https://www.emarketer.com/chart/237359/which-product-categories-have-us-amazon-prime-members-purchased-digitally-past-month-of-respondents-feb-april-june-2020?li=1

Channel Key Transitions to a Fully Remote Company

Channel Key Transitions to a Fully Remote Company

With COVID-19 Redefining The Role Of E-commerce, Channel Key Turns Pandemic Challenges Into An Opportunity To Lead By Example

Channel Key, LLC is excited to announce that we have transitioned to a fully remote company. Our channel management marketplace agency employs e-commerce professionals from around the U.S. and has established an offshore support team in the Philippines.

Channel Key began piloting remote work options in 2019, allowing employees to work from home two days a week. In March, we were forced to close our offices to comply with a state-wide lockdown in response to COVID-19.

“We’d been discussing the benefits and logistics of working remotely for some time,” said Dan Brownsher, President, CEO, and Co-Founder of Channel Key. “The pandemic accelerated this discussion. Instead of viewing the Nevada stay-at-home order as a setback, we decided to turn it into an opportunity to improve the company.”

The Channel Key leadership team established a remote infrastructure and developed new company policies designed to not only facilitate a seamless transition, but also improve internal communication, strengthen company culture and values, and ultimately provide better service for clients. The company utilizes Microsoft Teams, SharePoint, Office 365 and other cloud services to support our new remote protocols, which include structured daily and weekly virtual meetings to ensure transparency and coordination among employees who now work in various time zones.

As a fully remote company, Channel Key has expanded our talent pool to recruit the most skilled and experienced e-commerce professionals from around the world. In July, the company hired a new Chief Operating Officer, Ryan Rollo, along with a Marketing Coordinator, Corporate Marketing Content Manager, and Assistant Strategic Brand Manager.

“COVID-19 has redefined the role of e-commerce,” said Brownsher. “To succeed, businesses need to adapt to a changing world, and that includes Channel Key. As an e-commerce agency, it’s imperative that we lead by example to help brands anticipate and identify new shifts in consumer trends, as well as develop effective strategies to help them adapt successfully in a COVID era.”

 About Channel Key

Channel Key is a full-service channel management marketplace consulting agency that works with leading retail brands from around the world. Complete 360-degree services include marketplace strategies, content development, marketing and advertising, catalog management, marketplace and fulfillment setup, ongoing consulting, and more. For additional information, contact us today for a free consultation.

An Important Amazon FBA Deadline

An Important Amazon FBA Deadline

Understanding the Inventory Performance Index Evaluation Period

Summer is winding down, which is good news for many businesses. With COVID-19 accelerating online shopping, Amazon Prime Day (slated for October) and the 2020 holiday season are on path to generate record e-commerce sales. However, a successful Q4 on the world’s largest online marketplace is largely contingent upon another event that will arrive much sooner: Amazon’s Inventory Performance Index (IPI) evaluation period.

Amazon IPI Overview

For a quick overview, every FBA seller on Amazon has an IPI rating of 0 to 1000. Amazon calculates your score based on how well you maintain inventory levels, fix listing problems, and drive sales. Essentially, Amazon wants your items in their warehouses to sell quickly. To incentivize businesses to better manage their inventory, Amazon penalizes those with low IPI ratings with storage restrictions and higher fees. You can imagine how this can complicate sales during the holiday season. Until recently, the IPI threshold to avoid penalties was 400, but with Amazon experiencing record demand, they’ve increased the threshold to 500.

Amazon IPI Evaluation Metrics

The good news is you have control over your IPI score. The bad news is there’s a deadline for meeting the 500 threshold in time for the holiday season. To avoid potential storage limits and higher fees for Q4 2020, you need an IPI score of 500 or above by mid-August (if you miss this deadline, keep reading to learn the next step to take).

Amazon uses four primary metrics to calculate your IPI score: 1) excess inventory, 2) sell-through rate, 3) stranded inventory, and 4) in-stock inventory. Remember, Amazon is in the fulfillment business; not the storage business. The more efficiently you occupy space in their warehouses and the quicker your items sell, the higher your IPI score.

Channel Key conducts frequent IPI reviews for our clients and provides recommendations for adjustments to help brands maintain and/or improve their score. These can include strategic edits to existing product listings, keyword optimization adjustments, updating product settings, Sponsored Ad campaigns, price modifications, inventory management tactics, removal orders, and more. The following graph details actual Q2 IPI score changes for Channel Key Clients in four Amazon categories:

Amazon FBA Protocol Changes

One of the most important components to maintaining a healthy IPI score is remaining up to date about Amazon protocols, which are constantly changing – especially in a COVID-19 era. Channel Key closely monitors Amazon policies to ensure our clients are meeting the latest requirements. For example, Amazon recently introduced ASIN quantity limits for items in FBA. This means if you have products with an ASIN storage limit, it’s a sign that Amazon doesn’t think these items will sell quickly. This hurts your IPI score. You might consider promoting these products to encourage sales or removing them from FBA and replacing them with products that sell faster.

Fortunately, Amazon is currently waiving removal fees as an incentive to create room for more productive inventory, which in turn helps you avoid storage fees. Sellers can view quantity limits for their products on the Restock Inventory page and the Restock Report in their Seller Central account. You can read the entire Amazon announcement on its new FBA quantity limits via the button below.

Prime Day and the holiday season are the two most important events for Amazon sellers. In 2019, Prime Day generated an estimated $7.16 billion in sales, while the holiday season topped $72 billion. With the rise in e-commerce due to COVID-19, this season is expected to be even more lucrative for sellers providing they avoid potential setbacks like storage limit penalties. For this reason, meeting the new IPI thresholds will help maximize your sales performance on Amazon in Q4. If you miss the deadline, don’t panic – Channel Key has developed calculated strategies for this predicament that will better position your business for holiday success. To learn more about them, contact us today for a free consultation.


REFERENCES

https://www.digitalcommerce360.com/article/amazon-prime-day-data/

https://www.theverge.com/2019/1/31/18205671/amazon-q4-2018-earnings-profits-holidays-black-friday-cyber-monday

https://sellercentral.amazon.com/forums/t/ipi-threshold-change-increased-to-500/660976

Back-To-School Shopping is Changing

Back-To-School Shopping is Changing

Data Highlights the Importance of Adapting to New Market Trends

These days it’s difficult to discuss anything without mentioning COVID-19. The pandemic has added an element of uncertainty to just about every facet of daily life. Case in point: with the fall semester approaching, parents and students are still unsure exactly what the upcoming school year will look like. Many schools, colleges, and universities have announced a tentative mix of e-learning and in-classroom teaching, which has changed the demand for back-to-school supplies. The good news is data shows that suppliers are primed for a successful third and fourth quarter – so long as they make a few calculated adjustments.

The National Retail Federation recently released its Annual 2020 Back-to-School Spending Survey, which examines how American families plan to shop for clothing, supplies, and other items for the new school year. Conducted by Prosper Insights & Analytics, the study revealed that – despite a struggling economy – back-to-school spending is expected to total $33.9 billion, up from $26.2 billion last year and even breaking the 2012 record of $30.3 billion.

2020 Back-to-School Chart

Not only do consumers plan to spend more on back-to-school supplies this year, but where they plan to shop has changed as well. A separate study commissioned by PayPal and conducted by Netfluential found that nearly 75% of college students will buy their school supplies online. Plus, with the likelihood of e-learning and school pods looking more like reality, the most-sought items are also different from previous semesters. According to the study, 59% of parents and college students intend to spend more on remote learning and tech goods than last year, while 81% plan to spend more on personal protective equipment.

As an e-commerce channel management agency that helps businesses succeed on digital marketplaces like Amazon, Channel Key can confirm that some of our clients are experiencing changes that reflect these market trends. For example, one of our clients provides wholesale back-to-school supplies. Their top-selling product on Amazon has suffered a significant drop in traffic and conversions. To supplement this lost revenue, the company shifted its focus to provide safety supplies for students who will be reentering the classroom this fall.

Channel key subsequently adjusted the brand’s marketing and advertising strategy to capture the increase in search traffic for these items. Despite the dip in sales of their most popular products, our client saw an 8% YoY increase in total Amazon sales for July. This is not to suggest that promoting personal protective equipment is a fail-safe approach for back-to-school suppliers in a COVID-19 era, but it does underscore the importance of adapting to a changing market.

One of the best ways to adapt is not only to identify new opportunities to meet demands but also missed opportunities. Utilizing proprietary technology, Channel Key routinely conducts internal studies to identify what shoppers are searching for on the Amazon marketplace. Recently we noticed that a client was experiencing heavy search traffic for several series of educational books. Unfortunately, it was not converting to sales. After a careful analysis, we proposed an aggressive two-pronged strategy designed to better present the value of the books through enhanced content and increase conversions by improving the quality of the search traffic with new Sponsored Ads. After only four weeks, this adjustment increased the June conversion rate for our client’s listings from .95% (with 2,311 sessions) to 1.35% (3,254 sessions), resulting in a 160% MoM sales increase from June to July.

Final Thoughts

 There’s no denying that COVID-19 is changing the way we live. The shift in consumer shopping habits for the 2020-2021 school year is just the latest example. From a business perspective, this isn’t necessarily bad news. Regardless of how long the pandemic lasts, life will continue – just differently. Students still need school supplies, but what they need and how they get them is changing. This trend applies to not only the back-to-school industry but many others as well. As an e-commerce agency, two of the most valuable services Channel Key provides for our clients in these uncertain times is: 1) helping to anticipate and identify new shifts in consumer trends, and 2) developing effective channel management strategies to help brands adapt successfully. To learn more about how Channel Key can help your business lead your specific market, rather than chase it, contact us today for a free consultation.


REFERENCES:

https://nrf.com/insights/holiday-and-seasonal-trends/back-school/back-class-data-center#:~:text=NRF%20has%20been%20conducting%20its,%24789.49%20per%20family%20in%202020.

https://newsroom.paypal-corp.com/back-to-school-is-about-to-look-different

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