September 25, 2020
Holiday 2020: What You Need to Know for Amazon Advertising
Q4 and the holiday season in 2020 will be nothing like we’ve ever seen before, especially when it comes to Amazon and other marketplaces. Half of adults surveyed have said that the pandemic will affect how they’ll shop during the holidays this year, with those changes ranging from doing less shopping in stores to doing more of their shopping earlier in the year. Many more shoppers will be going to buy what they need this holiday season online, and that means they’ll be buying on Amazon and other marketplaces.
Outside of COVID, Amazon’s anticipated Prime Day sometime in October versus July in 2020 has left most brands wondering how this change will affect their Black Friday/Cyber Monday (BFCM) Amazon strategy. Specifically, what does this mean for scheduling inventory you’ll need to have in your warehouse, when it will need to be at Amazon Fulfillment Centers, and whether you need to find a third-party logistics (3PL) company to support?
Our contacts at Amazon have been preparing us for much higher levels of traffic around Prime Day and the holiday sales season, even with the two big sales holidays so close together. We’re looking at another record holiday period on top of a record Prime Day.
And, everything is starting earlier. Our search volume research shows that Amazon is already experiencing 25,000 daily searches for ‘Christmas gifts,’ up from 15,000 for the same period in 2019. This means you must start planning for increased demand now, especially with inventory.
In the next few weeks, Amazon will start reducing the amount of inventory it accepts to accommodate this influx of traffic and customers to their site. If you’re on Vendor Central, you should really anticipate purchase orders to start decreasing in quantity requests around the middle of September, so immediate action is needed to make sure inventory issues now won’t set off a daisy chain of problems that lead to depressed sales during the holidays. Purchase orders should rebound around the middle of October in preparation for BFCM, and any issues with stocking now will impact your ability to sell then.
This comes down to two factors, in-stock rate and inventory age. Amazon wants to maximize sales, so any of your products seeing an in-stock rate lower than 90% will likely see placements slipping below 3rd-party sellers, leading to lower sales directly to you. Amazon also wants to only stock inventory that’s going to sell during Prime Day and BFCM, so any inventory that’s aging in Amazon warehouses will incur much higher long-term storage fees, lowering your margin potential during the biggest sales opportunity you’ve ever had.
Any Amazon retailer, whether Vendor Central or Seller Central, should expect longer lead times for Amazon to check-in product to their fulfillment centers. (Note: One way to get faster check-in from Amazon is to ship LTL. If that’s not an option and you have to ship via other parcel services, try to ship all your products in one shipment versus multiple shipments.) To avoid lower in-stock rates, we advise you to front-load your inventory in the weeks to come for FBA and make sure your on-hand quantity is sufficient to fulfill quantity requests. For the most accurate way to predict how much inventory to send now and prior to BFCM, use the forecasting tool in Vendor Central with the P70 filter to plan stocking and shipments for the quarter. Seller Central will be seeing a forecasting tool like Vendor Central in late 2020!
Because of Amazon’s ongoing logistical challenges in 2020, this needs to be planned now. And, it will be even more critical than ever for Seller Central brands to keep a close eye on their Inventory Performance Index, and to make adjustments now to ensure it reaches and stays above the 500-point threshold in Q4. This will help lower your fulfillment fees starting in October so that you can get the most out of both Prime Day and the holiday shopping period.
Week of September 14th: You should be shooting to ship Prime Day FBA inventory to Amazon this week due to longer processing times at fulfillment centers.
September 18th: Deadline for all Vendor Central promotions for BFCM to be submitted to Amazon for approval.
Week of September 21st: Last week to send in inventory for potential Prime Day week in October. For Vendor Central, this will probably be the last week of large PO’s before the potential Prime Day.
Oct – Dec: Reduced fulfillment rates for FBA if brands reduce their storage at fulfillment centers
October 3rd – October 7th (Canada ONLY): Canada Vendor Central Prime Day coupon dates:
Week of October 12th: Vendor Central Brands should check to make sure they have received their PO’s for BFCM, because this will be the last big week for PO’s
Week of October 26th: You should be shooting to ship BFCM FBA inventory to Amazon this week due to longer processing times at fulfillment centers.
Week of November 2nd: Last week to ship inventory to fulfillment centers to make sure it’s available on BFCM. For Vendor Central, this will probably be the last large PO week until BFCM.
November 5th: BFCM Shipments need to be in Amazon fulfillment centers to have it processed in time to be available during the shopping period
Week of November 23rd: You should be shooting to ship remaining holiday FBA inventory to Amazon this week due to longer processing times at fulfillment centers.
November 30th: Last day to ship holiday inventory for December to fulfillment centers, and last large PO week for Vendor Central brands for the remaining holiday shopping period.
December 2nd: Inventory for remaining holidays in Q4 need to be in fulfillment centers
Week of December 22nd: This is the first week brands can ship inventory for 2021 to Amazon fulfillment centers.
Week of December 29th: Vendor Central brands should expect influx of large PO’s to start being issued for 2021
With the pandemic changing shopper behavior, even Amazon is struggling mightily to react to the changes. Add in a Prime Day that’s later than ever before, and if you’re not careful, you can easily be caught flat-footed with your inventory management, leading to lost sales and lower margins for what’s sure to be the biggest sales opportunity we’ve ever seen. Make sure you have a strong forecast, a day-by-day fulfillment plan, and backup options to keep your holidays a happy occasion. If you want to make sure you don’t miss your goals, reach out to us to help guide you through Q4 and beyond!