2020 Hindsight: Takeaways for Amazon Sellers

2020 was a year like no other. The COVID-19 pandemic disrupted everything from supply chains to daily operations. eCommerce sales surged. Prime Day was delayed until early Q4, kicking off an incredibly busy holiday shopping season for Amazon sellers.

As the saying goes, hindsight is 2020. In this article, we'll take a look at what we can learn from the past year and how you can apply those lessons to your business in the months ahead.

Amazon’s Biggest Q4 Yet

CNN reports that Amazon’s Q4 2020 earnings were up 44% from the same period in 2019; Q4 2020 was also Amazon's first $100 billion quarter. Amazon reported a 38% increase in net sales for the full year.

Amazon shared details about top products and Q4 sales for small and medium businesses (SMBs). Toys and games were incredibly popular, with classic items such as Jenga and Lite-Brite topping Amazon sales charts. More than 1.5 billion toys, home products, electronics, and beauty/personal care items were sold on Amazon during the holiday season.

New in 2020, Amazon promoted a dedicated storefront to encourage shoppers to support small businesses in Q4. Worldwide sales for SMBs increased more than 50% when compared to the same time in 2019. American SMBs sold nearly 1 billion products throughout the 2020 holiday season.

Sales records were shattered, but keeping up with demand wasn't easy. Amazon businesses faced challenges with everything from getting new shipments from suppliers to keeping employees healthy.

How can you use 2020 insights to prepare for the months ahead? Let's explore four key takeaways.

1) Be Prepared for High Volume Sales

Amazon’s annual Prime Day event is incredibly lucrative for Amazon sellers in addition to other retailers who offer sales in conjunction with the event. The date moves every year, but the event had previously only taken place in July, the same month that Amazon was founded. In 2020, Amazon delayed Prime Day until October 13-14.

Prime Day typically breaks sales records on its own in July. Moving it to mid-October resulted in an early start to the seasonal rush that never seemed to slow down. Digital Commerce 360 estimates Amazon’s sales on Prime Day hit $10.40 billion globally in 2020, up from $7.16 billion during the 48-hour event in July 2019.

We analyzed order volume from FeedbackFive to see the top three days for orders in Q4 2020. It’s no surprise that Cyber Monday, Prime Day, and Black Friday topped the list. But it is incredible to see just how much average daily order volume increased during these major shopping events, including a whopping 81% on Cyber Monday!

The takeaway here is to make sure you’re prepared to take advantage of increased search traffic during major shopping events. Excellent listing content, strong account health, plenty of Amazon reviews, and a good advertising strategy can work together to create a strong foundation for your best sales yet.

2) Have a Backup Plan for Fulfillment Challenges

Staying in stock and fulfilling orders on time became even more challenging in 2020. The sudden increase in eCommerce demand combined with logistics challenges for everyone from suppliers to delivery partners made Q2 stressful for many Amazon sellers.

Amazon also had to prioritize essential items, eventually only allowing eligible ASINs to be sent to fulfillment centers for restocking. Amazon sellers who fully or mostly relied on FBA to fulfill orders quickly had to pivot to offer merchant fulfillment. Sellers who already fulfilled their orders with a mix of FBA and merchant fulfillment were much better positioned to continue selling products despite FBA receiving delays and inventory restrictions.

Although FBA’s abilities were certainly tested last year, it remained the most effective way to ensure that orders were delivered to customers as promised. As holiday shopping demand increased alongside the additional demand for household items due to the pandemic, the USPS, UPS, FedEx, and other delivery partners were overwhelmed.

Shoppers were instructed to order gifts even earlier than usual to make sure they arrived by Christmas. As gatherings and holiday travel were reduced due to the pandemic, many shoppers turned to Amazon to deliver gifts, since it was one of the only ways to guarantee delivery in time for Christmas holiday.

Sellers found themselves relying on Amazon’s FBA services once again to get orders to customers. When the post office and delivery companies had their most significant delays, Amazon was able to step in with last mile deliveries. Ultimately, sellers who were able to keep inventory in stock at Amazon fulfillment centers could capitalize on last minute sales due to Amazon’s “arrives before Christmas” label, which allowed buyers to filter for items that were available for fast fulfillment.

The lesson here? When it comes to fulfilling orders, you should have at least one backup plan. Amazon FBA is an incredible tool for sellers but being prepared to merchant fulfill orders if needed can protect your bottom line during times with unexpectedly high demand. Q2 is typically a slower time for most third-party sellers, but 2020 showed us just how quickly demand can change.

On the flip side, Amazon FBA still has the best delivery logistics system available. Getting inventory into the fulfillment centers and staying in stock should remain a top priority if you use FBA.

3) Ask for Customer Reviews

When it comes to Amazon reviews, it’s important to have recent and relevant reviews. Customer reviews provide “word of mouth” style social proof for your products. Shoppers often rely on these experiences shared by previous buyers when making a purchasing decision. Requesting reviews regularly is critical to the continued growth of your Amazon business.

Amazon allows you to request reviews and/or feedback. There are three main ways to do this: through Buyer-Seller Messaging, with the Request a Review button, or through an API. The first two options are time-consuming and unfortunately, you’re not going to get a review for every request sent. The easiest way to request reviews and feedback on an ongoing basis is to automate your requests through an API.

Software like FeedbackFive does this for you so you don’t have to worry about developing and maintaining your own solution. With FeedbackFive, you can send customized requests through Buyer-Seller Messaging or schedule automation for the Request a Review messaging system. Buyer-Seller Messaging allows you to tailor your message to the product, but it is riskier. You need to be aware of Amazon’s product review policies and Communication Guidelines. Violating any of these can lead to messaging restrictions or even account suspension.

The Request a Review message is sent by Amazon on your behalf, so it is always going to be completely compliant with Amazon policies. There’s no risk for user error and setting it up is simple. FeedbackFive gives you the ability to schedule when these requests are triggered and segment your requests in a way that makes sense for your business. You can also exclude orders, see the success of your requests, and much more.

Of course, you can also click the Request a Review button on the Order Details page in Seller Central. However, this quickly becomes both tedious and time-consuming. Amazon review automation software does this on your behalf. You can also set up monitoring to receive text or email alerts based on the type of rating you want to be notified of. FeedbackFive even allows you to export your reviews into a CSV or filter them within the tool to quickly see trends.

4) Learn from Amazon Reviews

Reviews provide undiluted information about how customers perceive your products and the value they provide. In addition to requesting reviews, you also need to have a process for monitoring the reviews you have received.

Customers often make great suggestions for product improvements in reviews. You may discover a gap in the market that leads to your next product idea based on customer insights. You should also monitor mentions of quality in your reviews. If you start noticing a negative trend, dig in and find out what’s going on. Maybe you need to call your supplier because that change in packaging is resulting in broken pieces by the time the item is delivered to the buyer.

Amazon recently removed the ability for sellers to comment on negative reviews. Unfortunately, this leaves sellers with few options for managing negative reviews.

However, if you believe a review violates Amazon’s Community Guidelines, you can report the review to Amazon. It may be removed if it includes personal identifiable information, profane language, or other language that violates Amazon’s policies.

You can answer any questions posed by customers on the Questions and Answers section of the product detail page. Remember that having quality images and listing content can really make a difference for shoppers. By setting realistic expectations of your product in your listing content and photos, you can avoid accidentally misleading customers, which could result in negative ratings.

Bonus: Q4 2020 Review Trends

You’re probably wondering how the increase in order volume translated into product reviews throughout the holiday season. Throughout the season, FeedbackFive customers received more reviews in the week or so following high-volume shopping days.

As expected, reviews dropped a bit during the week of Thanksgiving, and we saw an increase in reviews received the following week. The biggest week for reviews was the first week of 2021, about a week after the Christmas holiday.

Since there were fewer gatherings during the 2020 holiday season, ordering gifts online to be delivered directly to the recipient was easier for many shoppers than buying an item and shipping it themselves. In an informal poll, several friends told me that they left reviews for products after gift recipients reached out to express appreciation for their presents. I suspect an increase in these types of interactions contributed positively to the review rate, especially when combined with a well-timed review request in a shopper’s inbox.

What’s Next?

The COVID-19 pandemic rapidly accelerated eCommerce adoption. McKinsey reports a ~20-40% growth in the number of consumers who purchase online for most categories. It’s hard to say how things will change in the next several months. However, if there’s any universal lesson we can learn from 2020, it’s this: reacting to the unknown with flexibility and agility is paramount to your continued success.