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E-commerce News and Insights | March 24, 2020

Coronavirus News: Business Changes, Challenges & Updates

Shippo Snippets:

  • Amazon is greatly reducing text ads and Google Shopping in a way that’s dovetailing with their temporary shift towards essential items
  • Some e-commerce and multi-channel brands are paying grocery workers and warehouse staff significantly higher wages and offering bonuses
  • In-store fulfillment is becoming more popular, including grocery store curbside service

The Story:

It’s easy to list the challenges connected to the coronavirus—from public health issues to economic challenges, communication issues, supply chain challenges and more. Each of these is quite real. Yet, there are also plenty of emerging opportunities as the way we do business shifts.

How many of these will be temporary and how many will play permanent roles in how we operate remains to be seen. 

Amazon Makes Changes

On March 17, Amazon announced that the shipment of non-essential products would be suspended for a period of time, estimated to be through mid-April. This would allow for more of a focus on shipping grocery items, health and personal care products, pet supplies, baby products and so forth.

This applies to sellers who use the Fulfillment by Amazon program (FBA) to store and deliver products for a fixed fee through the Amazon network. It also applies to vendors who provide products to Amazon, wholesale. [UPDATE: During the week of April 13, Amazon announced that it will start allowing third-party sellers to ship some non-essential items via its FBA program.]

At about the same time, Amazon also significantly cut back on advertising on Google Shopping and through online text ads. That’s logical, since it wouldn’t have made sense to plow money into advertising for products that were temporarily not for sale. In fact, if you take a look, it can be pretty hard to even find an Amazon ad for numerous types of products. They haven’t totally stopped advertising, but their online presence has shifted downward by quite a bit.

The internet giant seemed to start shifting gears late in January, and by March, their absence was clearly more obvious. And, on about March 11, they appear to have turned off text ads in most areas.

Amazon’s focus is now on stocking and delivering items that are in high demand because of COVID-19—and on hiring enough warehouse staff and drivers to get these essential items to their increasing numbers of online shoppers.

So, what does that mean for online businesses, overall? Well, for one thing, if you’re able to stock and ship in-demand items, including ones that are deemed essential, as well as those that can help ease the stress and burden of COVID-19 (think scented candles and soaps, bedding, cozy loungewear, light decor, music, personal electronics and much more), then the advertising space vacated by Amazon may help give your emerging business more visibility and prominent placement in online advertising.

Wages and Bonuses

Speaking of Amazon, they—and companies such as Whole Foods that sell in-demand essentials through online and brick and mortar stores—are struggling to keep up with demand. As more and more people are participating in social distancing, or sheltering in place, many basic needs will have to be met through online purchasing and direct shipping.

One Whole Foods employee was quoted as calling the situation in Chicago as “post-apocalyptic,” adding that employees were crying, even “having panic attacks.” Whole Foods has in turn added an extra $2 per hour to employees’ wages through the end of April. Amazon, meanwhile, is temporarily raising overtime pay for its warehouse workers, who are now receiving double their hourly rate from March 15 through May 9. Wages are also being raised at Amazon by $2 per hour through April 30. Employees of Albertsons, Vons and Pavilions stores will receive an extra $2, as well, for at least a week. Stater Bros. will pay this extra $2 for four weeks—and Target is also boosting pay.

Other stores are paying bonuses. Walmart is giving full-time employees $300 bonuses, with part-time ones receiving $150 apiece. This will total $365 million for the company.

Giant Eagle, Inc., meanwhile, is awarding $10 million in bonuses to employees who are working in their grocery stores and warehouses. Current employees and new ones are eligible for this bonus, retroactive from March 15. This bonus plan will be reviewed on May 2. Grocery chain Trader Joe’s is also planning to pay employees a bonus.

In-Store Grocery Fulfillment

In years past, shopping for groceries online in the US was not a huge trend. This is clearly shifting now, with the question now being how long this might be a trend. In other words, how many people will get into the habit of ordering groceries online and then stick with it?

In the time of COVID-19, grocery stores are going beyond just taking an online order and packaging purchases for customers. They’re also offering curbside service more frequently in cities around the United States—and this service may also become a habit.

While convenient for shoppers, grocery stores have been had to manage inventory differently, take orders in a new way, create new processes, hire new staff to fill positions, and fulfill orders in a different way. Will they find that the new customers this brings—who are hopefully retained—are worth the added steps once shoppers are no longer staying close to home?

Only time will tell. What’s for sure, is that we’ll keep up on the trends for you, and be here to help your online business navigate these challenging times. 

Navigating Shipping, Logistics & Operations During COVID-19 | Webinar

Get insights from a panel of industry experts on how to navigate the challenges of COVID-19 on shipping, supply chain and general e-commerce business operations. Check out our recent webinar, now available on Shippo’s Youtube page.

 

As you find business opportunities in these challenging times, Shippo can help mange it with shipping and logistics solutions. 

Kelly Boyer Sagert is a full-time freelance writer living in the Cleveland area. Her range of expertise spans business, finance, logistics, automotive, e-commerce and more.

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