How is FBA Changing in 2021?
January 25, 2021
Almost all businesses have moved online. While this has been true for some time now, the global pandemic and the ensuing lockdowns have resulted in dramatic changes in the way most people shop, with more and more customers buying online. Learning how to close leads online has become an essential skill for most business owners today.
Going by statistics alone, Amazon is the current world leader among e-commerce platforms. Roughly 55% customers first check the price of a product on Amazon.
Not only does Amazon allow you to market to your customers, but through its Fulfillment by Amazon (FBA) service, it also manages storage and delivery logistics for you at a reasonable cut. In 2017, Amazon shipped over 5 billion items worldwide.
The Covid-19 pandemic has been the most unprecedented and unpredictable event in recent human history. For merchants, it has meant learning to adapt and adjust business strategies in the face of a new reality.
To acclimatize to the changing world, the e-Commerce giant adopted a number of far-reaching changes, especially in FBA. Some so severe that they redefined the way countless sellers do business.
Recent Changes to Seller Fulfillment
2020 marks the end of 25 years for the world’s biggest e-commerce giant. The growth Amazon has witnessed in the last decade alone has been the result of their outstanding delivery when it comes to performing all forms of fulfillment services.
Delivery is Amazon’s most integral function. It’s the foundation stone on which their entire business was built. Given the pandemic induced demand-surge, many changes have been implemented to improve the efficiency of the fulfillment part of their services.
Some examples of the recent changes implemented by Amazon include:
- Introduction of live streaming on-site by a qualified host to give buyers virtual tours of new places and connect them to sellers so they can shop from home.
- Sellers with Seller Fulfilled Prime must offer nationwide delivery coverage for all of their standard-sized products.
- New policy on dietary supplements being sold on Amazon, which requires them to have passed certain checks and certifications.
- New and improved brand tools for registered brands, such as sponsored ads, brand stories, Amazon posts, and much more.
- Increased security and stringent action against counterfeiters and unauthorized retailers on the market.
Predictions for the Near Future
From all these changes, we can glean that Amazon is hell-bent on creating more than just a marketplace for buyers and sellers. As we head towards the future, we might start to see Amazon as more of a business utopia with strict rules, which everyone hopes ensures fair play and promotes equality of opportunity.
Given Amazon’s current trajectory, we forecast the following changes to FBA in the not-so-distant future:
Improved Brand Marketing Strategies and Tracking
Amazon has always been a staunch supporter of brand building. It has continuously encouraged sellers to grow their business by private labeling and then establishing a solid reputation for the brands they create.
This effort has been evident in the tools they produced specifically for increasing brand equity across the platform: Video in Sponsored Brands, Over-the-Top (OTT) Video Advertising, Sponsored Brands Custom Image, and Amazon Posts. These avenues are dynamic opportunities for sellers to tell their brand story.
Meanwhile, Amazon introduced New-to-Brand metrics to enable sellers to track the impact of their marketing endeavors on their sales. This tracking metric is not yet available for the aforementioned tools, but we expect it to include those strategies in 2021. It’s perfectly aligned with the company’s commitment to supporting brand building through content marketing.
Storefronts can also expect increased traffic with additional options for self-service advertising, such as targeting new shoppers with Detail Pages and Sponsored Displays. New-to-Category visitors have already been rolled out on DSP, and it’s highly likely that specific categories will follow.
However, storefront metrics like clickpathing, brand following, and page insights should be enhanced with additional customer engagement and store traffic metrics. These will make it easier for brands to target first-time visitors.
Heightened Security and Additional Video Options on Brand Registry
Registered brands currently enjoying the exclusive perks of Brand Stories via A+ Content, a.k.a. Enhanced Brand Content (EBC), will see more improvements in 2021, particularly in being able to add video content.
Currently, the Amazon Live program already offers live streaming exclusively to sellers registered in the Amazon Brand Registry. These video feeds can be viewed on Amazon’s homepage and on their brand’s product listings.
This promotional tool is free to registered sellers. Here, they can demonstrate their products, just like on home TV shopping shows, only better. On Amazon Live, a seller can interact with the audience via live chat.
With regard to security, while registered brands already benefit from Amazon’s protection against enterprising sellers, “gating” remains a hurdle for small brands. Earning the right to gate their own brands is something sellers can look forward to in 2021.
Expansion of Advertising Options
Amazon Advertising is a whole suite of solutions with a wide range catering to all types of sellers across the board. The company keeps on adding to the list while existing ones are periodically upgraded.
Sponsored Brand and DSP ads are projected to be refined with tighter targeting parameters. Based on Amazon’s history of rolling out new advertising features, these will most probably be released in the beta format first.
Amazon Sponsored Brand Ad Example
Sellers who take advantage of the test version will be ahead of the pack when the changes become official. It increases their chances of landing on page one in search results.
In addition, Amazon seems to be exploring the browsing territory, which is currently dominated by Google and Facebook. Amazon Posts, for instance, are already appearing in shopping feeds on the Amazon app and mobile web.
While it’s still in beta format, Amazon Posts already shows promise as an effective tool for capturing organic traffic and increasing brand awareness. It allows sellers to feature a product’s image, logo, text, category, and profile banner with links that redirect to its Amazon product page.
In its relentless pursuit to be present in every advertising medium that technology can offer, Amazon introduced its Over-the-Top (OTT) video advertising in early 2020. These ads are played on Fire TV (also an Amazon device, of course), which tracks audiences’ demographics, behaviors, and interests.
Already, OTT is better than YouTube. Ads are on full screen and viewers don’t have the option to skip them. OTT is expected to add more features to help brands target their markets more accurately and get more mileage on their ad spend.
More Robust Fulfillment Systems
Shipping restrictions due to pandemic-related lockdowns greatly affected major couriers in 2020. But not Amazon. Because of its increased investment in various fulfillment channels, it was able to carry out last-mile delivery which the others were simply not equipped to do.
Not that it was a perfect year for the company. On the contrary, it was beset with challenges of delivery delays and maxed out warehousing capacity.
But this year, Amazon just might revive its Multi-Channel Fulfillment program, wherein sellers may avail of FBA to ship their goods to their customers off Amazon.
It’s also possible that the Seller Fulfilled Prime program will face tighter restrictions. It was already tough last year. It may even be totally closed and sellers using SFP could be required to use FBA. However, this comes with a silver lining – Amazon might just recruit them as satellite fulfillment facilities.
Integration of Amazon Fresh
As a subsidiary of Amazon.com, Amazon Fresh currently sits on a separate platform. But some significant movements in 2020 indicate that the company is gearing up to offer a seamless shopping experience between the two.
First, Amazon opened its own supermarkets, probably in an attempt to compete with Walmart and Instacart, which dominated the online grocery shopping segment last year.
Second, the company invested in SpartanNash, a wholesaler and distributor of grocery items. This stake effectively provides Amazon direct access to a steady supply.
And with the improvements to its fulfillment capabilities, as discussed above, a more efficient system for grocery delivery cannot be far behind.
The development bodes well for many sellers who also want to extend their brand reach and venture into fresh produce.
Now that consumers have discovered the ease and convenience of shopping online, many experts believe that the increased number of online shoppers will not plateau, even post-pandemic.
Before the quarantines, lockdowns, and closing of physical stores, Amazon found it difficult to win the Boomers over. But they are now on board, adding another big swath of the population to the e-commerce giant’s roster of regular customers.
Along with the more than 150 million Prime members from other age brackets, this demographic is anticipated to continue browsing and purchasing on Amazon. Sellers can consider it a new target market, as are the work-from-home residents who are likely to continue with their current work arrangement.
As a business, it is essential to be on Amazon-- and to do that, you need to try and stay up to date with the latest developments there. 2020 has seen a lot of them. Going forward, expect to see a drastic shift in both business and consumer attitude and behavior.