How Amazon is going to win customers back

When millions of Americans (and our customers from Russia, too, by the way) went to Amazon at the beginning of the pandemic to buy everything they needed, the company’s logistics system failed. No one expected an extra hundred million orders in random March. As a result, the company did its best to lower sales. And her strategy worked. Walmart and Target boosted online sales by 250% and 400% during the pandemic. And Amazon – less than 100%, and then it was mostly masks and sanitizers.

Now that the company has hired an additional 175,000 employees and the logistics are in order, it is time to show competitors where the crayfish hibernate.

About a week ago, we noticed that the company again sends out on time all the goods, and not just essentials. And she launched the daytime again stocks, up to 80% discounts that change every few hours. At the beginning of the crisis, these sections were removed at the request of Bezos, because Amazon still did not have time to process existing orders.

Also now there are no restrictions on the types of products allowed in the company’s warehouses. Earlier, a few weeks ago, only diapers, food, hygiene products and board games were taken to the warehouses (so that people would not get bored and would not go outside).

Prime day, the main sales day that Amazon spends every year in July, has so far decided to postpone. Most likely, it will be postponed to August or September. But instead, the company trains “Summer Sale”, a summer sale, which will become the main bait for users who have gone to Walmart or Target. It will be even earlier than Prime Day would be, somewhere in the middle of June.

There are many discounts expected at Summer Sale and they will be very serious. They say that this will allow seller companies to get rid of excess inventory that has accumulated in warehouses while Amazon processed their orders. And quickly make up for at least part of the losses incurred in March, April and May. The New York Times received information about Bezos’s plans from an audio recording of the meeting at Amazon, which discussed the holding of a large new campaign.

John Gyorso, director of Orca Pacific, an agency helping companies run their business on Amazon, explains:

By their limitations, they eliminated their competitive advantage, which they have been creating for 20 years. Now they are trying to rebuild it. Apparently, now at Amazon they are confident that they will cope even with an even greater number of orders.

The company remains the largest online store in the country. But restrictions on the types of goods dispatched and severe slowdowns in the delivery speed greatly affected this position. After gaining full control over the business, Bezos focused on the safety of his employees, having already invested more than a billion in the arrangement of warehouses, which could help with the early detection of coronavirus and prevent unnecessary contacts. Despite this, several Amazon employees have already died.

But since online delivery is safe, and the path to offline stores carries considerable risks, a very significant part of US trade has gone online. Even such traditional areas as the purchase of food. And, engaged in its own reorganization, Amazon at a critical moment was not able to satisfy everyone’s requests. As a result, its market share fell from 44% (to Covid-19) to Total 34% Instead of controlling almost half of all online orders in the country, the store now had to give two-thirds to its competitors.

The biggest problem for the company was the huge network of its warehouses. More than five hundred structures, each with an area of ​​several football fields. They were built for a very specific purpose, everything was calculated to deliver goods to customers in the region within 1-2 business days.

But when the orders became much more than the system predicted, and the workers began to leave, fearing infection, everything fell apart. The efficiency and refinement of the mechanism have become its main drawbacks. When several aspects failed, everyone else also stalled. The company even had to remove its obligation to deliver goods within 1-2 days, which it was so proud of. For some non-priority goods, the delivery time has increased to a month. And no one knew when the situation would clear up

One of the companies that got into the center of all this was Nativeselling natural deodorants. Before the collapse of logistics, it sold about $ 1 million of its products to Amazon every month. This was her main source of income. But at the start of the pandemic, such products, of course, were identified as “not vital” (this is not toilet paper). Delivery times increased to 1 month. But if a person needs a deodorant – will he really plan this for a month? Most order them when it turns out that the current one is over. And they are waiting for delivery the next day.

The company had to pause its work with Amazon. And to try to literally sell tons of their goods through some other channels, so as not to curtail production. Native Sales via Walmart and Target grew 70% in just two months. Many Americans have now discovered that deodorants can be bought online at these stores.

Now Amazon is quickly sending goods again, and this has allowed Native to finally sort out its stock, and even introduce new products on the site, since the online store can finally allocate enough space for them in its warehouses.

For more than a month, Amazon has been hiding its discount page. And even if it could be found (only through a search engine), there were only products that did not need to be sent or stored in warehouses. E-books, magazine subscriptions, software and so on. Now, about a week ago, the page appeared back, and the same Native deodorants appeared on it, which helped the brand to remind customers about itself. There, on the popular sales page, Hunter boots, Black & Decker tool kits, Karcher high pressure washers visited. Amazon gives priority to well-known brands that could think about more active communication with other online sites during this time.

In early April, the company stopped banning sellers for numerous canceled or expired orders. But this week, Amazon said that starting June 1, it again begins to punish accounts with a large number of canceled orders or slow delivery. Free delivery in the USA to our warehouse used to go 3-5 days, and now they begin to return 1-2 days to which we are accustomed over the past two years. Everything gradually comes to normal.

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