Podcast Episode 023 : Amazon Announces a Temporary Pause for FBA Sellers

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Key points from episode 23:

• A full breakdown of Amazon’s official announcement.
• The 6 categories of items that Amazon deems as essential right now.
• How this temporary pause for some FBA sellers coincides with Amazon’s recent announcement of hiring 100,000 new warehouse workers.
• The difference between price gouging and supply & demand.
• How the prices and availability of non-essential items might react to this temporary pause.
• What to pivot in your online business to still stay afloat during this time of uncertainty and change.
• And more!

Links and resources mentioned in this episode:

• Amazon’s official announcement (Amazon Seller Central sign in required)
• Watch the video version of this podcast in the Full-Time FBA Facebook group (need to be a member of the group for this link to work)
• Apply to join the Full-Time FBA Facebook group
• How to deal with change blog post

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Episode Transcript:

Announcer:

Welcome to The Full-Time FBA Show. In each episode it’s our goal to help you turn part-time hours into a full-time income selling almost anything on Amazon. And now, your hosts of the show, Stephen and Rebecca Smotherman.

Stephen Smotherman:

Welcome to episode number 23 of The Full-Time FBA Show. This is Stephen Smotherman. I’m here with my wife, Rebecca. Rebecca, how you doing?

Rebecca Smotherman:

I’m doing pretty good.

Stephen Smotherman:

This episode is going to be a little bit different because it is a recording taken from a Facebook Live that I recorded on March 17th, 2020, when Amazon announced the news that they are not allowing any inventory items to be sent to Amazon that do not fall into the category of medical supplies, household staples or other high demand items. And we’ll get into what that means in this Facebook Live.

Rebecca Smotherman:

And be sure that you stick around to the end of the podcast episode because Stephen did answer some questions that the people watching the live video were asking. And so, you want to be sure and stick around to that time when there’s a little bit of a Q and A. So on that note, let’s just jump right into the topic for today.

Stephen Smotherman:

Hey everybody, Stephen Smotherman here. I’ve got some big news from Amazon just dropped and so I wanted to walk you through that big news and what it means for your Amazon business and what kinds of ways we can respond. I want to help bring some clarity to what’s going on. I want to help you think through this really well. So I’m going to read Amazon’s announcement to you. We’re going to break it down and we’re going to talk about ways that we can respond. So if you haven’t heard yet, Amazon just dropped this news and it’s going to affect every single Amazon FBA seller temporarily. I’m going to read directly from the Amazon Seller Central homepage the details about this.

Stephen Smotherman:

The title of Amazon’s announcement is Temporarily Prioritizing Products Coming Into Our Fulfillment Centers. And Amazon states, “We are closely monitoring the developments of Covid-19 and its impact on our customers, selling partners and employees. We are seeing increased online shopping and as a result, some products such as household staples and medical supplies are out of stock. With this in mind, we are temporarily prioritizing household staples, medical supplies and other high demand products coming into our fulfillment centers so that we can quickly receive, restock and ship these products to customers. For products other than these, we have temporarily disabled shipment creation. We are taking similar approaches with retail vendors. This will be in effect today, March 17th, through April 5th, 2020. This is a 20 day temporary pause of shipping those non-essential items to Amazon.”

Stephen Smotherman:

Back to the announcement. We will let you know once we resume regular operations. Shipments created before today will be received at fulfillment centers. Please note selling partner support does not have further guidance, which means don’t ask seller support for any clarification or any help on this. This is all the announcement that we’re going to get. There are some frequently asked questions and if you have questions be sure to post them in the comments so that I can do my best to answer. Here are the questions first related … This is what Amazon came up with the FAQ, and then I’m going to answer some questions that I think a lot of us are talking about or asking or thinking about.

Stephen Smotherman:

What products am I able to ship to FBA? Answer, we are prioritizing household staples, medical supplies and other high demand products coming into our fulfillment centers so that we can more quickly receive, restock and deliver these products. Most of the products we are accepting at this time are in the below categories. Baby products, health and household, beauty and personal care including personal care appliances, grocery, industrial and scientific and pet supplies, listing products in an inaccurate category is a violation of our listing policies and may result in account suspension. So don’t try to list your toy in the grocery category, you’re just going to get suspended if that happens.

Stephen Smotherman:

Is Amazon taking similar steps for retail products? Yes. Where does this apply? This is currently applied in the US and the EU markets.

Stephen Smotherman:

What if I already have a shipment on its way? Answer, shipments created before March 17th, 2020, will be received.

Stephen Smotherman:

What happens to my products that are in an Amazon fulfillment center but are not one of the above categories? Can I still sell this item on Amazon? Yes. If your product is already in a fulfillment center or on its way right now, you can still continue to sell it.

Stephen Smotherman:

I believe my product is a household staple medical supply, but I’m not able to create a shipment. What should I do? Answer, we determine if a product is a household staple, a medical supply or both, depending on the listing. At this time, we are not accepting a request to reclassify listings.

Stephen Smotherman:

Question, my product is listed within the prioritized categories, but I’m still not able to create a shipment. What should I do? If your product is correctly classified and you’re not able to create a shipment, then the product in question is not prioritized at this time, which means Amazon does not consider it a household staple or a medical supply.

Stephen Smotherman:

Question, I don’t sell household supplies or medical supplies. What is going to happen to my business if I can’t replenish my products? Answer, we are making these temporary adjustments in order to prioritize household staples, medical supplies, another high demand products coming in to our fulfillment centers so we can more quickly receive, restock and ship these products to customers. You may continue to sell products already in our fulfillment centers. This will be in effect today March 17th, through April 5th, and we will let you know once we resume regular operations. We understand that this is a change to your Amazon business and we did not make this decision lightly. We are working around the clock to increase capacity and yesterday announced that they are opening up 100,000 full and part-time positions at their fulfillment centers across the US.

Stephen Smotherman:

Can I still sell non-household staples or medical supplies through Merchant Fulfilled? Yes.

Stephen Smotherman:

What will happen to my IPI score, Inventory Performance Index score if it falls because of this? We are working to account for this change in your IPI score and in storage limits for the following quarter.

Stephen Smotherman:

So, that is what Amazon has for us. I’m going to break down my takeaways from this. If you have questions then you can ask those. Here’s what I think is going on. Amazon is saying that for the next 20 days, only those household staples and medical supplies can be sent to Amazon to be sold on Amazon. If you already have stuff in your inventory, you can still sell through what you already have in stock via FBA. If you have other inventory that you want to sell on Amazon, you cannot create shipments unless they are considered a household staple or a medical supply via FBA, but you can sell them Merchant Fulfilled.

Stephen Smotherman:

I honestly think that Amazon is opening up 100,000 jobs, but it’s going to take a while to interview them, train them, and get them ready. I think that that those two announcements, Amazon hiring 100,000 people and this 20 day pause of not allowing any kind of inventory to come into Amazon unless it’s an essential household staple or medical supply, these two go together. Amazon is taking the next 20 days to find 100,000 more employees to train them and get them ready to work in the warehouses, plus it is prioritizing the things that people need to have in stock on Amazon to be ordered, to be shipped out to customers. So, I think that in 20 days things are going to go back to normal, we can start sending in our inventory again and when I say back to normal, I just mean in regards to selling via FBA. Because I honestly think that they’ll have more workers there ready. A lot of the medical supplies and food supplies and household staples and all that will be stocked up better.

Stephen Smotherman:

And here are the categories again that apply to these household staples and medical supplies. Baby products, health and household, beauty and personal care, grocery, industrial and scientific and pet supplies. Now, it doesn’t mean every item in those categories is allowed to be sent to Amazon. It means that those categories are where the household staples and medical supplies are being sold in. And so, even if you have an item that falls in that category, it doesn’t necessarily mean you can send it to Amazon. So what do you do? You set up your Amazon shipment. Amazon will tell you if there are items in there that you cannot create the shipment and if it has those items in there. So, if you’re able to create a shipment because you do have those items, great, send those to Amazon.

Stephen Smotherman:

I do want to break down some different ways to respond to this news. Obviously the first way some people respond is to freak out, the sky is falling and just totally panic. That’s never a good way to respond. That’s never a way to respond to anything. So if you want to be successful, you need to respond in other ways. The second way some people might want to respond is to think about, “Well, I’m going to start sourcing those household staples and those medical supplies.” If you are sourcing via retail arbitrage or even online arbitrage, I might suggest that you not try to sell those items on Amazon, and here’s why. The issue of price gouging is very serious. It is against the law and there is a lot of confusion about price gouging, what it is, what the definition is, what consists of price gouging versus just having a mark-up to cover our expenses and our costs and our time and effort.

Stephen Smotherman:

Here’s what the definition of price gouging is. If during a time of emergency, essential items are priced above average cost. And it’s different per state, some of it’s 10% above cost, some says 15% above cost. It’s that low of calling it price gouging, then that is considered illegal. And again, it’s different per state. Some of it’s 10%, some of it’s 15%. But still, if you’re going to buy something retail priced to sell on Amazon, that is a household item or a medical supply and you’re going to mark up your prices to cover Amazon fees and mark up your prices to have some sort of profit, that might be considered price gouging by Amazon. And so be careful about this. We do not recommend that you shift your focus now on these medical supplies or household staples, because even though we know we might only be making a couple bucks per item, in the mind of the customer, that’s going to be price gouging.

Stephen Smotherman:

Now if you can get those medical supplies, household supplies, other essential items from a wholesale source and you’re buying it below retail price, then that would be an opportunity for you to buy it where you are buying it from and selling it on Amazon. Now, really think about this. Price gouging and supply and demand are two totally different things. I’ve seen different arguments in different places that it’s price gouging is actually a good thing because we’re offering a service to people who can’t get it and they’re paying for our service because they can’t find it in their area, and so we can provide that service for them and we can make a little bit of extra money, and so we’re actually serving those people.

Stephen Smotherman:

Well, the big key about price gouging when it comes to being illegal, is that it’s during an emergency. And this is an emergency. Our country is in a state of emergency, the US, there are places all around the world that have considered state of emergency. I know our State, our city, has claimed it as a state of emergency. So this is not a time to mess around or play with gray lines. We want to be as above board as possible so that we can be successful with what we are doing. And so, I want you to know that it is not a good idea I think, to start selling those medical supplies and grocery items and household staples, unless you’re able to get them at a wholesale price so that your Amazon price is going to stay around average. I just really think that it’s getting pretty iffy and putting your account on the line if you are going to be taking supply from your area and moving it to Amazon. Because I think most places, like I went to the grocery store this morning and I went there right when it opened up and there are shelves that were still empty. There’s places that do not have certain items, household staples, medical supplies, toilet paper, sanitizing wipes, all sorts of different things. Do not take from your community to sell on Amazon during an emergency. So that’s price gouging.

Stephen Smotherman:

Supply and demand is totally different. Supply and demand just means that if there’s an emergency going on, supply and demand is thrown out the window. You don’t even think about that anymore. You want to make sure that everything is fair for everybody, but supply and demand is like, there is a certain toy that they didn’t create, the store companies didn’t create enough of and so it got really popular, and so the supply went down because people were buying this popular toy but the demand is going up because the popularity of that toy is really popular, and so the price goes up to meet that. And so, but getting a rare fingerling toy or a rare doll or a rare, whatever toy during Christmas time, is not an emergency. That’s just when those supply and demand meet and it comes up with the price, that’s just what the market is calling for at that moment. People don’t need fingerling toys to continue to have that security and knowing that they’re taking care of their family and making sure that they have their household staples and items that they need, things to keep them safe, things to keep them healthy during an emergency crisis. That’s the difference between supply and demand and price gouging.

Stephen Smotherman:

There is no way that you can ever convince me or the government or the law that, “Oh, I’m just providing a service by pricing this sanitizer really higher. Pricing a bag of rice for $40 when I bought it for four. No, again, price gouging is defined as pricing an item about 10 to 15% more than the normal price when you look back at the last like six months, the normal price during a time of emergency. What are some other ways that we can respond? Respond in a positive way. You can shift to selling your items via Merchant Fulfilled, and so that’s an option for you. You go out and source those items and fulfill them yourself. So, there’s going to be more of a demand for Merchant Fulfilled items after the items that are already in stock on Amazon begin to dwindle out. But if you have inventory is still at Amazon FBA, just know guess what, there’s not going to be any more competition joining you. If there’s an item you’re trying to sell via FBA and you have your inventory already at a fulfillment warehouse, there’s not going to be much competition joining you. So, you can hold out for a higher price if you want. It’s not price gouging to hold out on a high price for a certain toy or a pair of shoes. So just know, well actually shoes could be considered essential. Who knows?

Stephen Smotherman:

That’s the one other thing about Amazon, they don’t tell you exactly what might be considered essential, but most of us can use common sense to figure that out. So you can shift to Merchant Fulfilled items. You can also make sure that your FBA prices are priced competitively because again, there’s not going to be any more competition. So you might be able to see your FBA item prices begin to rise as lower priced items begin to sell out. I use an automatic repricer, I’ve got my min price and my max price. If you don’t have an automatic repricer yet, you can try to sign up for one. And that way your prices are being competitive all the time. If the lower prices items begin to sell out, you could actually start raising your price. But again, when it comes to essential items, medical items, household items, you want to make sure that your items that if you do use a repricer, that your items are not priced too high. You don’t want any type of hint of price gouging when you’re selling stuff on Amazon.

Stephen Smotherman:

Another opportunity for us is to shift to Merchant Fulfilled but you can also shift to other marketplaces. eBay. If you’ve got clothing, shoes or any other type of closet, jewelry and just things like that, you can sell that on Poshmark. So you can look into other options or opportunities to still make money from home by reselling items. I mean, look around your house. You’re probably going to have some items around your house that you can resell. And so for the next 20 days, March 17th to April 5th, we’re not going to be able to send in inventory to Amazon that does not fall into the medical supply, household staple, other high demand products that are in demand because of this time that we are in. Another option that you can do right now is to know that on April 5th, when Amazon announces it, and maybe they’ll announce it on April 6th the following day, you can stock up on your FBA stuff. Maybe buy stuff to sell for FBA and just put it off to the side knowing that you want to be one of the first people to send in inventory to stock up those FPA shelves again with the toys or the clothing or whatever else that you’re selling.

Stephen Smotherman:

And then other aspects that you can be doing over the next 20 days, if you don’t like any of these other options, another thing that you can do is start to clean up your Amazon inventory. And not just because of that, there’s things that you’ve been putting off because it’s not fun to do in your Amazon business, like requesting reimbursements for items. That’s a way that you can make money right now, by requesting reimbursement on items that have been damaged. If you opened up an overstock return, removal order, and it came back and it was damaged, open up a reimbursement request, because that’s Amazon’s fault. There’s a lot of different things that you can be doing. You can improve your feedback score by opening up cases to try to remove negative or neutral feedback. You have other things in your Amazon business that you can be focusing on that you might’ve been putting off. Maybe you’ve got stuff in your garage that you’ve been meaning to go through, to see if it’s profitable or not. Well, go through that stuff.

Stephen Smotherman:

So, there’s still things that we can do over the next 20 days to build our Amazon business and be able to continue to keep that momentum while still obeying Amazon’s rules and their suggestions. If you are looking for suggestions on what you can do during this time and how to best respond, we have a blog post that just dropped today. If you go to fulltimefba.com/coronavirus, we’ll talk to you about how Amazon sellers can respond well to this pandemic that we’re going through. During this time we give seven ideas of how you can best respond to be a good Amazon FBA seller, to be a good human and to help our country and our world get past that. If you want to listen to our latest podcast episode, we actually recorded a video of Rebecca and I recording the podcast. You can watch the video version of our podcast episode. If you go to fulltimefba.com/coronavirusvideo, and that’s a longer version, that’s a conversation of Rebecca and I walking what those seven things are and how we can respond well during this time.

Stephen Smotherman:

Those were the things that I’ve been thinking about. I want to go through as best as I can and answer the questions that I see from you. And so here are some of the questions. Lori says, “where are they going to safely employee 100,000 people?” At fulfillment centers across the United States, maybe even in the EU and other places. So they’re going to safely employee those … I’ve taken an Amazon warehouse tour. You can be in an Amazon warehouse and still be safely six feet away from somebody else. Most of their people spread out in these Amazon warehouses and in the places where they are congregated together, they can work it out or they can spread it out. So, I think most of those 100,000 people are going to be in Amazon fulfillment warehouses where they’re going to be able to train them. And again, this is why I think that Amazon right now focusing on the essential items for the next 20 days, only focusing on that, so that those items can get out to the customers and so that they can train and get these 100,000 plus employees ready to start working in an Amazon warehouse.

Stephen Smotherman:

Someone says, “I set up two shipments yesterday, I wonder if they will let me send them today?” If you have not closed that shipment, probably not. You can always try it, but again, Amazon is closing the ability for you to create new shipments unless those items in those shipments, 100% of those items in those shipments, are considered household staples, medical supplies or other high demand needs. We are in an emergency. We need to pivot how we act on Amazon, how we behave in our Amazon FBA business, the things that we focus on and our mindset. We need a whole new mindset for this. I know Easter is coming up and there was a question about how to handle Easter candy. I don’t know if Amazon’s going to deem chocolate, candy … I mean I think some people will see that as an essential, but who knows what Amazon’s going to see in regards to what is essential and what is not essential. So, if you have already purchased Easter candy to sell or any other type of candy, then you could try to create a shipment and if it goes through, then maybe that’s great. But I wouldn’t suggest anyone go out and buy it to try to create a shipment. So, just try to stay away from that.

Stephen Smotherman:

So, a lot of questions in the comments asking about what about this specific thing? What about this specific thing? I don’t have all the answers. I do not know what Amazon considers as essential and non-essential. You might have Clorox wipes that Amazon considers as not essential. Just because they’re doing their best to separate what is essential and what is non-essential, and there’s going to be things that show up in essentials that are not, and things that show up and are deemed as non-essential that are. We just need to go forward with how Amazon has it set up. I really think that over the next 20 days, we just need to have that mindset shift, be okay with doing things a little bit differently and focusing on what we can do and not focus on what we can’t do. Focus on the good that’s coming.

Stephen Smotherman:

I love the fact that Amazon is pausing this so that those who need these household items and medical supplies can get them faster. They’ll get to Amazon faster, get checked in faster, they’ll get to the customers faster. And so, I really think that this is really good. I appreciate your time hanging out with me today talking about this. Again, if you have any more questions, you can ask them in the comments below and we’ll do our best to answer them. Thank you again for watching this, for being a part of this group. I wish you all the best. I wish you health. I wish you and pray for you all and hope that you all … We’re all going to make it through this. We don’t know how short it’s going to be. We don’t know how long it’s going to be, but it’s going to be temporary and we’re going to just do our best and we’re going to make it through this. Have a great day everybody. God bless. Love you guys. Bye.

Rebecca Smotherman:

I hope that that was helpful for you. I’m sure that all of us have a lot of questions, a lot of more questions than it seems like we have answers these days, but hopefully we were able to bring some clarity to what we are aware of right now. And again, be sure and go to our Facebook group if you want to watch the video and if you want to be notified when we do other videos in that group. We do periodic Facebook Live videos with announcements and on different topics that are relevant to selling on Amazon FBA, and we’ll continue doing that. We’ll continue trying to answer as many questions as we can. You can find that Facebook group at fulltimefba.com/facebook. And you’ll be asked to answer three short questions to be given entry into the group. But just fill that out and do that and we’ll get you into the group as soon as we can if you fit the requirements. And in order to see the transcript of this episode that will be up shortly, and also any show notes that have the points of the episode, any links that are mentioned, be sure and check that out at this episode’s webpage, fulltimefba.com/23 and that will take you to this episode’s show notes.

Stephen Smotherman:

Well that’s it for today. Thanks again for hanging out with us. And next week on the show we have an interview with Kim Coghlan and we’re talking with her about dealing with inauthentic claims and how to best respond to that. So that will drop next Monday. We look forward to seeing you on the next episode of The Full-Time FBA Show.

Announcer:

That’s all for this episode of The Full-Time FBA Show. Head over to fulltimefba.com/podcast, where you’ll find the show notes and links from this episode. While you’re there, subscribe to our newsletter where you’ll get several free downloads of our popular and helpful Amazon FBA resources, including a free eBook. Now, take action on what you’ve learned today so you can find success at turning part time hours into a full time income with Amazon FBA.