Avoid These 4 Deadly Sins of Ecommerce Sellers During a Crisis

These are unpredictable times for ecommerce sellers. On the other hand, they are also great learning moments.

While everyone might be caught between a rock and a hard place, the recent COVID-19 outbreak has proven there is definitely a wrong way to act during times of crisis. Below are several instances in which ecommerce sellers paid a hefty price for the decisions they made. Avoid resorting to these methods when your business is in crisis mode.

Cranking Up Prices

The “he did it, so I’m doing it” mentality caught on like a disease in early March, 2020. Outside of the $500 Nintendo Switches I saw circulating online, prices on essential items spiked 250% on Amazon, according to research by Zentail. One in every six items sold directly by Amazon (not third-party sellers) even spiked at least 50% the month prior, according to the U.S. Public Interest Research Group, before pricing policies tightened up.

Granted, supply and demand is a real thing. But during times of crisis, ecommerce sellers need to be especially mindful of public sentiment and the pressures that marketplaces face. While there’s no formula for what exactly constitutes price gouging, pushing prices too far can get you kicked off marketplaces with hypersensitivity to pricing violations.

And public disdain is often just one poor pricing choice away. The Associated Press found the number of price gouging complaints nationwide exceeded 5,000 by the end of March 2020, with hundreds more arriving daily.

Don’t let that $10 tissue box be the last thing you ever sell. Protect your brand reputation and revenue streams by pricing both logically and sensitively.

Jumping on the Bandwagon

The worst response to a crisis is no response at all. However, “there’s a very fine line between being helpful and flogging stuff on the back of a crisis,” AMLGroup CEO Ian Henderson told CNBC.

This is sage advice at a time when digital consumption is high, and many sellers are bulking up on ads or using quick-fix tricks to keep cash flowing. “Coronavirus” is now becoming one of the most-blocked keywords on marketplaces like Amazon and eBay, where sellers are keyword stuffing listings to rise in organic search results. Amazon alone has already blocked more than 6.5 million listings for exploiting the pandemic or improperly citing COVID-19 protections – even on products like hand sanitizer.

Instead, live in your customer’s world. Address the current crisis with transparency. Prioritize strategies that build trust. At a minimum, acknowledge the impact it’s having on your business. Proactively communicate what customers should expect in the upcoming weeks and what you’re doing to stay ahead of any issues.

Building a Template Instead of Flexibility

There are various types of crises your business could face in the future, be it a public health disaster or technology failure. Focusing too much on a perfectly detailed response for each type may leave you with plans that look better in binders than they do in practice.

Instead of just penciling out every step, think of areas of your business that require improvement now and greater flexibility to handle sudden events.

For example, COVID-19 brought these questions to the forefront for many sellers:

  • Does our business rely too much on a single sales channel?
  • Does our business rely too much on a single product?
  • Do we need to source products from multiple or new vendors?
  • Do we need a more nimble system (i.e., automation and/or the ability to work outside the traditional 30-day forecasting window) for managing inventory and spotting new buying behaviors early?
  • Do we rely too heavily on Amazon FBA?

An analysis of over 200,000 ecommerce sellers on Amazon revealed that 36% of merchants became inactive in early April. This is on a marketplace where nearly half of sellers reportedly earn 81%-100% of their total ecommerce revenue, so it’s unlikely that some of these sellers will ever bounce back.

Wasting Time at Home

Amid state lockdowns and other restrictions, many companies have been grounded at home. Some Amazon Fulfilled By Merchant (FBM) sellers have had to hit “pause” on shipping entirely, as they’ve lost access to their warehouses.

Despite this, recent months present a rare opportunity for your business to regroup. At-home teams can focus on “spring cleaning” efforts, such as optimizing product listings, sprucing up webstores and/or improving multichannel SEO.

You can also dig into more cost-saving or strategic moves for the future, like finding a 3PL to improve control over shipping while still outsourcing fulfillment, or researching software to increase efficiencies across your organization.

To help with current blocks to cash flow, take a page from Supply’s book. This luxury shaving company experienced their best weekend of sales since Black Friday after launching a marketing campaign harping on the desire to hoard or stock up on products.

“For a limited time only, get a free year supply of blades with every [razor purchase],” read their ad.

By leveraging ideas like this, your company can ignite the path to greater success, both now and in the future.

Daniel Sugarman is CEO of Zentail

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