Covid-19’s effect on Amazon Demand

Coronavirus has shifted consumer behaviour dramatically over the last few weeks. With more bricks and mortar stores closing and social measures taking place online shopping for all products is becoming the norm. And while a lot of retailers are still re-working their supply chains and distribution to cope with the significant surge in online demand, Amazon is already able to cater for this demand across pretty much majority of product categories. For Amazon, the corona crisis is an opportunity to further expand its already dominant market position as a primary online marketplace.

It is not surprising then that since the quarantines and social distancing measures started across Europe, there has been a continuous growth in audiences going to Amazon. This has resulted in strong fluctuations on the platform, with both the changes in demand as well as the challenges to product supply and fulfilment significantly disrupting the current Amazon Marketplace. Challenges in product supply is leading to volatility in the marketplace with a 38 per cent change in best sellers across categories. For sellers who currently have stock ready to ship, this provides an ample opportunity and a ripe moment to invest in AMS advertising, gaining sales velocity versus more established competitors which may have challenges in their supply chains.

From a demand point of view, consumer interest was focused on Masks and Disinfectants in the first two weeks of March. After the initial couple of weeks of panic buying and essentials shopping, the last week of March offered a changing landscape in terms of shoppers’ demand, with demand re-focusing on hobbies and wellbeing.

Categories such as Toys & Games, Beauty and Health & Fitness have emerged as continuous growth drivers.

Nearly all type of toy & games-related search terms have seen a gain in terms of search frequency. There have seen also significant increases in adult game search terms, with the search term “board game adult” jumping to top 2000 search terms vs last year when it was not appearing even in the first 255k terms. Same applies to different types of family and drinking games. As we’ve seen video conference socialising and parties have started becoming the new way people connect and this is going to create also new opportunity for group games online despite the quarantines.

What is interesting is the significant increase in Health & Fitness and Toys & Games categories, showing 70-80 per cent increase YoY. This would have been also influenced by the growth of popularity in online yoga and workout classes which has inadvertently focused consumer demand on smaller workout equipment such as mats, bands and weights. As suppliers are having issues with fulfilment, another trend emerges around pricing. Pricing data shows pricing surge exponentially, with brands charging 80-100 per cent more since the last two weeks in March. This points to the fact that current suppliers from any of the in-demand categories can raise price exponentially without affecting demand as supply and fulfilment are still a challenge for many competitors.

Increase in demand for products for “self-care” is also visible in the Beauty category. Feel-good products such as self-tanners, bath products as well as make up continue growing. In addition, demand for home salon products such as nail sets and hair products, as people are replacing their usual manicure and hairdresser appointments with DIY alternatives.

Brands in the above-mentioned categories can find a long-term online customer even past the quarantine if they are able to answer the demand and provide the right customer journey. As competition within these categories increases, the use of well-structured and targeted advertising, as well as optimised product listings, will be decisive factors on whether brands maximise their growth potential within the channel.

Brands making decisive steps to building their presence on Amazon by using data-led strategy will see both short- and long- term growth acquiring loyal customers and gaining market share vs competitors.

By Joanna Lambadjieva, Managing Partner, Emergent

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