Where is Amazon Going?

Times are quickly changing. As we near the end of a world-altering pandemic, we may find ourselves looking around and asking ourselves, what’s next? It is intriguing to consider how culture, economy, and daily life could be forever changed by recent events and what parts of life will be transitioning to a “new normal”.

Amazon has seen its own share of changes recently, reminding us all how organic and fluid it remains as a platform, constantly transitioning with the times. We at Skale are particularly interested in the immediate future of Amazon, considering some particularly large changes and new directions it has recently adopted. Based on the behaviors and trends we have observed, here are some of our thoughts on where Amazon is going next so we can all adapt our own strategies accordingly, following the ebb and flow of the platform.

Streamlining for High-Performing Inventory

The events of 2020 ushered in a lot of changes when it comes to shopping. As more and more traffic moved to e-commerce, and markets became more chaotic due to unforeseen issues brought on by COVID-19, Amazon responded by introducing ASIN-level restock limits to manage inventory, limiting what sellers could send to fulfillment centers based on individual item performance. Recently, they took these limitations a step further by replacing ASIN-level limitations with category-level limitations. This is now forcing sellers to restructure their restock strategies by prioritizing their high-performing items, removing stale inventory, and taking a much more streamlined approach to inventory planning. Further, changing limits (whether it be up or down) seem to happen automatically without a notice to the seller or an explanation for the change. In fact, we have recently seen multiple limit changes in as little as two days.

These updates signal to Skale that Amazon will continue focusing on building their fulfillment centers into fast-moving, conversion-oriented locations that will be continuously “trimming the fat” by actively changing seller’s stock limits based on performance. In only a few weeks, Skale has seen regular updates to our client’s restock and storage limits, even with week-to-week changes on how much inventory they are allowed to send in. This, combined with updates to how orders are processed on Seller Central, has kept us on our toes and forced us to rethink our ordering strategy altogether.

Catering to Established Brands

On top of changing its approach to inventory storage and fulfillment, Amazon has also recently been adding several new tools and features to its platform. As Skale has studied and utilized these tools, we have noticed that their use provides a distinct advantage to brands that are already established and have an organic consumer following.

For example, one feature that has been withheld from sellers over the years is the ability to email their Amazon customers directly. This ability has finally been added for sellers, but with the caveat that sellers can now email customers ONLY if they are following your brand on Amazon. In order to receive a follow from a customer, your brand must be enrolled in Amazon Brand Registry and be utilizing Posts, Amazon’s new version of social media posts on the platform. Obviously, brands with the best online presence and most established products will be the most likely to gain active followers, meaning that the biggest brands will have access to growth features that smaller brands will not have. This sentiment is also reinforced by the myriad of features only available through Amazon brand registry, such as sponsored video ads, sponsored brand ads, posts, and violation reporting.

In Conclusion

Based on the changes we are currently witnessing at Skale, it appears that Amazon is behaving less like a “catch-all” for sellers than they have been in the past, and that they are now focusing their platform to be a more polished and streamlined location where established brands are more likely to grow and thrive. We see that presenting a consistent and developed brand presence is and will continue to be highly advantageous to sellers, and that focus on top-selling items will be the narrative that Amazon will continue to push. Brand development and establishment on Amazon can be a tricky and intimidating game. Still, through our study and experience, Skale has built an arsenal of tools to give our clients the correct recipe for success, despite ever-present changes.

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