Recently several of my readers asked a really good question about whether now’s a good time to get started in e-commerce. I thought I’d share my answer with you.
Here it goes.
I also came across the following on the internet,
Officially the world’s largest retailer, Amazon has announced it can no longer keep up with consumer demand. As a result, it will be delaying the delivery of non-essential items, or in some cases not taking orders for non-essentials at all. This presents a double-edged sword, as the new dynamic that is bringing some retailers unprecedented demand could also bring about an untimely end for others.
Is it still a good time to engage in e-commerce or better to wait to launch my first product?
This is an important question and I’m glad you brought it up.
I feel the crux of it depends on the outcome of Covid19 to which nobody knows.
But in my opinion, assuming life returns to somewhat normal in the next few months (the US/EU can’t afford to stay in lockdown for the medium/long term without the economy collapsing)… here are my thoughts:
1) Ecommerce is the sector most well-positioned out of virtually any business. Think of all the retail shops declaring bankruptcy, empty malls, and closed restaurants. People stuck at home, and not wanting to risk exposing themselves after lockdown ends, will continue to shop online.
New habits are forming. Even the elderly who previously didn’t shop online now are becoming more accustomed to shopping online. Amazon is the dominant player and if anyone will survive Amazon is the most likely be left standing and probably dominating IMO.
2) To get in the e-commerce game, Amazon is still the most direct and quickest way for small business entrepreneurs.
Most of you are aware of Amazon FBA.
While amazon did temporarily completely stop accepting all non-essential new shipments from 3rd party sellers in March 2020 – this was in the initial phase of shock and awe towards Covid19 when everyone suddenly couldn’t go out anymore and were buying everything from Amazon including essentials.
As a result Amazon has hired over 175,000 new employees since March 2020 and as a result have gradually rolled back restrictions and allowed limited quantities of non-essential shipments in April. I expect this to continue and I don’t believe they are not going to sit on the sidelines and let this silver lining to the pandemic pass. So I expect Amazon to pivot quickly to expand capacity to meet increased demand.
3) Regarding whether to start now or wait…I would put it this way.
Normally it takes at least 3 months (often longer) for the entire business process of launching a product on Amazon. Specifically this is product selection, sourcing, getting samples, production, shipping, and launching. If one were to start now in May then the product will launch in August at the earliest. There’s a good chance that things will get back to somewhat normal by August (again not guaranteed but good chance. And remember America/Europe cannot afford to stay in lockdown without an economic collapse).
On the other hand – let’s say you wait for things to return to normal.. but by the time things return to normal then it will be too late. You will be behind with the 3 month lead time (often longer).
And if you do wait you may also miss out on Q4, the busiest time of year with the majority of online sales happening in the final few months of the year.
It’s like the stock market where prices will be volatile – there will be ups and downs – but the important thing is to be in the market and not try to time it. Because in the long term prices grow Y2Y average of 8-10%. And if you miss out on the limited growth times that would severely cut your gains.
Ecommerce retail growth continues to outpace offline retail growth so the same theory applies in my opinion. You need to be in the game to take advantage of the gains.
4) Supply Chain – While certain countries like India, Nepal, and others may be in lockdown… most factories in China have recovered by now and resumed production. The manufacturing sector in China is “too big to fail” for their government. It supplies hundreds of millions of jobs in China. They are doing everything they can to restart this engine.
Important note – production lead times are longer now. Based on my experience factories are quoting an additional 2-4 weeks additional lead time due to raw component supplier limitations, social distancing in factories affecting productivity, shortage of skilled labor due to some factories not returning, etc. So your delivery will take longer now than before Covid.
Shipping – Both air and sea freight routes have been cut back due to Covid19. Capacity may be a bottleneck and there’s a chance if you miss the boat your shipment will be delayed.
So revisiting the initial 3-month estimate – it may be optimistic considering the above factors and may take longer. Even more reason to get started now.
But if one is interested in building an ecom business the risk of not starting far outweighs the risk of starting too early now in my opinion.
That’s why I’m creating a new coaching program for a small group of motivated students if you are looking to launch an Amazon FBA business this year.
With crisis comes opportunity.
You can learn more and apply here: https://8020sourcing.com/coaching
PS: This just in – Amazon CEO Jeff Bezos announced today that they will invest all of the $4 Billion dollars of Q2 profit “On COVID-related expenses getting products to customers and keeping employees safe.” If you want to get in on the Amazon FBA ecommerce market now is a great chance to get started. Learn more and apply to my coaching program today.