Just a few weeks ago when I talked about Covid-19, it was to explore some questions that sellers were having to ask themselves like “Is it OK to accept my container-load of goods from China?” “Could I be liable if someone got sick from buying my products?” “How long does the virus live on surfaces?”
How naïve these concerns seem today. Now that the virus is in the US and spreading worldwide, new questions need to be asked. I’ve spent part of this week creating a crisis plan for our business around this, and it has raised many questions for my team and me. I hope my approach will be helpful to you too.
Where I’m coming from
As a bit of background on me, I’ve written and executed many crisis plans over my career for medium-to-large businesses. While my focus was on communications (to employees, suppliers, local first responders, Wall Street and the media), I worked closely with the internal risk management guys who had extensive plans for their facilities (fire, slip-and-falls, death of an employee, explosions, murder in the workplace, acts of God, etc.). My portion was on business continuity and messaging; theirs was on employee safety. We all needed to have systems for rapid communications that were set up in advance.
Having a small business working hard to grow, I did not build out a written crisis plan for my own business until now. I suspect that is true for many of my readers. A crisis plan is for sudden but predictable events. It is a risk management, business continuity and communications plan. Crisis is hectic and can be very bad, but it also provides an opportunity. How you handle a crisis can build a foundation for your future growth (and ability to survive).
As a side benefit, planning for crisis is empowering. There is very little we can do about the global pandemic at large, but there’s a lot we can do to protect our families and businesses. Much of the anxiety around Covid-19 is the unknown. We feel powerless and afraid of an invisible foe. Having a detailed plan will relieve some of that anxiety and allow you to focus on your family and business.
Why is Covid-19 a big deal for Amazon sellers?
There is a lot of misinformation flying around about this virus and rather than spend this blog talking about the science, predictive exponential models and things like that, I’ll include some trusted resources at the bottom of this blog for you to explore for yourself. The central premise of this blog and a crisis plan is that it MIGHT get very bad and that planning is a good idea. You don’t want to be planning in the stress of a crisis. You want to be executing your plan. Therefore, whether you think this is basically the flu or a disease that could cripple our country and the world economy, take some time to plan. Even if you never need the plan, the exercise will help you with other crises you may face in the future. At our company we are building out a comprehensive plan for many scenarios besides pandemics.
Here’s why Amazon Sellers should care about Covid-19:
- Our businesses rely on outsourced logistics.
- We all own global businesses even if we only sell in the US. What happens in the world impacts our ability to design, source, and sell new products.
- We rely on Amazon for a large percentage of our income, if not all of it. If Amazon falls, we all fall.
- Amazon’s HQ in Seattle is already a ghost town as employees are self-quarantined and working from home. A serious interruption in their ability to deliver goods to customers will hurt us too.
- Amazon employees have contracted (and likely spread) the disease already.
- We all have families, and many of us have employees. If they get sick, it could significantly impact our business as we take care of them or work with a limited staff.
- Collateral damage. Much of the world news coverage today is about stopping the spread of this disease – rightly so – but you as a business owner with family and employees who depend on you need to think how this could impact your ability to keep selling. You should do more than wash your hands and avoid crowds. You have a responsibility to yourself and others to think ahead. The implications of a full-blown pandemic will affect the financial, healthcare, logistics, transportation, restaurant, grocery, retail, event planning and many, many other industries. Your partners and buyers in other words
Possible scenarios to consider
When you plan for crisis ahead of time, you are thinking of possible scenarios and how your company would respond. I’m sharing some here, but this is only a starting point for you.
I’m a consulting business, so I have some different worries. For example:
“Clients unable to pay because their businesses fail or are unable to operate for an extended period of time due to global crisis or economic downturn.”
I’ve lived this one twice in my career in the twin recessions of the 2000’s.
Depending on your selling model – arbitrage, drop-ship, wholesale, brand – you may have additional scenarios of your own involving your supply chain.
- Employee or employee family member diagnosed with Covid-19 (or other highly infectious disease)
- Medical emergency at company facility (warehouse, office – anywhere there are other employees) that attracts media attention
- Loss of relationship with Amazon (suspension or outright collapse of Amazon for an extended period of time)
- Supply chain interrupted for more than a few weeks; supplier failure
- Product demand nosedives because of pandemic, negative media attention (remember the exploding hovercrafts?), company is unable to pay employees, bills, etc.
- Inability to expand manufacturing and grow for any reason (assumes there is a demand for these products, obviously)
- Inability to hire/recruit because of business disruption, global pandemic, etc.
- Company sued by customers, partners or suppliers for any reason
- Significant product quality or safety issue that requires recalls and opens company to liability.
- Death of founder or key employee
- Departure of founder or key employee
- Sudden death or suicide of any person in company
- Arrest of key employee/management for any reason
- Arrest of non-key employee for a severe crime
- Theft of intellectual property by a competitor
- Fire, flood, tornado or other act of God in any facility
- Employees are afraid to come to work
- Workplace violence injures employees
- Negative media or social media posts
Things you can’t plan for
I have seen and executed for every one of the previous scenarios in the past for my clients or myself, so we would call them “predictable crises.” While many things will fall under one of these scenarios, you want to be ready for ANY crisis. The way you do this is to prepare an approach and steps for every crisis that you follow no matter what. This structure will enable you to act quickly even if you’ve never faced a situation before.
Some of this is obvious. You pull together your leadership team (family, employees), outline the crisis and review what you know, what you need to know, your priorities and the steps to complete them.
Things like “have a war room” are good to prepare in advance. It’s not just how you meet; it includes what you might need to have an effective war room. For example, if you are meeting at a physical location, you want to make sure there is a projector, coffee, snacks, electricity, laptops, etc. If the crisis involves your office/warehouse being out of commission, then you need a backup. Write it down now and no one has to coordinate it later when all holy hell is breaking loose in your business.
In the old days we included things like a dedicated fax machine, paper, notepads and pens, a conference speaker phone, a backup satellite phone and more. Today we do most of it by Zoom so there are fewer things to think about. However, disruption of internet and power in our Philippines office is a regular occurrence, so we must have additional backup plans if both our backup generators fail or none of our three separate internet providers is operating.
Additionally, if you are a corporation, you will want to record and transcribe every meeting for your corporate minutes book and in the case of future lawsuits. Zoom is handy for that, too. Even if there are just two or three of you on a phone call, make sure someone is recording it.
Your built-out scenario for the unknown might look something like this:
Crisis Team Members
- SVP/Marketing – Strategic Planning
Depending on information received, the team may also include these people. Be sure to have resources identified and added to this scenario for fast access:
- Legal counsel
- Human resources/employment law issues
- Health code issues
- Government health/regulatory issues
- Personal injury
- Human Resources
Crisis Support Staff
- Senior administrative employee for CEO
|President and CEO|
|Chief Financial Officer|
|PH Managing Director|
|PH HR Head|
- Senior management team
- Neighborhoods surrounding office
- City officials, state or national officials
- Senior management to be notified immediately (be sure to have emergency numbers for everyone ready at hand – a mass text might make sense here)
- Senior management team to gauge scale of crisis, determine if incident warrants Zoom and/or physical team assembly
- If appropriate, senior management team to activate dedicated crisis team/alert crisis support staff
- Crisis support staff to clear/secure/supply crisis Zoom or physical War Room. Set time for meeting as soon as possible
- Ensure/verify the safety of the employees (I recommend having planned back-up ways to communicate with employees. What is the plan if phones, electricity and internet are down or a flood has wiped out half the city where your workers are?)
Crisis Zoom or Physical Meeting Agenda
- Assess scale of crisis
- Assess who the affected parties are
- Determine what steps are necessary to secure the safety of the employees
- PR Team or designated media spokesperson to report on media inquiry (if relevant)
- Determine if a press release or formal statement is required
- Determine scope of necessary internal /employee outreach
- Determine how to communicate to other affected parties
- Assess if need exists to formally notify national, city or community officials
- Formally agree/assign roles & responsibilities, including who will script communications to media, management team, employees and community
- Assign To-Do’s and next meeting (you may be doing these 2-3 times a day or more depending on the crisis)
- Agree timing of formal communiqués/actions related to crisis
- Agree to spokespeople
- Develop messaging/formal response points
Immediate Action Items
As you can see, a consistent approach to the crisis is key. For all your possible scenarios, you want to flesh them out. Under the scenario you want to list possible actions that might trigger that scenario (except “unpredictable,” obviously).
For our pandemic scenario, our possible crisis triggers looked like this. Yours may be different:
PANDEMIC – PUBLIC HEALTH DISASTERS
- Coronavirus (COVID-19) or other dangerous disease affects large groups of the population where our company operates
- The disease is rampant after a natural disaster and breakdown of local services (typhoid, cholera, malaria, etc.)
- An employee tests positive for a dangerous disease like COVID-19
- A large percentage of our employees and/or their families are sick, and we cannot function as a business for a long period of time
- The government declares a health emergency or is likely to very soon with enforced behavior like business shutdowns, no travel, mandatory testing, etc.
- Local health infrastructure collapses
- Loss of food, water, housing or other basic life necessity due to pandemic
- Reporter contacts the company wanting a quote about how the health disaster will affect the business or workers or writes a negative story about our response to the disaster
Tools and Resources for planning
My approach here is very old school. All you need is word processing and the fortitude to print, collate, 3-hole punch and securely store multiple copies of this plan. The senior management team not only needs to be able to access it online; but should have a physical copy (bright red binder!) at home and in the office. When all else fails, paper works just fine. That way, any employee can grab the binder and start the process. If it is the senior management team that is incapacitated, then it is crucial that anyone can operate the plan.
You want to use checklists and have clear instructions in the front of the binder and with each scenario. Some of you technology whippersnappers may want to use technology for the whole thing. There are some fantastic crisis programs out there for planning and executing crisis plans. Many commonly used project management tools are also useful for planning and execution because you can assign and check off items as you go. Knock yourself out. However, these are the essentials and if a paper binder is all you have, then it’s enough if a thought has been put into it. It’s the planning that counts. Take it from the old school.
The Wall St. Journal put out an excellent report that includes issues for employers to consider. It might be helpful to you as you’re building your own plan.
Specific thoughts about Amazon
When I look at Amazon in relation to our business, my concerns are focused on what would happen if my clients couldn’t sell anymore for an extended period of time. We have nearly 40 employees on two continents that are supported by this business. We just signed a two-year lease in Iloilo City for the entire third floor of a building.
If people stop buying stuff on Amazon – or are unable to buy stuff on Amazon due to delivery system disruptions – we could be laying off people within the next few months. If Amazon’s seller performance team is non-functioning, we won’t be able to reinstate people. While reinstatement is not the majority of our business anymore, it would still hurt a lot.
I’m confident Amazon has a crisis plan and I’m hoping it works. Some of their vulnerabilities that would affect us include:
- Global – they are all over the world and will be affected by this pandemic to varying degrees in every country in which they operate.
- Logistics/delivery – if governments stop transportation and delivery services for even a short time, it would hurt all of us. If shipment carriers are incapacitated by sick employees, the same.
- National Emergency regulations – right now there are restrictions on pricing for certain goods. We could see that expand to a wide range of products which could, possibly, be required to be sold for cost by the government. Demand would be high and profits zero.
- Reduced consumer demand – If people stay home and avoid normal activities they will need and spend less. While food deliveries would increase (one of their lowest margin categories), everything else would decrease. If people are worried about losing their jobs or not being able to work for a few weeks, they won’t spend. If people are avoiding gatherings of all kinds, demand for business and celebration supplies would drop, and on and on. This is very likely to happen as the disease continues to spread.
- Business operations – if a large number of employees get sick, daily business processes would slow down significantly.
After 9/11, I watched one of my competitors implode from $10M a year in revenue to closing their doors in three months. I think he’s still selling real estate. My team survived the blow-up of tech and the ensuing recession, but many did not. I was lucky. We were acquired by a much bigger agency where only a small amount of their business was in technology. I learned a lot about diversification, and it made me stronger. When I started a new agency a few years later, we were in completely different industries. And it was awesome…until the next recession hit, and companies stopped paying me again.
When I switched to selling on Amazon, it was glorious. Buyers pay for your stuff before you deliver it. Margins were great. Cash flow was great, but Amazon wasn’t paradise for very long. Suspensions and policy enforcements are a huge disruption for sellers to put it mildly. Normal competition and a huge influx of new 3P sellers changed some of those awesome margins. With the consulting practice, it seemed like Amazon was only escalating its compliance requirements, so the long-term prospects for our business looked good.
Now things could go to hell pretty fast for me and my clients, but this is the nature of business. There will always be things beyond our control that hurt us. Our best defense is to plan ahead. Expensive stuff like insurance, a legal team, and a good CPA are critical to a business. Many of my clients only have insurance on their inventory. They don’t have a key man or business continuity insurance. Many don’t have an ongoing relationship with a lawyer. Statistically, many don’t have a will or corporate directive that covers what happens to their business if they die or are incapacitated for an extended time. Most basic business policies only provide $10K in case a business is sued.
Personally, I think things are going to get worse. I’ve looked at the science and the numbers. I understand how epidemics grow exponentially. It seems manageable until it blows up seemingly overnight. I am hoping for the best and planning for the worst. I cannot control our government’s response or another government’s response, but I can control mine. I have a lot of faith in Amazon to manage and weather this crisis, but I can’t rely on it. Neither can you.
While things are still relatively calm (before the storm), take some time THIS WEEK with your business advisors and plan ahead. I sincerely hope none of us need our plans, but you will be glad you did if things get worse. I’ve canceled my speaking engagements later this month for ASD and Vegas. I’m in one of the highest risk groups for death from COVID-19 because of underlying conditions (roughly 1 in 5 mortality rate). This is an exposure risk I can avoid and I will.
Whether you think the risk is low or high, please take care of yourselves and your families. Good self-care and reasonable preventative measures are never a bad thing.
PS. Please also have a family meeting and talk about what the family is going to do if Nana gets sick or Daughter Judy can’t work and pay her rent. Easter is coming up. Are you going to church? Two recent infections were contracted by attendees at a funeral. What’s your family plan for important get-togethers like this?
How can we help you?
Amazon is still open for business and so are we. For the moment none of those gloomy possible scenarios have occurred. This week we’ve been talking to sellers who were suspended for profiteering or lost important listings in Amazon’s 1M+ listing purge. We are still helping sellers get ready for Prime Day this summer, enforce their IP rights and improve their PPC campaigns. Let us know how we can help you!