Supply Chain Bottlenecks Explained
According to Forbes, “Retail sales, excluding food services, through the first six months of the year stand at $3.2 trillion, 22.2% higher than $2.6 trillion in the same period 2020.” Sounds good for business, right? However, there’s a major point to address. Both domestic and international shipping has been impacted by COVID-19 lockdowns. Supply chain bottlenecks and being felt by retailers are reaching consumers, too. And issues are only going to intensify the closer we get to the holidays.
On the supply chain side, these strains include backlogs for consumer goods manufacturers, warehouse disruption, delays for trucking companies and freight deliveries, railyards, and of course, shipping overseas.
Retailers have had to adjust store assortment based on availability, like Best Buy, while companies like Nordstrom are planning on using airfreight for the holiday season. Walmart is even chartering vessels specifically for their goods. White toy companies, like Basic Fun (distributors of Fisher-Price toys and Care Bears), are paying the higher shipping container prices and still facing unprecedented delays.
Retailers far and wide are feeling these supply chain bottlenecks and consumers should be prepared to start holiday shopping early. Shoppers may be faced with longer wait times, more and more out-of-stock messaging, and shipping delays. But for resellers, there are a few opportunities that we will cover below!
What’s going on in the supply chain world?
Covid has impacted millions of workers across the globe. Not only in terms of infections either. As people sheltered in their homes, shopping and demand for products have been on the rise. Simply put, demand is far exceeding supply. As factories and manufacturers struggle to keep up, it’s worth noting how these supply chain issues are impacting the rest of the world:
Import prices are increasing
According to S&P Global Market Intelligence, shipping rates are up 18.9% in the second quarter of 2021 versus Q1. Essentially, it’s costing more to ship products since shipping containers aren’t able to be filled and returned to ports where they can be emptied. Shipping container competition and port congestion brought on by COVID-19 outbreaks in key markets are all contributing to these price increases.
Air cargo is getting busy, too.
Taking it to the skies is an understatement. While retailers look for solutions to these bottlenecks, they’ve also turned to other transportation methods—like air cargo.
Upping the frequency of pickups and store deliveries
Time is of the essence, as shoppers buy out both in-store and virtual shelves, retailers can’t afford to wait to respond. Retailers will also have to choose where to send products. The stronger shopping markets at the top of the list, while those not considered to be primary shopping markets may not get the typical variety of inventory.
Holiday inventory will be impacted
Supply chain bottlenecks will be around for the holidays, too. Historically, July is when toy companies are shipping holiday items to retail locations. This year, The Toy Association reported prices for shipping containers have increased by up to 500%. Shoppers may struggle to find popular toys on shelves during key shopping periods. Bigger toy companies, like Hasbro, don’t seem as concerned about shortages but more so prices. Not all toy companies have access to multiple freight providers though and may have to delay new toy releases. For resellers though, this could be a good opportunity as consumers will look elsewhere to get the gifts they want.
Consumers may end up paying more
This part is still speculative, but as more retailers strive to hit their bottom lines, prices for popular categories may increase. Think apparel, consumer electronics, and toys, especially. CPI measures that consumer inflation is creeping up from 5% (May) to 5.4% (June), versus the same time last year. For shoppers looking for a deal, this could be your chance to offer great merchandise and at a discount!
How supply chain issues impact your resale business
While big retailers like The Home Depot’s and Targets of the world work to minimize the impact of these supply chain issues, there are things your resale business can do, too. Here’s how you may feel the effects of supply chain disruptions:
- Shipments can/will be delayed (for buyers and customers)
- Holiday shopping will start sooner
- Materials that you may normally have quick and easy access to may be out of stock
Tips to keep your business prepared
There are certain things you can do to respond to these issues to stay ahead of the holiday rush.
Here are some tips to prepare:
- Start bidding earlier to maintain a steady flow of inventory as we head into the holiday shopping season
- Expect longer shipping transit times based on constrained LTL and TL markets
- Buffer in lead time (or the time it takes to fulfill orders)*
- Check inventory and restock necessary items before you’re completely out
*Pro Tip: B-Stock Customer Service is available to answer any marketplace shipping questions you may have!
C.H. Robinson said, “Both UPS and FedEx expect peak surcharges and volume caps to be in place for the foreseeable future.” Budget for these extra expenses when fulfilling customer orders from now until the end of the holiday season.
While we may not see a balanced supply chain in time for the holiday season (and probably not until 2022 or later), there’s still time to source the inventory your business needs. With all this information in mind, start your bidding early on B-Stock Auctions and B-Stock Supply and be ready for the busy holiday season. Register as a B-Stock buyer today, we’re with you every step of the way!