Consumers who order products from Amazon sometimes assume they are buying directly from the e-commerce giant. But the online shopping platform includes a vast community of third-party sellers. Like small and mid-sized retailers, many are taking a financial hit due to supply chain snarls.
During the peak of the goods and materials logjams in 2021, upwards of 93 percent of Amazon sellers lost revenue because they were unable to secure products and fill orders. These entrepreneurial-minded people found themselves in the same boat as mom-and-pop outfits overshadowed by big box retailers. Reports of mega-corporations such as Walmart and Target hiring their own containers vessels demonstrated that it takes deep pockets to remain profitable when the supply chain grinds to a virtual halt.
But what surprised many in the logistics and retail sector were reports that 94 percent of large brands suffered significant setbacks due to inventory declines. The same held true for 93 percent of brand management agencies and 74 percent of first-party outfits. While consumers generally saw Amazon as the model of consistency, these are challenges sellers experienced in 2021 and could face going forward.
- E-Commerce sellers faced inventory delays of two months or longer.
- Sellers were forced to modify business practices and pivot to new products.
- Third-party sellers sought different fulfillment options.
The root cause of unreplenished inventories could be attributed to manufacturing plants in China shuttering to deal with Covid variants. In Europe, at least one major port was rendered inoperable due to massive protests. But perhaps the greatest challenge stemmed from multi-national corporations driving up container fees and freight rates. Small and mid-sized companies simply couldn’t compete as inflation spiked and the cost of securing imports priced them out of the digital market. A recent survey of 3,500 e-commerce sellers reportedly uncovered just how fragile the supply chain remains.
- Nearly half of large brands indicated inventories suffer 1-4 month delays.
- More than 40 percent of large brands and 27 percent of small businesses could not re-order from suppliers.
- More than a quarter of small businesses say the supply chain negatively affects inventory.
- More than 10 percent of sellers report losing their Amazon “Buy Box” because products were out of stock.
Freight moving organizations are keenly aware the cost of shipping goods and materials to West Coast ports soared in 2021. What many do not realize is that the cost of shipping a container filled with products from Asia exceeded $20,000. That’s largely why small e-commerce businesses reportedly lost $5,000 to $25,000.
If there is to be some silver lining to the goods and materials crunch of 2021, it’s that massive infrastructure investment is being poured into U.S. ports, rail, highways, and the federal government now has the will to address woes in the trucking industry.
Sources: junglescout.com, freightwaves.com
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