Resources

The eCommerceer Podcast: Supply Chain Crisis

Written by Stephanie Frackowiak | Sep 16, 2021 3:18:00 PM
In this episode we speak to Stephanie Frackowiak, Managing Director of TradeBridge France, about the recent supply chain difficulties and how that may affect eCommerceers in the run up to Christmas.

As the global supply chain crisis continues, Britain now faces further disruption in the form of queues at petrol stations everywhere, caused by recent labour shortages in the UK.

These compounding issues have added to a turbulent last six months for consumers and eCommerceers alike. 

As both now turn their attention to Christmas, the question facing eCommerceers is, what effect will the disruption of the last two quarters have on the busiest time of the year for retail?  

 

Global supply chains hit where it hurts: 

After the the pandemic slowed production to unprecedented lows, the current problem facing global supply chains is two-fold.  

Firstly, there has been an overwhelming increase in the price of shipping, Forbes reported instances of $6,000 increases in price per container throughout Asia and Europe, between April and August 2021.  

The second consideration is delays to delivery, caused in part by the COVID-19 pandemic and the additional restrictions placed on both production and shipping.  

These issues were compounded in March 2021 when the ‘Ever Given’ ran aground in the Suez Canal. The impact of the stranded container vessel is not only still being felt internationally, it also seems to be constantly increasing. 

 

Global demand outweighs supply: 

There are also retailers that are reluctant stock seasonal goods in fear of further ‘lockdowns’, meaning some supplies are limited and the level of fulfilment is low.  

The genuine risk of demand far outweighing supply globally, stretches far beyond there being less presents under the tree this year. 

 

Black Friday: what’s in it for retail? 

Considering the current disruption, speculation on the value of the annual, frenzied Black Friday sale events has continued to grow. 

In the wake of the pandemic, and now with labour shortages in the UK, 81% of high street brands are encouraging shoppers to go online this Christmas. 

As a route to market for retail, the eCommerce sector has strived to replicate the performance of physical stores to ensure revenue. Now the tables seem to have turned. 

 

There’s less reason to discount this Christmas 

As retailer’s margins have been slashed from the increase in shipping costs and product shortages, they may be less inclined to discount and lose even more profit just to be competitive.  

More importantly, the retailer’s motivation to discount hard and early in events like Black Friday, will be much lower as demand currently far outweighs supply.  

 

The customers that fuel growth 

The customers that contribute to a retailer’s growth, and drive consistent revenues are repeat customers.  

The offers typical of events like Black Friday and Cyber Monday, tend to attract bargain hunters that comparatively shop for the cheapest deal. That’s of less value to the retailer. 

Further, the ethicality of the wasteful practices that consumers exhibit during events like Black Friday and Cyber Monday, have called into question the sustainability of flash sales events, as we progress towards more environmentally conscious shopping practises. 

 

Stephanie Frackowiak,
Managing Director of 
TradeBridge, France 
commented:
 

There are three things that an eCommerceer must keep in mind during the build-up to Christmas, to improve their chances for success. 

The first being preparation and planning, the eCommerceer needs to have right stock in the right supply so they can properly meet demand. 

Secondly, there needs to be diversity in their supply chain.  

With global supply chains now under more strain than ever before, relying on one avenue to source products will simply not be enough. By utilising numerous methods, eCommerce retailers can spread the risk and increase their chances of capitalising on opportunities. 

Thirdly the eCommerceer must focus on fulfilment. Even considering the current circumstances, ensure that the customer receives their product in a time frame that is acceptable. The methods of pursuing this can vary from retailer to retailer. 

While large online business, that operate on an astronomical scale can utilise their margins to pour money into fulfilment, smaller businesses can be smarter and agile to manoeuvre through the potential pitfalls and deliver successfully.” 

Don't forget to subscribe and keep an eye out for our next episode, coming soon.

Also available on Spotify and Apple Podcasts:

               

Don't forget to subscribe and keep an eye out for our next episode, coming soon.

 

If you have any questions or would like to get in touch, contact us at tradebridge.com/ecommerce