By Chris Foti, PMP, Director of Operations
As we head out of the holiday buying season, there are obvious trends that can’t be ignored by Ecommerce marketers. While year over year sales overall are up slightly for this holiday season, the market is still finding new legs amidst compounding problems with supply chain distribution, inflation, and consumer demand. This new environment represents a big opportunity for marketers who are able to take advantage of the shift.
On-demand supply chain availability has long been the backbone of consumer goods. Not long before I started here at ASK, I was an Ecommerce Consultant working with specialty retailers of all sizes – from a small but popular West Hollywood boutique, to the official team shop for the Miami Heat, to large corporations. During an onsite project at the Dick’s Sporting Goods 670,000 square foot headquarters outside of Pittsburgh, I learned that they specifically chose that location because of the ability to utilize a private access road directly into the airport to reduce time for shipping goods and receiving materials.
Put another way, when a Fortune 500 company purchases the land equivalent of approximately 80 full size American Football fields specifically to cut down on distribution time, you know that supply chain optimization is a big deal in the world of consumer retail products.
So where are we at right now?
And how does that impact this year, especially for smaller Ecommerce businesses?
Lingering Effects of the Early Pandemic Initiatives
There are overlapping issues that were accelerated with the pandemic that are making right now a more difficult time for retailers. When the pandemic first emerged, China (as the world’s number one manufacturer of medical supplies) shipped PPE throughout the world in massive quantities.
This has led to the problem of shipping containers being stuck sitting empty in ports around the world due to the lack of demand for those countries’ exports. As this continues, there are less and less shipping containers available for shipping goods.
At the same time, due to the increasing availability of “on-demand” work that can be done remotely or on a schedule that is more convenient to the worker, there is a growing shortage of labor across the supply chain, from truck drivers to factory workers, to retail operations. This labor shortage means that even if the demand for shipping containers around the world is met, there are delays in transporting those goods from ports to shelves.
And these delays are expensive, and that inflation is passed along to the consumer.
If you have shopped for lumber recently, you may have been shocked to find that the prices for this foundational resource have more than doubled and rocketed up as high as 5X over the past year. For this reason, the long-standing movement by manufacturers to operate with a “lean” just-in-time model for raw material acquisition is hurting their profit margins.
However, despite the rising prices, consumer spending is at record highs in the U.S. and the high demand coupled with low availability leads to empty shelves in stores, which leads to an increased reliance on online shopping and demand for fast delivery through services like Amazon Prime, Instacart, DoorDash, Shipt and more. Companies like Michaels Craft Store, Best Buy and Walgreens who traditionally rely on foot traffic for sales are now forming partnerships with these on-demand delivery services to get their products to their customer’s door.
In fact, online Ecommerce is so strong right now, that Target was the first major retailer to reverse a decades long trend of opening stores on Thanksgiving for early Black Friday sales. Instead, major retailers like Target, Amazon and Best Buy kicked off massive savings holiday sales events in October, essentially extending the early holiday buying window from a few days to several weeks.
How Can a Smart Ecommerce Retailer Thrive in This Environment?
The “make-or-break” factor in Ecommerce this year is your product availability. It’s not enough right now to simply find a product with high demand. Instead, you need to know which products are in high demand, and how quickly you are able to get those products to the consumer’s door.
Delays in off-shore shipping will lead to rising consumer dissatisfaction, negative reviews, ad account closures, refund requests and more. This is the year to find “onshore” products that are more readily available and still high in demand. Finding those keystone products will be the key to success this year.
Want to Know More About What’s Next for Ecommerce and How to Find Those Keystone Products?
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