As we head into the 2021 holiday shopping season, sellers on Amazon and other online marketplaces are facing supply chain issues that could make this year uniquely challenging for everyone.
The most visible example of these issues is just off the U.S. West Coast, where dozens of massive container ships sit anchored as they wait through backlogs and chokepoints at our major ports of entry.
This broken supply chain stems largely, but not exclusively, from COVID-19 pandemic lockdowns and mitigation measures in various places around the world over the past two years. This has led to labor shortfalls at the ports, in the trucking industry and in other critical points in the supply chain.
In addition, there are delays in the procurement, production and manufacturing of key resources and components on a wide range of products, such as semiconductors and processors for computers, and even resin needed to make plastic for beverage bottles.
This has all led to various (and sometimes random) product shortages downstream in the supply chain, causing bare spots in sellers’ inventories and on store shelves, whether physical or digital.
The result, as we head into the holiday season, is the potential for headaches as sellers try to meet consumer demand for products that were typically in stock and available in years past, but are hard to get this year. Unfortunately, there doesn’t appear to be much relief in sight prior to the holiday season.
Holiday Consumer Spending Expected to Rise
Even though the problems caused by the broken supply chain have been well-publicized, holiday spending is still expected to reach record levels, according to a recent forecast from the National Retail Federation (NRF).
“Holiday sales during November and December will grow between 8.5 percent and 10.5 percent over 2020 to between $843.4 billion and $859 billion. The numbers, which exclude automobile dealers, gasoline stations and restaurants, compare with a previous high of 8.2 percent in 2020 to $777.3 billion and an average increase of 4.4 percent over the past five years,” says the NRF report.
In addition, NRF expects that online and other non-store sales, which are included in the total, “will increase between 11 percent and 15 percent to a total of between $218.3 billion and $226.2 billion driven by online purchases. In comparison, that number is up from $196.7 billion in 2020.”
Supply Chain Snarls + Record Demand = Early Start to Shopping
These two trends, combined with some recent surveys suggest that the holiday shopping season will begin early this year, and has likely already begun.
NRF Chief Economist Jack Kleinhenz tells us, “Pandemic-related supply chain disruptions have caused shortages of merchandise and most of this year’s inflationary pressure. With the prospect of consumers seeking to shop early, inventories may be pulled down sooner and shortages may develop in the later weeks of the shopping season. However, if retailers can keep merchandise on the shelves and merchandise arrives before Christmas, it could be a stellar holiday sales season.”
A recent article on FreightWaves cites several consumer surveys that also point to an early shopping season, including a recent parcelLab study that found 50 percent of U.S. consumers plan to have their 2021 holiday shopping completed by Cyber Monday.
Additionally, The Holiday 2021: Consumer Preferences and Expectations survey, conducted by FreightWaves and research firm YouGov, also found that five percent of consumers had already completed their shopping; 12 percent said shopping would be done by Halloween; and 33 percent would be finished by Cyber Monday.
What Should Sellers Do? How Can You Prepare for Supply Chain Disruptions?
For sellers on Amazon and other marketplaces, many supply chain issues may be completely out of your control, so focus on what you can to make an exceptional customer experience and minimize issues with customers and the marketplace.
For what it’s worth, Amazon recently said that it has taken steps to prepare for supply chain disruptions and keep customers happy, which can be comforting for many who are Fulfillment by Amazon (FBA) sellers. Here are some of our additional tips to help you prepare.
- Anticipate an early start — You may be seeing an uptick in buying already as consumers try to get ahead of supply chain issues and obtain the gifts on their lists, especially more popular and trendy items.
- Diversify your suppliers — It’s a good idea to work with multiple suppliers and vendors so if one is having supply chain issues, then you might be able to procure inventory from the other one.
- Stretch products with bundles — If there’s a particular product that needs tighter purchase caps due to stock, consider bundling it with complementary products to increase value and customer satisfaction for each sale while maintaining your inventory.
- Make sure you keep receipts — The last thing you want is Amazon questioning whether or not your products are legit, so scan, file and track your purchase receipts and invoices so you can easily provide them to the marketplace if asked.
- Have the infrastructure to deliver — While you can’t control all parts of the supply chain, you can make sure that you have the internal logistics processes in place to ensure your products are shipped and received in a timely manner. Likewise, make sure your returns processes and reverse logistics are equally customer-friendly.
- Ensure quality control — Be sure to check your products at the moment of receipt and the moment before you ship to certify there is no damage. You want to limit bad reviews as much as possible during the holidays.
- Review all product descriptions — Also make sure you have clear and accurate descriptions and photos for each product to avoid any confusion. Descriptive and enhanced content will also help consumers searching for similar products find you.
- Provide good packaging and good packing — Everyone likes a good unboxing, so make sure your products are packaged well and packed sufficiently so there is no crushing or damage during shipping and delivery.
- Communicate well and provide good customer service — Maintain proactive communication if and when you have any customer support issues arise, and try to resolve them in a timely manner.
- Consider additional marketing spend — A pay-per-click campaign in your online marketplace can help move your products to the top of search results for relevant keywords. An effective budget is usually double what most sellers think, so be prepared to invest if you have the inventory to support more traffic.
If you have any questions, or if you’re having issues with your Amazon account, please reach out to us today and we can help.