WHAT'S CAUSING THE CURRENT SUPPLY CHAIN DISRUPTION?
There are several reasons why the world is experiencing a supply chain disruption in 2021, and possibly into 2022. If you remember the panic toilet paper buying when the pandemic hit, in a way this became a trickle-down effect.
That’s because supplies began panic buying more materials than they needed to keep up with demand. This ranged from all kinds of items and materials, including plastics, wood, and even soybeans. No matter what industry you are in, you are likely observing some effect of supply chain disruption and product shortage.
Production in China slowed down during the height of the pandemic. Serving as the world’s factory for nearly all everyday items (and much more), availability for materials came to a screeching slow down.
Meanwhile, the current shortages are also causing price inflation. As the global economy works to recover from the pandemic, businesses and customers alike are feeling the crunch.
HOW IS THE DISRUPTION AFFECTING ECOMMERCE?
Product shortages are causing problems ranging from dissatisfied customers to having a plan for an economic downturn.
The disruption is forcing ecommerce brands to predict how customers and even your competitors may respond to economic downturns. It’s also making brands look into alternative suppliers and devise a plan of how to get what they need.
However, the effect of the disruption isn’t entirely negative. The disruption presents an opportunity for some or all the following:
No matter the positive or negative effects of the disruption, here is how you can start handling shortages.
WHERE TO START WITH HANDING SUPPLY CHAIN DISRUPTION
Ecommerce is incredibly competitive, and having a plan on how to handle disruptions can save your sales as well as your reputation. However, brands must face reality that this disruption is likely going to last for quite a while. Without a plan, you’re sailing on a sinking ship.
Consider Your Inventory
The first approach is looking at your current inventory. What do you currently have that you can ship to customers quickly and affordably?
This is the time to start stockpiling on items needed for inventory. Imagine what you would need if your supply chains were entirely unavailable to you. Even though there is likely going to be a wait, put your orders in as quickly as possible to build up inventory. This way, you won’t be caught unprepared or unable to supply customers with what they need.
Get a Backup Supplier
There’s no better time than now to consider a backup supplier. What other suppliers can you reach out to for fulfilling inventory needs? You might need to consider new suppliers from other corners of the globe to help bring in new inventory.
Partner with Logistics Professionals
When you’re having trouble determining the logistics of low (or no) inventory, it can pay to partner with the professionals. They can potentially help you find new sources of inventory that you may have otherwise overlooked.
Create an Emergency Plan
Consider what you will do if there is no inventory available to buy. This will be part of your plan of action to stockpile what you need. However, you’ll also need to consider how you will communicate emergency plans to customers.
Customer communication is a major aspect of surviving a supply chain disruption. In part II, we’ll show the best practices of customer communication during a supply chain disruption---a big key to surviving the uncertain.
It was a year-and-change ago that we first addressed the good news/bad news narrative ecommerce merchants were facing after a global pandemic kneecapped economic and public health concerns around the world. That was a seismic shock on a number of levels, but as business and life needed to go on, we explored strategies for preserving investments and even making the most of a new captive audience of shoppers forced to buy online.
Fast-forward to this point, more than halfway into 2021, and we are still here. After a brief period of “reopening” after a vaccination purported to liberate us from isolation, a resurgent Covid-19 wave has yet again imperiled virtually every aspect of our lives.
How did your store fare during the initial lengthy duration? Did you thrive or struggle? Whatever is your story, it’s about to again face challenges. But the shift toward online buying has paved the way for a potential continuation of opportunity.
Lockdowns hitting physical retail establishments last year bumped up the statistics for ecommerce merchants worldwide, but not by a significant margin – at first. Eventually, those numbers increased, reflecting comfort among consumers who grew familiar with and appreciative of the convenience of buying online.
Averages being averages, not everyone fared the same. The Latin American marketplace Mercado Libre doubled its daily sales between the second quarter of 2020 and the same period of 2019. Coronavirus, not a friend to anyone, did boost sales in the US for ecommerce merchants. Year-to-year sales increased just over 32 percent at the height of the lockdown. Perhaps Americans were more motivated than anyone to shift their shopping venues.
Not all good news
Though a general trend sent consumers to their computers and phones in record numbers, that did not translate to a universal benefit for all sellers. The reason will resonate as obvious: averages are driven by big players, and all in all, the existing ecommerce giants such as Amazon and Walmart saw the most gigantic hikes. In other words, either those who had experience with established online sellers were more likely to go to them for all or most purchases, or shoppers who were new to the game decided to trust the marquee merchants over smaller entities.
“Digital divides” played a role in this; online infrastructure was prepared to deliver, so to speak. Mid- to small-level sellers had a lot of catching up to do. And for some it never really materialized.
That said, this continued global struggle with a pathogen that doesn’t seem likely to go away presents a renewed opportunity to seize on what is already existing in everyone’s business model, provided they made early efforts to transition.
An important factor for sellers around the world is the role governments play in facilitating access and relaxing regulations. Convincing elected officials that economic fitness, including critical levels of tax revenues essential for day-to-day operations, is a primary goal, is paramount. Most understand but may lack the willingness to invest at a time when budgets are shrinking. Economists understand this is the opposite of good economic policy. An organized effort to convince them otherwise could make an extraordinary difference that benefits all.