Troubled waters in the logistics sector in 2021(2)

We have already talked about why the waters are rough in the logistics sector and how the increase in demand has affected global demand, as well as the problems faced by manufacturing companies after the hardest part of the pandemic declared by coronavirus. 

We knew that COVID-19 was going to transform eCommerce; not to mention retail, which has been through a very tough test that many have not been able to overcome.

Although there is always a bit of guesswork and it will depend on the type of business, distribution channel, the segment or niche in which each company operates... there are still some consequences that we can anticipate without too much margin for error.

This is the first thing you have to assume. If, like the vast majority of stores, you have a large part of your turnover associated with this season... this year may be much more complicated than you expected. 

The toy sector, for example, is anticipating serious problems. Hasbro, one of the world leaders, has already communicated that it expects shipping costs up to 4 times higher than in previous campaigns.

We say "the logistics of the Christmas campaign", but in reality we are referring to any product that has a high seasonality. No one can guarantee, even if we pay more, that our orders will be delivered on time.

If the price fluctuation is slight, most importers will decide to absorb the variation themselves and their margins will not suffer so much.

The problem is that, in this case, we are facing really important increases, and it is normal that this reduction in profits will have a domino effect from the manufacturer (who already pays more to obtain his raw material) to the distributor, the retailer and, finally, to the end customer.

Moreover, we already know what happens to prices when supply and demand are destabilized: they will always tend to rise.

Inventory management seems to be particularly important in the coming months.

Stock-outs and running out of those products that generate the most conversions at peak times such as Christmas or Black Friday is a real problem. The customer gets frustrated and, being in such a tight range, cannot afford to wait for you to replenish it even if they want to.

Those who have guaranteed inventory of the juiciest products (toys, electronics or any other star gift) will be in a position to attract new customers, whom they will be able to build loyalty in the medium term.

Strategically, we may be facing an opportunity for those who are able to anticipate.

Note: we are not talking about the user experience. This can be impeccable, with a page that loads fast, a great design of the information architecture and whatever you can think of to make your site a perfect store... But if you have no product, the shopping experience will always be negative for the customer.

We must also take into account an important aspect, and that is that most buyers do not know (and do not have to) what the market situations are and why they cannot find what they are looking for.

Until the situation of the production plants in China and India is regularized, the excess demand produced in these months is satisfied, the maritime traffic and the situation of the ports is normalized... there is only one thing we can do.

You have to get ahead of the game right now. Do not think much longer because there are only 4 months left and when you want to react it may already be too late. We have always advocated that the best time to prepare your eCommerce for Christmas is in summer. Go for your inventory or, at least, for those products that you know have a great run at this time of the year.

Here we enter directly into the territory of speculation. In any case, many specialists, seeing how the market is behaving, predict that we will not return to normality until well into 2022.

So, we give you another piece of advice along the same lines: also anticipate the following seasonal campaigns, you have plenty of time to arrive at the next dates unmarked from the rest.