Let’s start with the bad news. Since March 2020, a series of seemingly endless lockdowns, shipping delays, and labor shortages have rocked the supply chains of even the most well-established ecommerce brands.
The resulting cost spikes, inventory shortages, and lost sales have led to massive changes in the retail realm.
If you’re still cleaning up the mess from last year, don’t kick yourself. The demand for ecommerce has simply outgrown the global supply chain infrastructure in a way that no one saw coming.
The good news? By arming yourself with a little information on upcoming supply chain trends, you can increase stability in your business and protect your store’s profits.
In this article, we’ll recap the recent waves of supply chain challenges from 2020 to now and share the freshest data and expert insights on what to expect as we move into the future of ecommerce.
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The scoop on supply chain trends
- Supply chain drama revisited: How did we get here?
- The supply chain management trends to watch in 2022
- Buck the trends and build a resilient supply chain
Supply chain drama revisited: How did we get here?
From battling to find raw materials to fighting to stay stock, to say running an ecommerce store was a “challenge” last year would be a massive understatement.
And while some issues appear to be improving, supply chain management in 2022 is far from perfect.
While it’s important not to dwell on the past, one of the best ways to forge a better path ahead is to analyze how we got here to begin with.
Let’s start by taking a look at exactly what went wrong in supply chains over the past two years, and how it affected growing ecommerce brands.
Global lockdowns and massive stock shortages
When lockdowns were first introduced, many manufacturers and suppliers were forced to close their doors (and in some cases, their entire businesses) overnight.
Suddenly, brands were left with few places to find goods causing mass inventory shortages. And this couldn’t have come at a worse time.
During the lockdown, shoppers flocked to online stores in droves to get items shipped straight to them while bunkered down at home. The pressure on the both supply and demand side led to inevitable shortages in inventory.
Established brands elbow out growing stores
Despite the shortages, demand for inventory continued to build.
Once manufacturers and suppliers started to reopen, there was a massive ordering influx. 📦
It became extremely challenging for growing brands to compete for production slots as the bigger, more established brands were able to wave their hefty wallets to secure manufacturing runs and pre-made goods.
As a result, many sellers experienced stockouts, causing them to lose sales, rankings, and customers.
Shipping delays and massive price hikes 📈
Soaring product demand combined with fewer available shipping slots caused sea freight costs to skyrocket, with the cost of certain shipping routes rising up to sevenfold.
The cocktail of reduced shipping slots, limited staff, heavy goods vehicle (HGV) truck driver shortages, social distancing regulations, and overwhelmed ports caused significant shipping delays. And let’s not forget the Suez Canal disaster which saw a major shipping route blocked for nearly a week.
Suffice to say, the supply chain last year was a total mess. So, what can we expect moving forward?
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The supply chain management trends to watch in 2022
Now that we’re clear on the core variables that got us here, let’s take a closer look at how supply chain management is evolving today, and what it could mean for your store.
Here are some of the biggest supply chain management trends for 2022 and beyond.
Product sourcing moves closer to home
Due to the long waits and missed opportunities ecommerce brands have endured over the past two years, many sellers are bringing their product sourcing closer to home.
From hunting down local suppliers to partnering with border states, ecommerce entrepreneurs are starting to see the value of localized manufacturing.
By sourcing from your home or target market country (or at least, closer to it), sellers can avoid long shipping times and potentially save on taxes and tariffs.
Demand and inventory forecasting will matter more than ever
Going back to retail roots, many store owners will make inventory forecasting a priority, but with one major change. 📊
Ecommerce entrepreneurs won’t be slugging away through spreadsheets to predict demand. Instead, they’ll lean on sophisticated inventory forecasting and management tools to improve their ordering accuracy and optimize delivery times for better cost savings across the supply chain.
Supply chain management gets smart with analytics and automation
Hand-in-hand with better inventory forecasting, brands of all shapes and sizes will equip their stores with more centralized and comprehensive supply chain management (SCM) solutions for increased visibility and organization at every touchpoint.
While these SCM solutions aren’t a crystal ball, they can help sellers:
- Remove siloes and keep a close eye on the supply chain, alerting them to potential threats in real time.
- Understand how market events are affecting the supply chain to make fast adjustments to supply and reordering strategy.
- Automate repetitive tasks for increased efficiency and reduced errors in ordering, tracking and delivering inventory.
Brands will put the spotlight on customer experience
With 80% of customers saying they don’t just want but expect personalization from retailers, many ecommerce brands were already putting an increased focus on customer experience prior to the pandemic.
In the future, the brands who rise above ongoing supply chain challenges will likely also be the ones who double down on customer experience efforts.
Expect to see more sellers employing strategies like personalization and loyalty incentives in an effort to win and keep their shoppers in a hyper-competitive post-pandemic market.
Store owners will streamline their supply chains for greater agility
The big brands may take the lion’s share of the manufacturing space, but one advantage growing ecommerce brands have maintained throughout the supply chain chaos is the ability to adapt quickly, thanks to their smaller supply chains.
In the years ahead, ecommerce brands of all sizes will dial in their supply chain even further to gain the agility needed to react to market shifts more quickly without putting sales and profits at risk.
For example, ecommerce brands may look to remove or alter things like:
- Costly or admin-heavy processes
- Slow-moving inventory
- Unreliable suppliers
- Expensive carriers and freight
Sellers will revisit their shipping strategy
Ongoing shipping delays served as a hard-earned lesson for sellers who didn’t have their freight forwarding relationships fully dialed-in last year.
Many brand owners will be examining these relationships and actively looking for ways to cut costs and secure better shipping times. Forging relationships with a broad network of carriers and shipping companies may become a priority as brands attempt to build a safety net that ensures on-time delivery.
Online retailers will tap into policymaker initiatives
In response to the supply chain disruption, some governments have launched funded programs to help restore stability in their respective countries. Depending on their niche and business model, ecommerce brands may utilize these resources to reinforce their supply chain.
For example, in the US, the Biden administration pledged $17 billion towards upgrading US ports and has also committed to improving data sharing and freight planning, as well as ensuring that the mission-critical Los Angeles port is able to operate 24/7.
Buck the trends and build a resilient supply chain in 2022
While there are still many supply chain challenges for brand owners to reckon with, there are also new tactics and solutions on the horizon that can help sellers face these challenges head-on.
Here are a few best practices to help you build more resilience into your supply chain this year.
Start prepping for the supply chain crunch now
By September 2021, many sellers had realized they were already too late preparing their supply chains.
This year, don’t get caught by surprise.
Here are some ways you can beat the supply chain crunch:
- Start preparing for your key events and peak seasons 4-6 months ahead.
- Lock in your primary inventory orders early. 📅
- Set aside emergency inventory and store it in key locations in your territory.
- Begin testing backup carriers now and negotiate volumes.
Revamp your SCM tracking tools
To ensure your store runs like clockwork no matter the season, it’s important you have the right SCM tools to support your store.
Look for a sophisticated supply chain optimization solution that can help control key areas in your business, such as:
- Demand and inventory forecasting
- Sourcing and production
- Shipping tracking
- Warehouse management
- Supplier communications
- Opportunity spotting
- Real-time alerts
- And more
Use your liquid capital to get one step ahead of the supply chain
Everyone knows that in business, money talks. But this adage has never been more relevant.
When your cash flow is tied up in delayed Amazon payouts or long cash conversion cycles, it can feel impossible to collect the liquid capital you need to secure inventory, digitize your SCM systems and get sales back on track.
But with flexible working capital, you can:
- Stock up on inventory
- Prepare for peak seasons sooner
- Capitalize on opportunities your underfunded competitors can’t 😉
At SellersFunding, our team can help you go from application to up to $1 million in working capital in as little as 24 hours. We also help you monitor the cash you’re allocated to ensure you have the right amount to grow on.
So start your preparations early. Stay in the know on the latest supply chain trends, and don’t be afraid to pivot when you need to. With the right plan and approach, you’ll be able to build a formidable supply chain that can handle whatever the world throws at it.
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