As we head into Q2 of 2022, the eCommerce sector is continuing to be affected by widespread supply chain disruptions from a wide range of vectors, including the pandemic, war, and inflation. Hopes of the supply chain returning to a pre-pandemic “normal” are being dashed. Experts interviewed by several top publications agree that this state of supply chain uncertainty is the “new normal” and that disruptions aren’t going away anytime soon.
For retailers and marketplace sellers, the stresses of supply chain disruptions result in lower profits, higher fulfillment and warehousing costs, more unsatisfied customers due to delayed delivery times, and increased difficulties with shipping products from overseas. But if these problems aren’t going anywhere anytime soon, what are sellers doing about it? Let’s dive into the ongoing supply chain woes, look at how we got here, the impact it’s having on eCommerce, and what to do to smooth out the bumps in the road.
Why eCommerce is stuck on the supply chain gang
To get perspective on the situation, we have to go back to where the problems began: the global onset of COVID-19. As countries locked down, it caused a domino effect where one toppled domino led to another, and another, and another. While the speed at which pandemic-related dominos are falling has slowed, it’s become clear that some of them will not be reset to a normal position, while others exist in a state of flux, flipping from up to down at random.
Consider these dominos, and how they fell: COVID-19 Lockdowns > Increased ecommerce sales > Container Shortage > Delayed Shipmentments > Congested Ports > Dock worker shortage > Trucker Shortage > Fulfillment warehouse space shortage > Increased fulfillment and storage costs > Fulfillment driver shortage > Delayed deliveries > Unsatisfied customers > Sellers and retailers earning less > Sellers, retailers, and suppliers raising prices > Inflation.
Then, just as the pandemic was starting to abate globally, war broke out in Ukraine, setting the second set of dominos in motion. This time, rising fuel costs, economic sanctions against Russia, transportation resources used for humanitarian or military needs, currency fluctuations and changes, and more dominos that remain to be seen are all in play.
All these dominos continue to depress the various moving parts of the supply chain and increase costs to make life difficult for all stakeholders. In a new report from Digital Commerce 360, the CEO of Salt Cellar said, “This may be the new normal, with uncertainty being the wild card as the global supply chain is hammered by global events.” With looming threats such as a US West Coast port strike mid-summer looming, potential US legislation damaging to eCommerce, and the uncertain outcomes of the ongoing war, it’s looking like that assessment is spot-on.
So with the only thing certain about the supply chain being its uncertainty, what can be done to maintain eCommerce businesses in these times? For sellers and retailers, some strategies to employ are:
- Order earlier than ever before.
- To compensate for higher lead times, boost order volumes.
- Don’t rely on just-in-time delivery.
- Look for alternate suppliers and sources.
- Use a physical store as a warehousing space.
- Consider hiring a supply chain specialist to handle the burden of managing the supply chain and logistics.
It may take a year or possibly more for the supply chain to stabilize. Or it may never stabilize. But consumers will increasingly continue to demand to buy online and have products shipped to their homes. The best thing sellers can do is be prepared, agile, adapt, and evolve.
Read more at NRF.
The latest on Amazon’s antitrust issues
This week on the Amazon reality show, two updates on the marketplace giant’s ongoing antitrust legal battles.
On Friday, March 18, Washington DC Superior Court Judge Hiram Puig-Lugo dismissed an antitrust complaint against Amazon that alleged it had prevented retailers from offering better deals elsewhere. Attorney General Karl Racine filed a lawsuit against Amazon last year. It alleged that Amazon encourages higher-than-necessary consumer prices by enforcing policies that ensure Amazon makes a marginal profit on each item sold and simultaneously discourages sellers from offering their products at lower prices elsewhere. The judge found no evidence to back up the AG’s claim that Amazon inflated customer prices.
According to Digital Commerce 360, “price-fixing allegations have haunted Amazon for years. An Amazon merchant accused the company of forcing up prices on competing websites in a 2019 letter to federal regulators.”
The second update involves US antitrust legislation designed to impact big tech companies such as Apple, Google, and Amazon. As previously reported, the American Innovation and Choice Online Act were approved by the US Senate. It’s now awaiting a vote and reconciliation with a competing House bill. Now the US Department of Justice has announced its endorsement of the act. In a letter sent to the Wall Street Journal, the DOJ says, “The Department views the rise of dominant platforms as presenting a threat to open markets and competition, with risks for consumers, businesses, innovation, resiliency, global competitiveness, and our democracy.”
The endorsement by US law enforcement signals a desire to take action against big tech companies and marketplaces should the act pass into law. For now, the bill remains in a divided Congress, awaiting the next steps of the legislative process.
Now there’s more to Twitter than “mean tweets” – because Twitter is expanding into eCommerce. The social platform will provide some businesses with a new shopping function that allows them to market up to 50 products in a digital catalog linked to their profile.
The new Twitter Shops are currently only available to a select group of merchants. Users that visit a retailer’s page and click on the shopping symbol will be taken to a product catalog. Users who then click on a catalog product will be taken away from Twitter and to the retailer’s website, where they may make a purchase.
In recent months, Twitter has prioritized shopping and commerce as it seeks to expand into new industries and diversify its revenue sources beyond digital advertising. According to Twitter, “Shops gives merchants a larger, fully-immersive space to highlight a longer catalog of products.” For the 24% of retailers that advertise on Twitter, Shops gives them a new outlet for social selling and a chance to get a piece of the estimated $45 billion social commerce pie.
Read more on Twitter.
Wish is going through some changes – what’s happening and why?
Back in the salad days of 2018 and 2019, Wish was the world’s most downloaded shopping app and the third-largest marketplace in the US by sales. But lately, the fortunes of Wish have taken a turn for the worse. As part of a major reorganization, the platform announced that “effective March 1, 2022 UTC, merchants will no longer be able to sell into 79 destination countries/regions, as Wish will no longer support purchases from users in these areas.” The affected regions include a large swath of Africa, Asia, the Middle East, the Caribbean, and Pacific island nations.
In addition, a recent report by Business Wire highlighted issues with declining revenues, which went down 64% year over year to $289 billion in 2021. Monthly active users also drastically declined from 107 million MAUs in 2020 to 44 million by the end of 2021.
But conversely, the company has recently announced plans to become an invite-only platform for new merchants and a partnership with Wix to connect ecommerce merchants on the web hosting platform to the Wish marketplace.
So what’s going on with Wish? Wish previously had a reputation as sort of the Dollar Store shoppers’ Amazon that sold cheap Chinese products. But now, Wish seems to be purposefully bottoming out and rebooting to attract a better quality of consumers and products. Indeed, new CEO Vijay Talwar says, “These figures tell me that we need a new way of thinking to lead us back to the growth we know is possible.” It will be interesting to see if Wish can turn itself around while simultaneously changing the way the marketplace operates for sellers, and improving the quality of both merchants, products, and customers.
Also in the news
- Explore our new Quick Start Guide for brands. Amazon.
- Mobile App data is now available in the Business Reports tool. Amazon UK. Amazon US.
- Amazon Updates Price-fixing, Mediation, and Refurb Policies. EcommerceBytes.
- EBay Fulfillment: Coming to a Country near You. EcommerceBytes.
- Now Easier to Make the Most of Your Etsy Ads Campaign. Etsy.
- Alibaba and JD.com Remain the Largest B2C E-Commerce Market Players in China for 2021. GlobeNewswire.
Webinars in the week ahead
Various dates: Amazon advertising’s global webinar program continues with 20+ webinars scheduled, covering Sponsored Products, Sponsored Brands, reporting, optimization, and tips. Amazon.
For US sellers
April 5: Advanced TikTok – Moving Beyond Testing for Full-Funnel Success. Tinuiti.
April 6, 7, 8: Best practices for setting business discounts. Amazon.
April 6: All About eBay Stores – for eBay Sellers in the Northeast US. eBay.
April 7: Boosting online sales through marketplaces and drop shipping. Digital Commerce 360.
For UK sellers
Various dates: Free webinars on tips and best practices for Sponsored Ads. Amazon.
Various dates: Amazon webinars covering selling, fulfillment, SFP, advertising, and Amazon Business. Amazon.
eBay bungles sneaker March Madness-themed Sneaker Showdown, announces price drop after sneakers have sold out.
What’s the worst idea for marketing a sneaker sale? How about creating a social campaign tied to a popular sporting event, March Madness – then announcing a sneaker price drop on social media five hours late, so that when customers go to the shop, almost everything is sold out? Unfortunately, this nightmarish marketing scenario is exactly what happened with eBay’s Sneaker Showdown.
While there’s no doubt that eBay and marketing agency The Many didn’t intend to blow the big game with an unforced error, the foul on the play quickly turned the mood on Twitter sour. Potential customers following the promotion realized they were left on the bench and were not happy about it.
Ebay has done well of late in reinventing the platform as a home for lovers of high-end niche collectibles like luxury watches, trading cards, and vintage sneakers. However, this incident reeked of vintage eBay, home to buggy technology, sketchy service, and questionable marketing initiatives such as this February’s “Cubid.”
You have to give eBay a few points for trying hard to be clever with their marketing. But when reviewing the instant replay of this fiasco, we need to get the final call from Hall of Fame coach John McKay:
Reporter: “What do you think of your team’s execution, coach?”
McKay: “I’m in favor of it.”
Read more at Value Added Resource.