As the holiday season quickly approaches, small businesses and retail giants alike are preparing for a tumultuous Q4. This may feel like the Ghost of Christmas Past for those who faced similar challenges in 2020, but for most businesses this is an expected forecast in light of the supply chain issues that have persisted since the beginning of the pandemic.
Alex Willen, the founder of premium dog treat ecommerce startup Cooper’s Treats, has felt the strain of supply chain challenges on multiple fronts. “First, we order some of our accessories (things like paw- and bone-shaped ice cube molds) from China, and there have been some really serious delays in getting those shipped to the US,” he said. “Second, we use freeze-dried meat in our treats, and that’s become exceptionally hard to come by these days. We only source our ingredients from the US, so that adds to the challenge.”
Alex is not the only business owner who has been forced to make supply chain adjustments to keep up with customer demand. Across the globe, businesses are bracing for a holiday season laden with even more delays, shortages, and unhappy customers than ever before.
Current supply chain obstacles will lead to future shipping delays
The list of retail inventory impacted by the ongoing supply chain crisis is growing by the day. Retailers that sell books, furniture, home appliances, electronics, children’s toys, clothing, automobiles, and even some food staples are struggling to keep up with demand—and peak shopping season hasn’t even started yet.
It’s easy to pinpoint a single cause of the supply chain challenges: COVID-19. Global regulations to prevent the spread of the virus have made it difficult for some manufacturers to maintain normal levels of production, and a June outbreak in the Guangdong province of southern China has led to record-breaking congestion at most of the world’s cargo ports. Add to it the scarcity of some raw materials and the ongoing labor shortage, and you have a perfect storm for a logistics nightmare.
For businesses in the United States like Cooper’s Treats, this means inventory and supplies will be delayed by weeks, if not months. Willen explained to Small Business Computing that these supply chain and logistics struggles raise questions about the best way small businesses can prepare for the holiday season. “[For us], the answer is really just that we placed the largest orders we could afford as early as possible. Some of our products from China are hitting the warehouses now, so we’ll see some extra storage charges on those, but better than having them get stuck and not show up in time for the holiday season!”
Holiday shipping will cost more
Aside from shipping delays, the intricate web of supply chain snafus also means holiday shipping costs are expected to reach unprecedented levels. As expected, the United States Postal Service recently announced surcharges for commercial and retail shipments that will go into effect between October 3 and December 26, 2021. The increase is consistent with reports of surges for FedEx and UPS as well; most carriers temporarily raise their rates around the holidays to account for the higher demand.
However, the increased demand combined with shortages and logistics obstacles has sent the price of shipping skyrocketing. The cost to ship a single container overseas is currently 10-20 times what it used to be, which means businesses must offset this cost in one of two ways. Either they can charge customers more to have their products delivered, or they can eat these costs to prevent customers from feeling sticker shock and not completing their purchases.
Large corporations usually have enough padding to deal with situations like this, but for small businesses, the latter might not be a feasible option. In most cases, communicating with customers early and often will help customers understand why shipping costs have increased.
Transparency is key with customer communications
It may only be September, but it’s never too early to start communicating with customers about what to expect when holiday shopping comes around. Many retailers have started advising customers to place orders for gifts, supplies, and other holiday necessities months in advance. Not only does this give business owners a longer runway to fulfill orders and plan for delays, but it also gives customers a realistic time frame for when their orders will arrive.
Some businesses like clothing retailer Everlane have taken the transparency approach to the next level. In addition to alerting customers to potential delays, they recently sent an email explaining why these delays are happening:
Shortages and delays aren’t unique to any business right now, but making sure your customers understand the timeline for when they will receive your products will benefit everyone involved. Include information about possible delays in all customer communications, and provide a direct line of communication for customers who have questions about an existing order. This will help eliminate as much confusion and frustration as possible.
As we get closer to the holidays, it might also be a good idea to set an early cut-off date to guarantee delivery by certain dates. It’s better to under-promise and over-deliver, so give yourself enough of a margin to meet your delivery promises in the event of a worst-case scenario.
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