Supply chain issues cause small retailers to gamble on hoarding
Megan Searfoss racked up sneakers in Connecticut.
Ms Searfoss, owner of two running stores in Darien and Ridgefield, Connecticut, would normally have around 3,000 pairs of shoes in stock before the holiday season. But as she watched supply chain problems in Vietnam mount this summer and into the fall, she secured a new storage facility and now transports around 4,100 pairs.
It’s a costly bet for Ms Searfoss, who said it was extended by about $ 165,000 more than it typically would be in November due to fears of potential shortages.
“It’s placing a big bet and anticipating that what all the analysts are saying is correct,” Ms. Searfoss said. “Usually we go through the New York Marathon and then we stop buying shoes – we sell what we have and come into January super, super skinny. But we’re told not to do that because there just won’t be any shoes.
The buildup of running shoes in Connecticut is just one example of how supply chain issues and pandemic-related shortages are affecting thousands of small businesses in the United States this holiday season . As widespread vaccine availability translates into a busier buying season than last year, businesses of all sizes grapple with the impact of overseas factory closures, port backups , trucking and other labor shortages.
The unpredictability of this year has forced many small businesses to make buying decisions months or weeks earlier than they normally would and tie up more of their cash in their inventory, which can be risky.
“The most important thing is that you really have to order in advance,” said Dan Quinn, owner of What We Make, a furniture company in Algonquin, Ill. That sells tables and other items. items via Etsy. “I have 14 weeks of projects. I need to get most of this stuff in-house as quickly as possible and keep buying it until you have wholesale stock. “
While many small businesses are plagued by overseas manufacturing issues, some have used this time to their advantage. Etsy, which powers the online stores of millions of sellers, said more than half of its U.S. suppliers source materials in their own states, allowing them to bypass many supply chain issues that plague the Mondial economy.
Etsy stores “don’t have the complex supply chains that are vulnerable to single points of failure,” Josh Silverman, CEO of Etsy, said in an interview.
Yet the spectrum of shortages can manifest itself in unusual ways.
Isabel Amigon, owner of the online store Sololi, is still awaiting an order for Christmas tree decorations which she placed in April. The manufacturer warned her that the order would be delayed due to a lack of string to tie on the decorated orbs.
Ms Amigon, who is based in Westchester County, NY, said she was concerned that if she didn’t get it in time for the holiday season, she would have to wait until next year to use the inventory. The shortage of cords also led her to remove specific household items from her website, such as table runners and washcloths.
“Even if I get them by the end of November, I won’t be able to sell them all because most people have already bought their ornaments,” Ms. Amigon said. “I placed the orders early and still have to deal with this situation.”
Other missing elements are more traditional than the chain.
Earlier this year, Angela and Sean Arnold planned to order another set of Disney Princess dolls to fill the shelves at their toy store, Playmatters Toys, in Pepper Pike, Ohio. But they received a notification in September from the distributor alerting them, along with other toy store owners, that the items were “indefinitely out of stock” because a Covid-19 outbreak had closed the factory in Vietnam where the dolls were made.
Even though they had anticipated delivery delays and ordered toys in mid-May instead of August, they couldn’t anticipate the global disruption.
And it’s not just the dolls. The couple ran out of other toys and electronics due to shipping delays or disruptions at manufacturing plants in Vietnam. The couple were also forced to raise the prices of some products due to higher transportation and wholesale costs from toy sellers.
“Some things we ordered in June and July are still coming in,” Mr. Arnold said.
Due to this type of delay, Etsy has viewed this time as a time when small businesses can offer gift options that are not dependent on factories and overseas shipments. Further consumer interest in small businesses, whether online or offline, would more likely be welcome after the pandemic struck a crippling blow to so many people last year.
Etsy said it has seen searches for living room furniture skyrocket 1,572% and less drastic but significant jumps for dining tables, drafts or chessboards, suggesting that some buyers are coming to the site rather than going. in chain stores.
Etsy has learned how to better handle sharp spikes in demand after face masks exploded as a category on the site at the start of the pandemic, and it has made improvements designed to alleviate the shipping issues it has. encountered at the time. Mr Silverman said that now virtually every item from sellers in the United States has an expected delivery date, which was not the case a year ago, and buyers can filter the products by area. location to buy from sellers in their area, which can help expedite shipping.
The company also said it had made inquiries with sellers to ensure they had enough raw materials and supplies when its technology observed an increase in demand for specific items.
Mr Quinn, owner of furniture salesman What We Make, has seen his business explode as Americans grapple with long wait times and lack of availability of chain furniture. Customers were willing to wait 10 weeks for a dining table from her, especially after 20 weeks of waiting at chains like West Elm.
“Big box stores don’t have a lot of things that they normally have, so the good thing for us is that people are kind of forced to look at other options when they used to be content with the simpler option, ”he said.
Yet he saw his business disrupted in other ways, including a sharp rise in material prices and a rush for reclaimed wood, which usually comes from old barns.
“The people who take the barns apart for the equipment we use, a lot of them have ended up being made redundant or made unemployed,” Quinn said. “So we had to try to stockpile material and order way ahead of what we were doing before. “
While Mr. Quinn has thrived despite competition from major furniture vendors, the nation’s largest retailers are often better equipped to handle supply chain issues than smaller businesses. Companies like Walmart and Amazon are big enough that they can charter planes to get certain goods.
Jeannine Cook does not have this luxury. Ms Cook, owner of Harriett’s Bookstore in Philadelphia, noticed over the summer that publishers were struggling to deliver her book orders, with some not even able to provide a timeline for the arrival of orders. . The problem became widespread at the end of August.
Ms Cook, who opened a second store in Collingswood, New Jersey, in July, said more customers were canceling orders at the bookstore.
“It makes me nervous because I don’t want people to feel like they can’t get what they need or want,” Ms. Cook said. “It’s difficult because we are already dealing with big box companies that have so much more infrastructure than we do. “
A recent Adobe study showed that October out-of-stock messages more than quadrupled compared to October 2019. This is one reason why the retail industry, including small businesses , urged the public to buy at the beginning of the year to get gifts for the holidays. season.
“I hate that we have now gone from Halloween to Christmas,” said Ms Searfoss, the owner of the grocery stores, who said she started holiday marketing on November 1 for the first time. “I don’t want people to feel frantic, but I think it’s pretty bad that they’re not getting what they want this year.”
She predicted that shipping delays and out-of-stock issues at large chains could attract customers to her stores. “People, these days before Christmas, will buy anything they can from any local store they can,” she said.
“It’s just a little stressful for me to think, ‘OK, look at everything I’ve bought,’” Ms. Searfoss said. “If I buy it, will they come?” “