Holiday Supply Chain Crisis: How Will Amazon Help Sellers Prepare?

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supply chain crisis

The supply chain is the unseen pathway that delivers items from manufacturers to sellers, and then to customers. And when interrupted, a crisis of essential goods could begin worldwide. 

In 2020, the COVID-19 outbreak prompted shutdowns of many industries around the globe. And while in lockdown, customer demand shifted to online shopping, which clearly benefited Amazon and many other ecommerce platforms. 

But what is the current situation for Amazon sellers in the final stretch of 2021?

Read on to find out!

The Broken Supply Chain

On one side, product manufacturers experience material shortage. On the other hand, sellers can’t deliver goods as fast as before.

Plus, customers run against “currently unavailable” items more often. In fact,  Adobe Analytics expects that out-of-stock messages will increase by 172%.

Now, the 2021 holiday season is upon us, and lockdowns are being lifted. That’s great news for the world, but it also means that product demand is skyrocketing.

Is the global supply chain ready to serve the holiday season as before? Sadly, no. Here are a few reasons why.

Online Saturation

As of October 2021, Adobe Analytics tracked over 1 trillion visits to sellers’ website stores. Plus, the company also monitored more than 100 online sales.

We can’t deny that COVID-19 made eCommerce flourish. Now, online shopping is the go-to solution for millions of customers.

This change prompted many retailers to become digital. Brick-and-mortar stores reorganized their supply to meet online demand.

But as retailers became digital, the online marketplace began to saturate. This translates to the following setbacks:

  • Long delivery times
  • Back-ordered products
  • Slow inventory rotation

Manufacturing Shutdown

With employees getting sick or locked down, the pandemic forced the shutdown of many industries. And those that remained open had to reduce their production capacity.

The situation was worse in countries where most of the world’s manufacturing is located. For example, China, Vietnam, Taiwan, and Germany.

Consumers also had to stop acquiring specific products from such suppliers. However, item demand shifted to more immediate needs. 

Shifting Demand

Instead of buying leisure products, users acquired home and office items. They also looked for gym equipment and video games.

Purchases for said goods surged. But these products were never before in such high demand. So, the market wasn’t prepared to deliver them. 

And with manufacturers in lockdown, it became more difficult to produce and provide orders on time.

Components Shortage

Merchants did try to meet customer demand, but they faced another problem.

Let’s say a Chinese business needs chips to build computers. But the facility must ship them from Taiwan. However, the chip manufacturer closed down due to the pandemic.

So, factories lacked the components to build specific products. So, it was increasingly difficult to produce more goods for the market.

Transportation Crisis

On top of the shortages, there are not enough transports to ship products and components. Why? Containers are scarce, stuck, or too expensive.

International trade slowed down, which means some freighters are sitting idle in the ports. But customer demand is still up.

Freighters had to transport components and finished products. And with fewer transports, items began piling up in ports and the price for containers skyrocketed.

Labor Shortages

Labor shortages are causing many products to get stuck in the ports. Take the UK as an example. Since Brexit, the country’s faced a serious problem due to a lack of truck drivers.

The US and Germany also face trucker shortages. So, with no transport to take products from the ports into warehouses, sellers’ inventories are running low.

Sources: CNBC and NY Times

The Amazon Supply Chain Strategy

Sum up these bottlenecks, and you get two results: price inflation, and the 2021 holiday supply chain crisis.

The global supply chain has long-suffered from many of these issues. But the pandemic exacerbated the situation.

Lifting lockdowns may have a positive effect. But it’ll take more than that to boost sales and deliveries this Christmas.

One poll by Deloitte found that 39% of consumers plan to shop early to avoid delays and Back-ordered items.

As customers rush to buy presents, merchants must prepare for increased supply-chain setbacks. Luckily, Amazon sellers may have an easier time doing so.

That’s because the retail giant has prepared a few strategies to tackle the 2021 holiday supply chain crisis.

Let’s take a look at Amazon’s plans to deliver a great 2021 holiday season.

Delivery

Amazon’s shipment has also seen a big boost. The marketplace increased its ports of entry by 50%. It also doubled its container processing capacity.

The retailed giant also expanded Amazon Air. Now, the air cargo fleet boasts more than 85 planes, ready to transport packages all holiday season.

Besides, their freight network now has around 50,000 trailers at its disposal. Such road power will speed up delivery from ports to fulfillment centers.

Warehousing

Amazon is well-known for its warehouse management. The retail giant has fulfillment centers located near big cities and population hubs.

Then, many cities feature regional warehouses to boost order deliveries. With such stock capacity, Amazon ensures customers receive their orders on time.

But Amazon’s been investing more on inventory spaces in late years. Currently, there are more than 800 Amazon delivery stations across the world.

Plus, the retail giant increased its personnel to more than 260,000 drivers. This is thanks to the Delivery Service Partner program, which allows third-party services to deliver Amazon orders.

Technology

The marketplace has invested in inventory forecast technology over the years. These tools help sellers predict the number of products needed to meet demand.

On top of that, Amazon Prime guaranteed two-day delivery, or even same-day delivery, to subscribers.

Primer sales offer a great opportunity for FBA sellers to help users have the best Christmas they can.

The Human Touch

Currently, Amazon has more than 1 million employees worldwide. Plus, the company is hiring 150,000 seasonal roles across the US.

These fulfillment and delivery personnel ensure that FBA sellers can pick, pack and ship to customers in time for the holidays.

Source: AboutAmazon

Final Thoughts

The rollout of COVID-19 vaccines is a much-needed boost to heal the economy. But the pandemic is still disrupting the global supply chain.

It’s expected that sellers will suffer from these problems well into 2022. But we’re actually starting to see signs of recovery.

Amazon has adapted and learned to expect the unexpected. And marketplace sellers still collect a steady revenue.

The retail giant still has one of the best supply chain machines in the world. Now they’ve made some crucial investments in personnel, transport and stock management.

Plus, customers trust Amazon will come through for them. So, with these key upgrades, sellers will navigate safely through the holiday supply chain crisis.

Author Bio

Esteban Muñoz is an SEO copywriter at AMZ Advisers, with several years’ experience in digital marketing and e-commerce. Esteban and the AMZ Advisers team have been able to achieve incredible growth on the Amazon platform for their clients by optimizing and managing their accounts and creating in-depth content marketing strategies.

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