3 Ways Amazon Sellers Can Use the Supply Chain Crisis to Level Up!

November 11, 2021 Chuck Kessler

3 Ways Amazon Sellers Can Use the Supply Chain Crisis to Level Up!

Experts are advising e-commerce sellers to start planning NOW for the next supply chain crisis. Here’s how to make sure you're ready!

In late October of 2021, the city of Long Beach, California issued an emergency order allowing businesses to increase the height of the stacked shipping containers crowding their lots. And now, instead of a romantic, hazy view of Catalina Island, beachgoers are treated to a wall of immense container ships peppering the Los Angeles coastline. 

Several, once-in-a-lifetime occurrences happening at the same time have had a great deal to do with why the global supply chain (and increasingly busy ports) have been so dramatically impacted.

An ongoing drought diminished the harvest of global agricultural crops. The increasingly unpredictable climate led to last year’s deep freeze and multi-state blackouts. That skyrocketed energy needs and decimated oil and gas operations across the central United States.

Recently, a sophisticated hacking operation shut down the largest U.S. fuel pipeline causing gas prices to soar. Just a few months later, the pandemic returned to India full force leading to a huge slowdown at its biggest ports.  

Stacked Containers and Hacked Pipelines

Backstopping this series of disruptions are four major recent trends:

  • The global pandemic has changed everything, including the super-charging of e-commerce as a way of shopping
  • International bottlenecks (such as the stuck container ship in the Suez canal) have at times brought shipping to a complete halt
  • Last year’s shortages are causing companies to use the stockpiling of raw materials as a first line of defense (and inadvertently exaggerating the effects of the crisis)   
  • Dramatic labor problems are another (ongoing) result of the pandemic. Even when products do make it to port, in many cases there aren’t enough workers to get them packed up and on their way. 

shipping containers stacked

Global E-Commerce is Undergoing Dramatic Changes

Amazon, Walmart, and Apple are all warning shoppers that they might want to take a very close look at the most recent delivery updates before choosing a big red bow on their hoped-for holiday gifts. 

The pandemic helped start this mess

Maybe we can blame Amazon (and every other merchant that promises immediate delivery), but most of the industrialized world is accustomed to a well-oiled supply chain. 

Unfortunately right now, many industries, including, shipping, transport, e-commerce, and retail are facing significant labor shortages. 

The World Happiness 2021 Report drills down to look closely at the effects of COVID-19 and how the pandemic affected global labor. It points out a significant decline in the total hours worked and highlights the cascading effects of a supply chain (and industry) in crisis. 

The article goes on to say that according to the International Labour Organization (ILO), global working hours declined by 17.3 percent in the second quarter of 2020. That is equivalent to almost 500 million full-time jobs lost within the last year alone.  

Can we also blame social media?

According to the U.S. Department of Commerce, consumers spent $791.70 billion online with U.S. merchants in 2020. That’s an increase of 32.4% year over year, double the 15.1% increase in 2019.

I don’t think I’m giving away any state secrets when I say that social media plays a large role in the way that we live our lives. Now, Instagram, Facebook, Twitter, Pinterest, and TikTok are all contributing to the spike in online shopping. 

Business Insider points out that according to a new Salesforce report, orders from social media sites increased 84% in the most recent third quarter. WeChat and many other Chinese social platforms have long integrated FinTech into everyday communications between friends and family. Now, it’s becoming more prevalent throughout the rest of the world. 

Hoarding on an enterprise scale

A year ago, as the pandemic turned the entire world upside down, everyday citizens began hoarding toilet paper and hand sanitizer. Prompted by high demand, the shortages changed the way people shopped. According to a survey from Oracle, over 91% of shoppers have made changes to their buying behavior and are routinely stocking up on merchandise. 

Now, it’s international corporations that are panic buying. From hip electric car manufacturers to flashy Silicon Valley technology companies, large companies are buying more material than they need, mirroring the behavior of most of the industrialized world just 12 months ago. This “me first” behavior is stretching an already-taxed supply chain network to an unsustainable level.

The Effects of Supply Chain Disruptions are Intertwined

An October, 2021 article in the Wall Street Journal, spoke of how transportation executives were navigating the supply-chain gridlock frustrating U.S. importers. The Journal said that in many cases, the supply chain ground to a complete halt because of the lack of “a simple piece of steel.” 

The trailer chassis that are used to ferry containers from dockside terminals have become increasingly difficult to source. Experts are saying that the (over) 70 container ships lining the southern Californian coast are there in large part because the existing supply of trailer chassis already have containers on them waiting to be driven to their destinations. 

In Argentina, Bloomberg reports that the country’s famed vineyards are struggling to find wine bottles because of a global shortage of glass brought on by the supply chain disruptions. The lack of glass and its raw materials comes at a bad time. Alcohol consumption is up across the globe. It seems that I’m not the only one who has enjoyed an extra measure of adult beverages over the long, and sometimes stress-inducing pandemic. 

At the same time, Reuters has reported on how supply chain challenges have cost Apple $6 billion in sales during the crucial fourth quarter, missing Wall Street expectations. Chief Executive Tim Cook went on to say that the impact “will be even worse during the current holiday sales quarter,” and that the ”chip shortage has persisted and is now affecting most of our products.” 

3 Ways to Prepare for the Next Big Supply Chain Disruption 

The e-commerce world in 2021 is a very bumpy place. A lot of smart people are advising that online sellers start planning NOW for the next cataclysm. Here are three ways that Amazon (and other e-commerce sellers) can not only get ready for the next disruption, but end up with a stronger, more agile business in the long run. 

1. Have a plan B in place

There’s probably nothing you can do to eliminate every component of global supply chain disruption. Still, working closely with your suppliers, considering an affiliation with a third party logistics company, and keeping a very close eye on your inventory management is a great first step. 

An honest, early communication with your supplier might lead to you locating another supplier for an important Amazon product. It’s always a good idea to place an experimental test order early on before a crisis arises. That could lead to an additional supplier relationship and might give you a way of keeping your business moving forward. OR, it could as easily lead to a new product and niche that you had never before imagined. During times of uncertainty, the more options the better. 

2. There’s strength in numbers

If you’re not a part of an e-commerce sellers group, now’s the time to start! 

The simple, undeniable fact is that it’s invaluable to surround yourself with others that are facing the same pain points, trying to solve the same problems. Looking for a new source for an important component of an Amazon product? You might find it while listening to a speaker (or in line for a cocktail) at the next e-commerce meetup. 

How about a well-reviewed local 3PL (Third Party Logistics) company with good rates? The answer to that one is probably as near as the Amazon sellers Facebook group, webinar, or trade show that you had been meaning to sign up for. 

If you’re looking for a group to help level up your e-commerce knowledge or solve an ongoing puzzle, here are two great places to start:

E-commerce. Business Lady In VR Headset Pressing Invisible Button Experiencing Virtual Reality Over Black Studio Background.

3. Put technology to work for you

If you’re looking for a new career, you could do much worse than pursuing a degree in data analytics. Every successful SaaS (Software as a Service) company is looking to hire data experts. I’ve seen postings on LinkedIn that hint at an active pulse as the starting requirement for job applicants. 

These days, big data, artificial intelligence, and advanced supply chain and inventory management software are all featured topics at the most influential e-commerce conferences. 

  • Big data, data science, and data analytics

These emerging technologies help companies to use data to uncover insights and modernize their supply chain management. Among the ways that data analytics can help e-commerce companies are through quality control, analysis of weather patterns, cash flow management, and predictive strategies. 

  • Artificial intelligence and machine learning

Artificial intelligence involves computer systems that can mimic human intelligence. Machine learning is a field of study that uses computers to make predictions. Using historical data, they can even make decisions without human coaching or oversight.

AI and machine learning can help businesses develop automated processes that use predictive modeling to help make critical decisions including inventory management and shipping logistics. 

  • Supply chain management software

Many of the top e-commerce SaaS companies have recently developed and launched their own proprietary supply chain management software. Helium 10 has Inventory Management. JungleScout has Inventory Manager. Both of them claim to take a data-driven approach to help e-commerce sellers with their Amazon inventory management. 

The idea is to create an algorithm that enables sellers to customize their own supply chain models. That results in accurately calibrated lead times and reorder frequencies. With a better understanding of a supplier’s shipment speeds, forecasting becomes much less of a guessing game. 

I think we all are starting to realize that this won’t be the last e-commerce supply chain challenge that we are forced to navigate. Taking these few simple steps will go a long way towards making sure that the next one isn’t a huge bump in the road. Instead, by following these suggestions, you’ll be able to level up and distance yourself from those who weren’t ready. 

Have questions? CANOPY Management is here for you.

CANOPY Management wants to be your e-commerce partner. We leverage our experience from across all corners of the Amazon industry to help you scale your business and gain market share. This partnership allows you to maintain control of your Amazon business while at the same time benefitting from the wealth of experience and expertise of the CANOPY Management team.

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Chuck Kessler

I'm a surfer, climber, trail runner, and adventurer who loves to write. My focus is on e-commerce and technology as the Content Manager for CANOPY Management.