It is never too early to start your Christmas shopping, right? Well, that statement is about 500% more accurate in the year 2021. With massive supply chain issues continuing to wreak havoc on the global economy and cause severe headaches for suppliers, retailers, and shoppers across the board, this holiday season may require a level of flexibility that we haven’t seen in years.
With many shoppers accustomed to getting anything they want on-demand, the current situation has been a major wake-up call. It has forced the industry to rethink some of the principles that have dictated their practices for decades. So, whether you’re playing Santa Claus and are worried about how you’re going to put presents under the tree, or are a retailer wondering how you’re going to keep clients happy—let’s take a look at what’s going on out there, some strategies for dealing with it, and how it is playing out in the Swiss market.
The supply chain trouble explained
To put it simply—the supply chain has not yet recovered from COVID-19. In 2020, worldwide factory shutdowns threw the global supply chain into chaos. And although many things have since reopened, lingering virus-mitigation measures continue to limit efforts to return the supply chain to pre-pandemic levels.
Many big industry players limited worker levels due to fears of the further spread of COVID-19. In China, port terminals were temporarily shuttered due to the country’s COVID-19 zero-tolerance policy, creating backlogs at some of the world’s largest ports (more on that below).
As former US trade negotiator Harry Broadman told Insider—
“From an economic perspective, it’s sort of like a game of musical chairs. The world economy is out of sync because parts of it were forced to go offline when the pandemic started, and getting all the industry players back in line at the same time is near impossible.”
Demand is soaring
What’s more, demand has been steadily increasing over the last two years, and the principles that have long governed supply chain best practices are proving woefully inadequate.
All parts of the supply chain, most of which are built on so-called ‘lean’ principles (no slack and little redundancy), were simply not prepared to meet the requirements of this increase. As a result, while consumer demand can increase rapidly in a matter of months, it takes a great deal more time to build up the port capacity, warehouse space, and manpower needed to meet that demand.
Getting stock from point A to point B
Even if the products are getting produced, though, many of them are getting stuck in the wrong places. The world only has so many container ships. Since the first phase of the pandemic meant China was shipping vast volumes of protective gear like masks and hospital gowns worldwide, containers were unloaded in places that generally do not send much product back to China—regions like West Africa and South Asia. Therefore, empty containers were piling up at far-off ports while China has no way of shipping other goods destined for wealthy markets in North America and Europe.
And thanks to the magic of market forces, as containers were scarce and demand for shipping intense, the cost of moving cargo skyrocketed. As reported by the New York Times,
Before the pandemic, sending a container from Shanghai to Los Angeles cost perhaps $2,000. By early 2021, the same journey was fetching as much as $25,000. And many containers were getting bumped off ships and forced to wait, adding to delays throughout the supply chain.
So, what about holiday shopping?
This year, the crowds of holidays shoppers will be forced to confront supply-chain shortages on everything from everyday products from household goods and electronics to cars, food, and raw materials.
To further complicate matters, empty shelves can be alarming and tend to spur panic-buying sprees. And at this point, shortages are guaranteed—at least in the short term as the supply chain continues to be stretched to its limit.
Swiss context
Those us operating in the Swiss market are subject to the same issues playing out elsewhere. The delivery problems in Asia are causing goods jams in Switzerland, dealers are warning against last-minute purchases, and many are already asking shoppers to accept that the desired product may no longer be available.
As reported by 20 Minuten, Digitec Galaxus is among the many companies recommending that customers order early.
In addition to the graphics cards affected by the bottleneck in spring, printers, baby monitors, radio play boxes, vacuum cleaners, and coffee machines are in short supply. The brand was also quick to point out that it was not only private customers dealing with the consequences but that there are also many companies waiting for their devices.
According to the company, the Migros branches are struggling with delivery delays in the household sector, toys, and textiles. The Migros subsidiary SportXX complains about the continued tense situation for Velos. Bicycle parts have therefore already become popular stolen goods. The DIY store “Do it + Garden,” on the other hand, had to accept massive price increases due to the vast global demand for wood.
A good time to consider alternative products
As to when this will come to an end—no one really knows. Experts state that there are good reasons to suspect that this will be with us well into 2022 and maybe longer. Shortages and delays are likely to affect this year’s Christmas and holiday shopping season by making it much harder to find key goods. Many companies ordered earlier, which exacerbates the shortages, sending more goods surges toward ports and warehouses.
What retailers can do to weather the storm
Chris Smid, one of our top online marketing experts and marketing intelligence professionals, has some advice for brands regarding how to make the most of the holiday season despite the situation:
As a retailer actively selling D2C through its online stores, it is essential that all teams work together this winter season. Products with high demand will sell out quickly, and it’s important to keep a tab on your marketing campaigns that are focused on your products. Here are a few tips for your marketing team:
- Make an overview of your current product-focused campaigns in Google Ads, Meta (Facebook/Instagram), TikTok, Pinterest, etc.
- Sit together with your product team and understand what products will quickly sell out and update each other on a weekly/daily basis. As soon as products go out of stock, it’s vital to update campaigns accordingly and spend your budget wisely.
- Analyze the products that you have available and brainstorm how you can focus your marketing campaigns around your stock.
- Create conversion-driven landing pages for high stock items.
- Use detailed product pages for out-of-stock items to make buyers aware of similar products that could interest them.
- Use your homepage to drive people to your focus items for this holiday season.
One trend we have noticed in the D2C market is building up a refurbished product category to compensate for the missing products coming in overseas. Many brands still have warehouses filled with returned items or items with only minor design flaws.
We are a big fan of this trend as it allows us to use our full potential and set the right impulse in the market. The situation we are currently in is also a mirror of how we have come accustomed to constant product availability. Educating shoppers and markets on refurbished items can give this sector higher visibility and establish a stepping stone for future operations.
Understanding how and where you are spending your money this season will be vital to using your budget wisely. At GANDT, we have created a framework that allows us to quickly analyze all marketing activities across all platforms and blend the data with your ERP system. This has allowed us to understand what campaigns are driving the bottom line up and what potentials are still untapped.
This article was co-written by Christopher Smid (Marketing Intelligence Professional, GANDT Zürich Team) and Megan Flottorp (Content Marketing Specialist).
