Supply chain disruptions in 2021 have caused countless online sellers to lose their revenue with endless order delay and increasing shipping cost that almost goes out of control.
Take Amazon as an example, according to a new survey by Jungle Scout, 93% of Amazon sellers complained about their loss.
Over 45% of small businesses predicted their total lost sales due to supply chain issues to be less than $5,000, but 30% lost between $5,001 and $25,000 in total.
What’s going on right now?
· Suppliers: production low-ebb
Now we are in Q1 of 2022, the CNY holiday has just finished. For the dropshipping supply chain, maybe not everything has started to go back on track so far.
Still, many sellers are getting busy communicating with their Chinese suppliers about order processing that is still pending – never think about the CNY only taking 7 days, especially during the pandemic period.
Many local factories haven’t resumed production completely yet owing to a labor shortage caused by extended holidays for the return of migrant workers, job change peak season, and the latest quarantine policy.
With that said, sellers have to go on slowing down their new marketing plan and deal with the customer dispute.
· Logistics: hard to recover from disruptions in the short term
In terms of logistics forecasting, even though the global fleet will jump about 1.5% with more new players in the sea freight market as well as a 2-3% increase in export by containers, the shipping fee still has little hope to drop back to the level it was two year ago due to staff shortage and transportation delay.
A similar situation is what air cargo is facing, or even worse. With growing volumes of shipping demand, but tighter capacity, the rate might even go up a little bit more in the short term.
The growing delivery demand also is challenging last-mile carriers. Even though carriers are reaching their limits, for big shippers, there may still be not so many options, which allows carriers to control the prices.
The most effective solution to supply chain management in 2022
The answer is to buy stock in advance.
It is believed that all the sellers are taking measures to lower the risk of disruptions. The core strategy logic always comes at a cost of paying more for the supply chain.
To find a balance between shorter reaction time and higher reliability, keeping higher levels of inventory in advance tends to be more and more merchants’ choice to lower their cost and risk undoubtedly.
Why do dropshippers buy stock in advance?
·The most effective way to lower shipping costs.
Having bulk stock in global warehouses beforehand is a good method to lower the shipping cost as well as fasten up the shipping time.
Instead of fulfilling orders one by one, shipping multiple items together in advance can save dropshippers a lot of cost and time on first-mile shipping.
You only need to pay for the first mile at once, and the rest cost like last-mile delivery to a different address will be much lower than dispatch from China whenever you receive orders. With such unstable freight pricing, the earlier to take action means less risk of additional loss on shipping.
· One of the best methods to shorten processing time greatly.
In terms of an internal investigation on the dropshipping pain point, about 94% of dropshippers are paying more attention to how to shorten processing time nowadays.
Usually, the processing time is easy to be affected by suppliers’ production plan and their level of storage with too many unstable elements to make sure product supply e.g. holidays, labor, raw materials, and so on.
Once the product is running out of stock, the processing time will have no other way but extend.
· Lower the risk of a rise in the product price
Except shipping, the other cost that sellers care about the most is the product price. Like a knock-on effect, the supply chain crisis also impacts the raw materials.
With the increase in raw materials prices in China recently, many products have increased it’s selling prices and you will need more budget to get them from suppliers. To avoid driving up costs and losing sales, having stock at one time helps to control the cost in a relatively short time.
· One of the strongest support to improve sales and customer service
All of the efforts that dropshippers are taking for their supply chain management are meant to make their business run better and better, improve sales, and develop loyal customers.
A reliable supply chain can be one of the strongest support to your business. Even though dropshippers are used to being well-armed to face unpredictable challenges every day, you still have so many controllable things to leverage, like preparing the product inventory earlier for your sales.
Latest Solution to Lower Inventory Cost – 30% Inventory Deposit
However, for dropshippers, purchasing inventory seems to go against their business model and brings them more pressure on the cost.
To reduce stress on the inventory cost and shorten the processing time, CJ has lately launched a new deposit service for private inventory – dropshippers can choose to pay a 30% deposit to stock their inventory and sell beforehand.
Once receiving the deposit, CJ will pre-stock and dispatch the products whenever you place orders first. The deposit will also be returned to sellers when all the inventory has been run out and all fulfillment orders have been closed.
With deposit preorder inventory service, dropshippers can save more up-front investment and put them into other aspects of running their online store.
Under such supply chain conditions, purchasing stock in advance is the easiest but more effective way to improve processing time and lower costs in 2022.
With the global eCommerce business growing rapidly, how sellers can adjust sell and supply chain management strategies smoothly are significant to online business.
Despite unpredictable risks could not being eliminated no matter what, we can always choose to take actions to manage controllable factors. Along with dropshippers, CJ will go on updating more backup supply chain solutions to provide better support.