Should We Worry About Possible Shortages and Supply Chain Disruptions During the Peak Season?
The year-end holiday season has arrived, and with it concerns regarding shortages and supply chain disruptions. How serious is the situation and what should we expect?
We are just in the middle of peak season, during which businesses expect to get a high percentage of their annual income through Christmas, New Year and Día de Reyes’s sales. Since the beginning of the Covid-19 pandemic and even before that, supply chain disruptions and logistics issues have abounded internationally, so companies have reasons to be worried about possible shortages during the most important time of year.
Setbacks Have Become the Standard
The difficulties that have plagued the industry until now linger on delays brought along by the pandemic, high international shipping, and freight rates, semiconductor and container shortages, port congestion, and so on. In the face of this, many businesses started to stock up on goods beforehand, in order to elude any shortage issues during the peak season. Further complications, such as the rail blockades that took place recently in Mexico, have proved the former decision to be a great one.
The companies that placed orders ahead of time expect to have no supply problems, especially regarding imported products. Having leeway in case of delayed deliveries will also make a difference, as well as substituting merchandise that has importation issues and resorting to local manufacturers to keep a well-stocked inventory and make the most out of sales. Chances are that if goods are not off on a boat right now, they will not reach their destination on time, since there are already tons of delayed merchandise, expected for this season, waiting to be unloaded at the ports.
Products in Short Supply
The importation of certain goods that arrive in the country by sea freight has faced serious delays. Items from sectors like the toy, textile, and electronics industries (mobile phones and computing devices in particular) are expected to be scarce. Some other products will also be less available in inventories, such as Nike and Adidas, since these brands have been struggling recently with shutdowns in Vietnam and China. It should also be kept in mind that, since the Buen Fin and the Black Friday just took place, the product reserve for the last month of the year has diminished.
In order to make the most out of goods that are in short supply, some companies have implemented strategies such as omnicanality, inventory integration and its availability in every point of sales, as well as offering different pick-up or delivery options to the customers. These tactics help bring the products within reach of every potential buyer, no matter where they are. In this way, shortages have become an opportunity for businesses that have recently joined e-commerce to take it to the next level by distributing their products more efficiently, thus increasing their competitiveness and securing their subsistence.
The Much Expected Market Recovery
The busiest days of the season are forecasted to go from December 18th to 23rd. The rising percentages of the population vaccinated against Covid-19 and the opening up of borders and businesses offer a promising scenario for peak season sales and economic recovery. It remains to be seen how large the gap is between this year’s and pre-pandemic numbers and whether they show an improvement from last year’s rates.
Consumers seem to have good spirits and to be well aware of shortages, since many of them have planned their holiday shopping ahead of time and even have backup options in case their first choices are not available. However, they will continue to judge businesses by how efficiently they satisfy their demand, so you better be prepared.
While some consumer demand may wane after the holidays, shortages will most likely continue. According to the cyclical logic of market behavior, recovery is expected to arrive eventually, though short supply will probably be overcome well into 2022 or even until 2023. In any case, it will take more than time alone to solve the supply chain crisis.