The ongoing festive season has proved to be dearer for both buyers and D2C online sellers. Logistics hurdles are especially bringing down sales and margins for online sellers.
Even as the recession is on its way to claim some of our peace of mind, Starbucks has already made plans to weather the oncoming recession by selling customized cold drinks through its rewards app to grow its ranks of younger, wealthier customers.
Read more: Environmentally sustainable logistics: Can India achieve it?
British retailer Marks & Spencer has warned of higher costs, as it repeated that full-year profits would drop.
A new survey by global B2B sourcing platform BuyHive has revealed that higher procurement costs, caused by the pandemic and the Russia-Ukraine war is forcing sellers or D2C (Direct-to-consumer) worldwide to increase their prices.
October saw an unexpected contraction in China’s exports and imports, the first simultaneous decline since May 2020, as an amalgamation of COVID curbs at home and global recession risks hurt demand and worsened the prospect for a struggling economy.
While 82% of sellers surveyed said their costs have risen because of higher prices from suppliers, more than 72% said they have already increased their prices or are planning to.
While many sellers are choosing to change their suppliers because of the ongoing disruptions; it might directly affect their product quality and impact their business in the long run
Still, surveyed sellers also agreed that profit margins and sales have reduced.
“The online and D2C sellers have been badly hit by the increase in procurement costs and are finding it hard to grow their topline or retain their profitability margins. While many sellers are choosing to change their suppliers because of the ongoing disruptions; it might directly affect their product quality and impact their business in the long run,’ said Minesh Pore, CEO of BuyHive.
Read more: How to retain the modern consumer: Trust & strategy
Most surveyed sellers are looking for other or cheaper suppliers to keep their procurement costs in control, blaming Covid-19 related manufacturing disruptions and international freight prices. However, finding alternative trustworthy and cheaper suppliers has become a challenge for most online sellers.
‘The disruptions in international travel along with the continuing surge in travel costs have created new problems for small or mid-sized retailers worldwide in finding new or alternate suppliers efficiently,’ added Pore.