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Supply chain disruptions de-stable prices, profits for online sellers

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An overwhelming majority of online or D2C (Direct-to-consumer) sellers worldwide have been forced to increase their price on account of higher procurement costs, caused in turn by the pandemic and Russia-Ukraine war, a new survey by global B2B sourcing platform BuyHive has revealed. 

While 82% of sellers surveyed from the US, UK, and India, confirmed that their costs have increased due to higher prices from suppliers, over 72% said they have already increased their prices, or are planning to. Despite the increase in prices, 64% of surveyed sellers also agreed that profit margins have reduced as a result of higher costs. Furthermore, the respondents also noted that their sales have reduced because of the increase in prices. These sellers either retail their products via major e-commerce platforms like Amazon, eBay, Etsy, or Flipkart or run their e-commerce stores through platforms like Shopify. 

“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. The BuyHive survey also reveals the link between global supply chain disruptions and business risks for D2C brands or online sellers. 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,”

Minesh Pore, CEO of BuyHive

Nearly 73% of the surveyed sellers said that they have started looking for other or cheaper suppliers to keep their procurement costs in control. When asked about the reasons for an increase in their procurement prices, 68% of the sellers blamed Covid-19 related manufacturing disruptions, while 70% reasoned that international freight prices are responsible.

Finding alternative suppliers, however, is proving to be a challenge for most online sellers. Nearly 50% of those surveyed agreed that they are not able to find trustworthy suppliers, while almost 60% lamented that they are not able to find cheaper suppliers. Just over 50% of the sellers agreed that they had concerns or doubts about the quality control at new or alternative suppliers. 

“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. Online platforms like BuyHive are filling in the gap by offering ‘sourcing as a service’ on demand,” added Pore. 

On the impact of the Russia-Ukraine conflict on their business, 55% of sellers said it has increased their costs and reduced margins; while over 49% said it has led to reduced sales. Over 53% of the sellers also agreed that the conflict has caused more difficulty in sourcing goods. 

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