In a normal year, online retailers focus on how they’re going to sell their merchandise during the holiday season. This year, they’re spending a lot of their time trying to get products to sell.
Nathan Gordon, chief information officer, Gordon Industries
Merchandise is in short supply for two main reasons: The coronavirus pandemic forced many factories to close early in the year, and many are still catching up. And a spike in ocean freight during the catch-up period is delaying the arrival of goods into e-retailers’ warehouses.
We have no discounts planned because we see no reason to.
Gordon Industries, an importer and wholesaler that operates such retail websites as ChristmasCentral.com and PoolCentral.com, illustrates the bind facing many online merchants. Nearly 20% of the 250 containers of goods the company ordered for fourth-quarter delivery had still not arrived as of last week, whereas last year all its holiday merchandise had been received by the first week in November, says chief information officer Nathan Gordon.
With online sales up 125% year over year, Gordon is facing soaring demand and limited supply. His solution: Sell everything at full price.
“We have no discounts planned because we see no reason to,” Gordon says. When approached by wholesale customers like apparel chain Kohl’s Inc. and online marketplaces like Walmart.com and Target.com about discounts he can offer them for their holiday specials, “we’ve said the answer is just no,” Gordon says.
Other online retailers facing product shortages are taking similar steps to beef up profit margins, including cutting back on advertising and limiting sales on outside websites, such as Amazon.com and deal sites, that take a commission off of each sale.
Looking beyond the 2020 holiday season, some e-retailers are considering whether they can manufacture some goods closer to home in hopes of having better access to inventory in a future crisis. But the higher cost of manufacturing in the U.S. remains an obstacle, many retailers say, although the higher margins brands generate when they sell directly to consumers may allow them to produce some items domestically.
Shipping delays and higher transportation costs are widespread
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