80/20 Of Ecommerce – May 27, 2022

China Sourcing Updates

What we know

• Port congestion in Shanghai could lead to airfreight congestion
• Shanghai aims to lower down restrictions on June 1
• Beijing authorities are strictly monitoring business ad residents

Image credits: Pexels

According to South China Morning Post, Shanghai aims to lower down restrictions on June 1. However, the production backlogs could lead to airfreight congestion in the coming weeks as they decide to loosen the pandemic restrictions. Despite this, the vast majority of shops, restaurants, and enterprises remain closed, and a work-from-home policy remains in effect.

Beijing on the other hand is still the Covid-19 hit capital of the country. As a result, they continue to tighten their zero-CoVid approach imposing consequences and punishments on businesses and residents that will not follow the mandate, Rappler Asia Pacific reported on Wednesday.

Despite the damage it has caused to the world’s second-largest economy and global supply networks, the government continues to focus on the zero-COVID policy. After a series of incidents involving a private logistics company within its control, certain employees of the state-run Beijing postal service were either fired or given a strong warning.

A few employees at a Beijing branch of the state railway corporation disguised their trip history and have been placed under police investigation.

According to the Shanghai local statistics bureau, exports from Shanghai, the world’s biggest container port, tumbled 44% year on year last month, while imports fell 33%, the steepest decrease since at least 2011.

E-commerce retail Q1 2022 report: a blip in the radar?

Image credits: Pexels

According to data provided by the US Department of Commerce on Thursday, US retail e-commerce sales in Q1 2022 totaled roughly $250 billion, up only 2.4 percent from the previous quarter.

According to the DOC, seasonal fluctuations were considered, but not price hikes. When you factor in inflation, the 2.4 percent increase in sales effectively flattens the e-commerce growth curve, which has been sagging since the third quarter of 2021, when e-commerce retail sales fell -0.7 percent from the previous quarter.

Overall retail sales in the United States were predicted to be $1.75 trillion in Q1 2022, up 3.7 percent from Q4 2021. Total retail sales grew 10.5 percent year over year in the first quarter.

As the Covid-19 lockdowns loosen, more customers are opting for brick-and-mortar retail. The e-commerce giant retailers are not an exception to the downward slope in the e-commerce growth curve during the onset of the pandemic. Amazon lost over $4 billion in the first quarter, its first quarterly shortfall since 2015.

Yet, this does not hamper the e-commerce sector from pooling the considerable market share gains. The annual e-commerce sales approach $1T, a double of the past three year’s sales. 

While YOY comparisons of e-commerce retail sales show a strong, mature online sector—DOC reported a 6.6 percent YOY increase in e-commerce retail sales in Q1 2022—the YOY growth rate in 1Q 2021 was an exponential 47 percent.

According to Prologis, e-commerce share will climb more exceeding its pre-pandemic trajectory. This is because of improved online sales technologies and same-day and next-day delivery strategies.

Takeaway: 

This report has two separate trajectories for ecommerce. Is a sign that e-commerce is slowing down or maybe it is just a bullish outlook? Do we really feel the slope going downwards, or this is just a blip in the radar?

Amazon Reportedly Ready to Dump Excess Warehouse Space

Image credits: Pexels

Amazon plans to lease some of its warehouse space to reduce excess capacity. The retail giant acknowledged it overbuilt its warehouses as it sought to meet pandemic demand. The company is finding ways to sublease the surplus of space estimated to be more than 10 million square feet. 

Amazon leased over 100 million square feet and owned 4.4 million square feet of fulfillment, data center, and other categories in North America at the end of 2019.

Depending on the market, other types of space are still being acquired by Amazon, such as Southern California office space, where it recently secured leases for a total of 439,500 square feet in Santa Monica, Irvine, and San Diego.

This big move from Amazon follows the first quarterly loss they incurred in April in which demand declined and affected the company’s warehouse operations. 

Takeaway:

Amazon sees a slowdown in their sales and is subleasing excess warehouse space and it could be a benefit to sellers in fewer inventory restrictions

Join me for a Live Training on Tuesday May 31, 2022 at 8PM Eastern Time about The Sourcing Algorithm

I’ve interviewed over 170 7-figure and 8-figure ecommerce experts and sellers. They said the ONE thing you need to get right is to choose a five-star profitable product.

After product selection, sourcing is the most important part of your ecommerce business. Because if you get it wrong, it can become a huge bottleneck and will bring forth bigger problems in the long run. 

Sourcing products for your eCommerce business is no longer a one-trick pony.

Previously everyone considered China as the first and often ONLY place to source and manufacture products for their ecom and FBA business.

Nowadays with the uncertainties with COVID and lockdowns continuing in China, many people are considering alternatives like India, Mexico, Vietnam, and even the US.  

If you want to source well, there’s a lot that you need to know.

But the ultimate resource you need to learn all of this from doesn’t exist yet. So, I decided to create one based on my over a decade of experience in sourcing and supply chains.

I’ve visited hundreds of factories on the ground in China, partnered with dozens of suppliers, and overseen millions of dollars of purchase orders with suppliers. In addition, I have an extensive network of sourcing and logistics contacts in India, Vietnam, and Mexico.

I’ve created The Sourcing Algorithm – the ultimate resource you need to start sourcing from China, Mexico, Vietnam, India, and the US. 

Join me as I will share this Sourcing Algorithm on a live webinar, Tuesday, May 31, 2022, at 8PM Eastern Time. 

Reserve your spot and send in your questions here: https://forms.gle/7FbSahBQaLXV619t8 

See you inside!

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• Develop the MINDSET of a million-dollar business owner and FUNDAMENTALS of creating a 7 Figure eCommerce business
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In case you missed it:

• China Sourcing Updates
• Shopify is buying their way into the 2-day shipping game
• Walmart e-commerce sales flat in most recent  earning report
• [Amazon Masterclass] Amazon Business Optimization – Learn How To Scale And Grow The 5 Main Business Functions
• [Profitability Masterclass] Scaling From $144k to $1m: Best Practices How Sellers are Winning in 2022
• Get your Free Pass to 7FSS6 Evergreen now!

Have a great weekend!

-Gary

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