Suppliers, retailers, shippers and delivery services are bracing for a surge in holiday online sales amid unprecedented supply chain challenges running from the factory floor to your front door.

Ecommerce surge
To be sure, the ecommerce business has exploded this year amid the pandemic with nearly every retailer consistently reporting double-digit percentage sales gains as more consumers shop from home. Kohl’s and Walmart on Tuesday reported 25% and 79% increases in ecommerce revenue, respectively, in their most recent quarters.

Yet those gains are being tempered by suppliers battling to get products manufactured and shipping services straining to get them to merchants or directly to consumers.

Manufacturing and shipping backlog
Asian factories are operating at full capacity, but still working through the aftereffects of the pandemic-induced shutdown early this year. And even after the products roll off the manufacturing lines, there’s a bottleneck at the shipping ports to get goods to markets around the world. Then there’s the expected bottleneck of deliveries to consumer homes.

For example, licensed plush and kitchen appliance supplier Uncanny Brands has suffered shipment delays of up to 60 days, pushing deliveries originally due in October to December.

“You know it’s bad when you call retailers and say ‘We are delayed,’ and they say ‘Yes, we get it,’ because everybody is,” says CEO Matthew Hoffman. “That makes you realize it’s bad.  It is not just a missed opportunity for holiday sales, but you also don’t get the data [that would] help you grow the business for next year.”

Some shortages were predictable, as with the just-introduced Sony PlayStation 5 (PS5) and Microsoft’s Xbox videogame consoles. The scarcity driven by the kind of demand normally seen for new consoles was no doubt exacerbated by pandemic driven manufacturing issues.  Overheard last week at the service desk of one New Jersey store: “Thank you for calling Target. We do not have the PlayStation5, and we won’t be getting more in stock. How can I help you?”

The supply chain issues are prompting many companies to reexamine their strategies, perhaps to consider creating a network of regional manufacturing centers close to the markets they supply (i.e. Mexico and Central America for North America, Turkey and Ukraine for Europe).

Delivery companies such as Federal Express and United Parcel Service face the dual challenges of the typical holiday crunch mixed with the sharp rise in online shopping. They may face a daily shortfall of seven million packages during the holiday season. Indeed, in a TV commercial that began airing in late October, Federal Express intones that it has been “training for a marathon because the obstacles are bigger than ever before” and urged consumers to “shop and ship early.”