Thought this year might have seen things get back to normal.......

[Ecommerce&MailOrderGuy]

Wow!
The pressures out there in the market are non-stop aren't they?
We've been trading over 20 years and we have never seen anything like the current market conditions.
We are an ecommerce retailer in the 'garden goods' sector and a fairly quiet March and first half of April has led to panic in our market.
We import our own-brand stock and also sell many famous brands you would see in a garden centre.
We sell online and have a retail shop.

Given that ocean freight costs rose by a factor of ten 18 months ago (and remain high) we have had to increase our selling prices by 15-20%.
To remain profitable we simply had to take this action.

In our market it is the weather that is the driving factor of demand.
A slow (cool/wet) start to the season has seen much lower demand. Down 50% vs 2021 but this was lockdown-assisted.
The result is that many competitors are panicking and slashing their prices.
Can't believe that these sale prices are sustainable when so many costs are rising.
I imagine 'cashflow' worries have led many businesses to become desperate.

Fortunately we have many repeat customers we can rely on to hopefully weather the storm.
Good luck everyone out there - get your 'tin hats' on because I think we're in for a very bumpy couple of years.

Would be very interested to hear how other product markets are performing?

 

[Solve My Problem]

My wife's eCommerce business is holding it's own, but it's in a market that typically is more a necessity with trade and retail sales.

I work with a lot of small to medium sized businesses for consultancy and development and it's a mixed bag for a lot of them, some are thriving others are struggling. As a result the struggling ones are looking at ways to increase productivity or increase revenue the thriving ones are happy to invest to keep growing.

Online has seen a hit for sure with shipping prices increasing, stock delays, and customers cutting back.

How has your foot fall been in the shop?

Darren

 

[MBE2017]

The problem with threads like these are they tend to be self fulfilling. I do agree though, major loss of disposable income will lead to a lot of pressure on margins, many might decide to withdraw from markets altogether, so for those with enough funds this could lead to major opportunities as well.

 

[Mark T Jones]

I completely agree that we are in the strangest consumer environment I've ever witnessed. (and I'm quite old).

The sensible money is on - at very least - a significant slow down in consumer spending. As @MBE2017 suggests, there is a self-fulfilling element in that - that's basically how velocity of circulation works.

As far as possible I'd avoid panic meaures such as fire-sale discounting and perhaps look for lines which are more resiliant.

 

[Solve My Problem]

The problem with threads like these are they tend to be self fulfilling. I do agree though, major loss of disposable income will lead to a lot of pressure on margins, many might decide to withdraw from markets altogether, so for those with enough funds this could lead to major opportunities as well.

One of my customers is confident they can see the decline in their traditional market and wants to be ahead of the game so has doubled investment into a project that has been a slow burn up to now.

 

[The Byre]

We are an ecommerce retailer in the 'garden goods' sector and a fairly quiet March and first half of April has led to panic in our market.
We import our own-brand stock and also sell many famous brands you would see in a garden centre.

Yes, there is a price war going on in that sector.

The result is that many competitors are panicking and slashing their prices.
Can't believe that these sale prices are sustainable when so many costs are rising.
I imagine 'cashflow' worries have led many businesses to become desperate.

I was talking to a business owner in your sector and I asked him how he could sell at (or even below on some lines) regular (i.e. one-off) wholesale prices. And we are talking about the number one and number two brands in the garden toys/tools market. No no-name stuff!

He was not desperate - indeed, far from desperate! He is shipping out several pallets of mowers, chain saws, pruners, rotavators, etc., every day. In the middle of the quiet season, he bought one thousand chainsaws in a single order.

Add to that online price war the fact that Aldi, Lidl and others are featuring own-brand garden tools at really low prices and you begin to see just how white-hot that war has become.

We have a word for that process in German. It's called aldifizierung (Aldification). The garden tools market has been Aldified! (Well, you can't say 'Lidlification - it sounds silly!)

 

[JEREMY HAWKE]

I am in an industry where we have enjoyed the best two years we have ever seen !
People here selling to consumers are experiencing a totally different world !
Business to Business appears to be solid still but I do wonder if the cost of living problems will filter down to all sectors over the next 18 months

 

[japancool]

My business would be through the roof if I could get any stock in. The manufacturer is limiting supplies, either deliberately, or because they simply can't keep up with global demand.

 

[japancool]

I am in an industry where we have enjoyed the best two years we have ever seen !
People here selling to consumers are experiencing a totally different world !
Business to Business appears to be solid still but I do wonder if the cost of living problems will filter down to all sectors over the next 18 months

That's cos you're the guy who sells spades during a gold rush.

 

[Ecommerce&MailOrderGuy]

We used to sell a little bit (20% turnover) on Amazon and Ebay. But their costs have gone through the roof over the last few years. Now you have to advertise to get to the top of the list when years ago the bestselling items rose to the top of the tree for free. Advertising can cost 5-30% of gross selling price. Add this to the 15% standard commission and you can see how the selling platforms are cleaning up.
We are now down to less than 10% of turnover from these channels.
I can see tough/impossible times ahead for Amazon sellers.

 

[Solve My Problem]

roof over the last few years. Now you have to advertise to get to the top of the list when years ago the bestselling items rose to the top of the tree for free. Advertising can cost 5-30% of gross selling price. Add this to the 15% standard commission and you can see how the selling platforms are cleaning up.

It's 18%+ on Amazon not 15% due to the VAT element in the sale (assuming you are VAT registered and sell vatable products)

eBay works on numbers of items sold and engagement to increase sales and move to the top of the listings. You don't need to advertise. If you can sell at a loss for a period of time to get sales up to a decent level you can then typically increase your price.

One of my clients as an eBay side hustle they started during the pandemic, they have now sold over 20k products in about 18+ months. Admittedly low value but high competition and all to do with pricing and quantity over advertising.

Not viable for all businesses but if eBay can lead to new customers, or cross sales (include a physical catalogue) then it has potential. We have had a lot of success with catalogues, either included with items or for some areas sending a few days after the sale in the post (much high engagement for some markets)

Amazon is a different beast just because it's generally a harder platform to get on top of, they also couldn't care less about sellers which makes it harder.

Darren

 

[Paul Norman]

If by normal you mean how they were 3 years ago, I believe we are not going back there. Ever.

The opportunities will still be there, though, but they will be different.

And Ecommerce has moved on, not so much due to the pandemic as due to a simple fact. Onlline is an even easier place for the big money to dominate.


To succeed with an Ecommerce store requiires a lot of skill at marketing. A lot. And probably a big marketing budget, much bigger than when I started out 14 years ago. Or whenever it was

 

[Mark T Jones]

I can see tough/impossible times ahead for Amazon sellers.

Because they were never really your friend, they were just using you to get to where they want to be!

 

[AlanJ1]

Admittedly low value but high competition and all to do with pricing and quantity over advertising.

Unfortunately this is going to drastically change in the coming months / years. eBay have introduced a proper advertising solution as they have clearly seen the amount of revenue that can be generated from this side. Albeit the advertising is basic at the moment I highly suspect this will take over more and more slots in the listings section as we move forward.

I can see tough/impossible times ahead for Amazon sellers.

I really don't agree with this. Someone has to be selling on Amazon (Amazon isn't going away). Getting a good BSR on Amazon is tough but doesn't always require advertising, and once you are there you can also stop advertising if needed. We had a top 10 best seller in the most competitive category on Amazon in December. Advertising to get there (still at a profit per sale) and then less advertising to maintain (larger profit).

 

[Solve My Problem]

Unfortunately this is going to drastically change in the coming months / years. eBay have introduced a proper advertising solution as they have clearly seen the amount of revenue that can be generated from this side. Albeit the advertising is basic at the moment I highly suspect this will take over more and more slots in the listings section as we move forward.

Yes probably, it's not the same platform that it was when we started 20+ years ago, but right now it's possible to grow on eBay without any advertising without the hoops that Amazon require.

I really don't agree with this. Someone has to be selling on Amazon (Amazon isn't going away). Getting a good BSR on Amazon is tough but doesn't always require advertising, and once you are there you can also stop advertising if needed. We had a top 10 best seller in the most competitive category on Amazon in December. Advertising to get there (still at a profit per sale) and then less advertising to maintain (larger profit).

This is all about perspective, if you have a product with a high margin this is the right way to go. Most people are re-selling someone else's product thus don't have the margins to advertise and maintain a profit. Also a lot of sellers are clearly losing money on Amazon, they don't take into account the costs and the losses mount up, but as most sellers are selling on multiple platforms they don't realise. I did an audit for a customer a couple of months ago and they were losing money on 70% of their Amazon and eBay sales.

If you manufacturer your own product then Amazon is a solid platform to put the time and money in but for reselling it's always questionable.

I have seen Amazon sellers using FBA make a lot of money, then another seller comes along and sends their product to FBA and the sales dry up over night. The stock sits there for months costing money and the only way to release it is to pay to have it returned or reduce the price below cost to sell it.

Amazon's whole business premise was to setup so they could monitor what sells and then sell themselves.

Try and open an Amazon account now and you spend weeks jumping through hoops, they also hold onto money for months at a time. One of my clients has over 3k sitting in reserves with them for no good reason, no returns in over 18 months, no bad feedback etc...

 

[AlanJ1]

This makes sense I guess it's slightly different for us as it's our own branded products and we have full control on retail price etc.

Amazon's whole business premise was to setup so they could monitor what sells and then sell themselves.

This used to be the case, it's changed a lot since then. They are more-so buying companies now or asking people to make the product for them under the Amazon brand name (we had this conversation recently with them).

 

[Solve My Problem]

This makes sense I guess it's slightly different for us as it's our own branded products and we have full control on retail price etc.

That's the perfect place to be, Amazon is then a solid platform for exposure.

This used to be the case, it's changed a lot since then. They are more-so buying companies now or asking people to make the product for them under the Amazon brand name (we had this conversation recently with them).

It's also in a bid to screw their other sellers.

A friend of mine sells a hugely popular range of products, turn over of millions, lots of individual sellers on Amazon. Amazon approached them in the same guise but want to basically make it impossible for the individual sellers to sell the product range.

I make money out of Amazon, but I don't like them as a company or their ethos etc... I know every large company screws someone (Royal Mail, PayPal, eBay) but with Amazon it feels different.

 

[AlanJ1]

A friend of mine sells a hugely popular range of products, turn over of millions, lots of individual sellers on Amazon. Amazon approached them in the same guise but want to basically make it impossible for the individual sellers to sell the product range.

We never had this. Approached us on our best-sellers and asked if we could bring in under Amazon brand and be able to continue selling under our own brand. Was a couple of hoops to jump through which we weren't able to do at the time as was peak pandemic the conversation was happening.

I make money out of Amazon, but I don't like them as a company or their ethos etc... I know every large company screws someone (Royal Mail, PayPal, eBay) but with Amazon it feels different.

I can understand that. I feel that Amazon makes us a margin (it's very consistent at that as well) and we are happy with it.

 

[Solve My Problem]

We never had this. Approached us on our best-sellers and asked if we could bring in under Amazon brand and be able to continue selling under our own brand. Was a couple of hoops to jump through which we weren't able to do at the time as was peak pandemic the conversation was happening.

Ah OK, maybe they changed or have different techniques.

I can understand that. I feel that Amazon makes us a margin (it's very consistent at that as well) and we are happy with it.

That's good! It's a win for a lot of businesses but a massive fail for others.

 

[AlanJ1]

Ah OK, maybe they changed or have different techniques.

I am sure for different ranges they will have different rules but was very little restriction on the conversation we had.

That's good! It's a win for a lot of businesses but a massive fail for others.

I agree, just need to keep a track of costs which a lot of people don't!

 

[Solve My Problem]

I agree, just need to keep a track of costs which a lot of people don't!

Easy done for a small business with lots of hats.

 

[AlanJ1]

Easy done for a small business with lots of hats.

Is that a pun because you know I have over 500 different types of hats in the warehouse?

 

[iMarky01]

Can't

Wow!
The pressures out there in the market are non-stop aren't they?
We've been trading over 20 years and we have never seen anything like the current market conditions.
We are an ecommerce retailer in the 'garden goods' sector and a fairly quiet March and first half of April has led to panic in our market.
We import our own-brand stock and also sell many famous brands you would see in a garden centre.
We sell online and have a retail shop.

Given that ocean freight costs rose by a factor of ten 18 months ago (and remain high) we have had to increase our selling prices by 15-20%.
To remain profitable we simply had to take this action.

In our market it is the weather that is the driving factor of demand.
A slow (cool/wet) start to the season has seen much lower demand. Down 50% vs 2021 but this was lockdown-assisted.
The result is that many competitors are panicking and slashing their prices.
Can't believe that these sale prices are sustainable when so many costs are rising.
I imagine 'cashflow' worries have led many businesses to become desperate.

Fortunately we have many repeat customers we can rely on to hopefully weather the storm.
Good luck everyone out there - get your 'tin hats' on because I think we're in for a very bumpy couple of years.

Can't believe it

 

[MOIC]

Things are tough the world over, from retailers to wholesalers and manufacturers, and in my opinion will remain like this for at least 1-2 years.

Think long term:

• create your brand (I know some people hate this phrase)
• look for new products
• look for new suppliers
• negotiate with suppliers on quantities and to offset shipping costs
• don't undersell, maintain the profit margin you need (promotions excepted)
• modify existing products
• expand your product range (budget depending)
• offload unwanted stock

Easily said, I know!

 

[Solve My Problem]

Unfortunately this is going to drastically change in the coming months / years. eBay have introduced a proper advertising solution as they have clearly seen the amount of revenue that can be generated from this side. Albeit the advertising is basic at the moment I highly suspect this will take over more and more slots in the listings section as we move forward.

Ironically eBay just sent out an email regarding changing their advertising prices

Currently, these fees are based on the final price of the item. Starting on June 1, they’ll be calculated based on the total amount of the sale, using the same basis we use to calculate final value fees (including applicable taxes, shipping, and other applicable fees described here for business sellers, and here for private sellers). In certain markets, any applicable VAT may be applied to your advertising fees.

What will change for you - Your ad fees will be calculated once you’ve made a final sale. - The Ad Fees estimation will no longer be available. The new ad rate calculation will include variables, such as buyer location and shipping costs, that are not determined until the sale is complete. You’ll still be able to view your ad fees from the Transactions section of your Payments tab, or in your sales report.

More smoke and daggers in fees and an obvious increase

Darren

 

[SillyBill]

Toughest business environment we've ever seen. Relentless cost increases in just about every single aspect of running the business (staff, energy, raw materials, packaging, taxes, regulatory costs). We're finding it increasingly difficult to pass these increases onto our trade customers who are struggling themselves to pass it on to the final customer (consumer). I think we're in for a tough couple of years across the board personally as inflation impacts only really beginning to bite now. We have noticed our credit terms being extended by a lot more clients now so currently tightening up massively as I fear a lot of businesses aren't in a good financial position to tackle what is coming.

 

[Justin Smith]

Wow!
The pressures out there in the market are non-stop aren't they?
We've been trading over 20 years and we have never seen anything like the current market conditions.
We are an ecommerce retailer in the 'garden goods' sector and a fairly quiet March and first half of April has led to panic in our market.
We import our own-brand stock and also sell many famous brands you would see in a garden centre.
We sell online and have a retail shop.

Given that ocean freight costs rose by a factor of ten 18 months ago (and remain high) we have had to increase our selling prices by 15-20%.
To remain profitable we simply had to take this action.

In our market it is the weather that is the driving factor of demand.
A slow (cool/wet) start to the season has seen much lower demand. Down 50% vs 2021 but this was lockdown-assisted.
The result is that many competitors are panicking and slashing their prices.
Can't believe that these sale prices are sustainable when so many costs are rising.
I imagine 'cashflow' worries have led many businesses to become desperate.

Fortunately we have many repeat customers we can rely on to hopefully weather the storm.
Good luck everyone out there - get your 'tin hats' on because I think we're in for a very bumpy couple of years.

Would be very interested to hear how other product markets are performing?

Sorry to be the bearer of bad news, though it cannot come as much of a shock to (most) people on here, but we ain't seen anything yet. Economically things are going to get a lot worse, and, thanks to the suppression strategy of the pandemic, they always were going to. It could be one the the worst recessions ever.
Then we had the war in Ukraine just to cap it off. strap yourselves in.....

 

[Justin Smith]

Toughest business environment we've ever seen. Relentless cost increases in just about every single aspect of running the business (staff, energy, raw materials, packaging, taxes, regulatory costs). We're finding it increasingly difficult to pass these increases onto our trade customers who are struggling themselves to pass it on to the final customer (consumer). I think we're in for a tough couple of years across the board personally as inflation impacts only really beginning to bite now. We have noticed our credit terms being extended by a lot more clients now so currently tightening up massively as I fear a lot of businesses aren't in a good financial position to tackle what is coming.

I have been severely worried about inflation since March 2020, you cannot shut down most of the economy for months on end then at the same time pump unprecedented amounts of money into it (mainly the form of furlough payments actually paying people to be unproductive) without humongous inflation.

 

[Ecommerce&MailOrderGuy]

Just run my monthly figures for April - Amazon taking 24% commission and Ebay 22%.
This includes on-site advertising and Paypal (in the case of Ebay).

Our selling prices are much lower on these channels too due to increased competition.
Plus don't forget you are almost obliged to charge zero for P&P if you want to be competitive!!!
Basically we are selling at break-even.
We include a 60 page catalogue with all outbound orders but we find repeat rates from these channels are much lower than elsewhere.

Never liked/trusted these channels but they can be useful in certain situations.
Fortunately less than 10% of our turnover comes in this way....it was 25% back in the day when it was cheaper.

 

[The Byre]

Sorry to be the bearer of bad news, though it cannot come as much of a shock to (most) people on here, but we ain't seen anything yet. Economically things are going to get a lot worse, and, thanks to the suppression strategy of the pandemic, they always were going to. It could be one the the worst recessions ever.
Then we had the war in Ukraine just to cap it off. strap yourselves in.....

This!

It's much, much worse than they are telling us. We really are in Cloud Cuckoo Land - if you measure GDP in REAL things and not in fugazi, you begin to understand just how bad things really are! I looked at UK GDP between 2019 (the last sort-of 'normal' year) and the end of 21 - so two years - and measured GDP in a basket of commodities, then it cars, then in houses, then in cheese, then in meat - and so on. In other words, what was GDP expressed not in pounds, but in real things like gold, grain, houses, cars, whatever.

Real GDP as measured in real things fell by about 30% over that two-year period.

I thought that 2008 was it, the Big One, but I didn't think that governments and central banks were crazy enough to play with fire by visiting Pinochio's Magic Money Tree. Well, now that tree is bearing only poisoned apples. If they are stupid enough to go anywhere near that tree again, all bets are off!

When one remembers that REAL inflation is usually about double the bogus CPI figure (try buying a nice juicy and fresh smoked kipper, the way one always could on any High Street back in the 80s!) one begins to see how living standards have been falling for large sectors of the population, i.e. the poor and the unskilled and semi-skilled working classes.

Now life for the middle classes is starting to become noticeably worse. Flats and houses are getting smaller. Gardens are getting smaller. The quality of fresh food on supermarket shelves is rapidly diminishing. The prices of many things such as houses and cars are escalating. Company profits are being squeezed and are incapable of paying any increase in wages or salaries to keep up with inflation and a shrinking economy.

And all this was (a) predictable and (b) totally avoidable and (c) a tax on the poor and the middle classes and gives that wealth to the rich.

(a) Printing money and rescuing failing banks and other major businesses can only go one way. It starts with asset price inflation - house prices and share prices. But sooner or later, that MUST spill over into production costs and from there, it is a short step to retail price inflation. Adding helicopter money (stimmy cheques, furlough payments, company loans and grants) speeds up that process enormously!

(b) When the banks discovered that they were insolvent back in 2007, they tried to cover it all up. Then in 2008 onwards, they went begging to their various governments, who, instead of letting them go to the wall and allowing natural market forces to prune off all the sick and dead branches, they caved in and bailed them out. And they've been doing just that ever since - for example, between Oct 1st, 2019 and Dec. 31st, 2019, the Fed gave various international banks a total of $12 trillion in zero-interest loans. The major banks are now permanently parasitic on the world's economies.

(c) The wealthy employ the poor and the middle classes (directly or indirectly). The wealthy have assets, the rest have wages and salaries. Inflation affects assets disproportionately as it hits them first, so assets become more valuable and account for a larger share of the economy. As inflation hits the entire economy, wages and salaries lose value - you can buy less! By printing money, the wealthy have become wealthier.

 

[japancool]

Our selling prices are much lower on these channels too due to increased competition.
Plus don't forget you are almost obliged to charge zero for P&P if you want to be competitive!!!

They're a race to the bottom.

 

[momon121]

Things are tough the world over, from retailers to wholesalers and manufacturers, and in my opinion will remain like this for at least 1-2 years.

Think long term:

• create your brand (I know some people hate this phrase)
• look for new products
• look for new suppliers
• negotiate with suppliers on quantities and to offset shipping costs
• don't undersell, maintain the profit margin you need (promotions excepted)
• modify existing products
• expand your product range (budget depending)
• offload unwanted stock

Easily said, I know!

I love your replies