Snowcone the Happy Unicorn is the latest victim of the manufacturing chaos
By Nathaniel Meyersohn, CNN Business
The holiday season is not shaping up to be so happy for Dena Fargo this year. Its best-selling toy, a multi-colored, smiling plush animal called Snowcone The Happy Unicorn, will not reach impatient parents and children this year.
Fargo, which imports Snowcone from a manufacturer in China, paid $ 1,300 in May for 500 of them. When she went to renew her order in August, the same order cost $ 9,000.
“I cannot place an order. My margins just don’t support it, ”said Fargo, whose Costa Mesa, Calif.-based company Cre8ive-D normally sells the product on its website and in Hallmark stores. Fargo is looking for manufacturing options in India and Europe to produce a few hundred stuffed animals for Christmas, but its hopes are fading. Fargo had considered raising customer prices to offset its higher costs, but its window for securing toys for the holidays is gone.
“It really is a blow,” she said.
The problem isn’t customer demand for the toy, according to Fargo. “The demand is there. It is the supply.
Rising spending and the myriad pressures on supply chains – factory closures, bottlenecks at major ports, and difficulties hiring domestic truck drivers – are wreaking havoc on businesses in the world. all sizes that enter the pivotal holiday period. They are especially difficult to navigate for owners of moms and dads like Fargo. This could impact the products they can carry around during the holidays and the prices at which they sell them more than their larger competitors, according to supply chain experts.
“Large retailers have a huge advantage over small stores because of their size, resources, supplier relationships and systems,” said Patrick Penfield, professor of supply chain management at the ‘Syracuse University. “Small retailers are really going to have a hard time filling their shelves. It’s going to be a tough vacation time for them.
Thirty-seven percent of small business owners say supply chain disruptions have had a significant impact on their business, while 29% reported a moderate impact, according to a survey of 595 companies in August by the National Federation of Independent Businesses, a small lobbying firm. group. A September survey of 2,682 small business owners by Alignable, a small business social networking company, found that 78% said they had difficulty sourcing.
As businesses battle to secure inventory for vacation shoppers, larger companies have the upper hand over smaller competitors at almost every link in the chain, according to supply chain experts. They also have a greater ability to absorb higher costs, experts say.
“If you’re a Walmart or Target supplier, you’re going to do whatever they ask for just because of the sheer volume of what they’re buying and getting potential deals going forward,” Penfield said. .
Why small stores are at a disadvantage
This year, top players like Walmart, Costco, Target, Home Depot, and others are chartering their own private ships to import goods from overseas, loading additional inventory, and using more expensive air freight to ship goods.
“We’ll be ready for the holidays,” Target CEO Brian Cornell said in an interview with CNBC in August. “We have a lot of inventory coming in right now. “
A big advantage for large chains is scale, which translates into priority with shippers. Edwin Keh, director of the Hong Kong Research Institute of Textiles and Apparel and former COO and senior vice president of global purchasing at Walmart, said large retailers have long-term contracts with shipping companies and volume enough to make them the most important shippers. customers. This is a big advantage when containers are stuck in ports.
“This causes their containers to be loaded first and finally unloaded,” he said in an email. “They also have dedicated agents in the ports to facilitate the customs clearance process, saving them time. “
Large retailers also often have back-up providers in different parts of the world to enable them to avoid port bottlenecks, he said. “If some ports or routes from Asia are too congested, they can move to Central or South America to manufacture their goods and vice versa,” Keh said.
Most independent stores do not have access to capital to fund expensive options like chartering ships, nor do they have back-up providers.
The holidays are usually a busy time for Simply Naked Candle Co., a candle shop in Conyers, Georgia. But this year, the store is struggling to source jars, wax and fragrances from domestic suppliers that are essential to the production of its most in-demand candles, such as Love and Honey, Brown Sugar, and Pineapple Passion.
Co-owner Shante Smith has set up essential oil supplier email alerts that let her know when the oils she needs are back in stock. She recently received an alert at 2 a.m. and woke up to buy the product on the spot because she feared it might run out in the morning.
Smith pays $ 5 for pots that cost $ 1.75 last year. A 50-pound box of wax costs $ 110, compared to $ 55. Smith used to order these supplies in bulk, but now she orders them piecemeal when she runs out because she doesn’t have the money to pay for the amount she would normally get.
“If we could afford to order more, we would,” she said. “We have a very, very strict budget.
Ideally, Smith would buy full pallets of around 1,000 jars, which would allow her to lower the price she pays per unit. “If we could afford to order more, we would,” she said. “We have a very, very strict budget. But she is forced to pay more for less because she cannot meet this threshold.
“If I had enough to buy pallets at once, it would be a good Christmas for me.”
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