By Kenny Tsang, Managing Director of PingPong Payments, advises merchants to think global and maximize their profits as we veer away from the holiday season.
Leaving the Christmas period behind, the livelihoods of e-commerce sellers on marketplaces like Amazon, eBay and Etsy are being threatened as they grapple with acute supply chain shortages and crippling inflation. In addition, the rise in customer demand was challenging to meet as sellers struggled with the significant impacts of the global supply chain crisis, which is expected to continue beyond December and into 2022.
With most companies doing most of their business in the last quarter of the year, the holiday season is crucial for merchants’ survival. The few who are now left are met with further pressures to expand and stay afloat. Sellers who are not fully stocked will have their ranking demoted on leading digital marketplaces, losing valuable traffic in what is expected to be a $4.89 trillion year for e-commerce. By following three crucial steps, merchants can stay ahead of the curve and leapfrog competitors as 2022 kicks into gear. It is high time that vendors rethink their sell and supply strategies and turn to the opportunities of a global market.
How inflation will affect consumer spending
The consumer price index surged by 6.2 percent for a 12 month period, ending in October, becoming the largest increase since November 1990. As a result, consumers now have budgets that do not allow them as much leverage outside of basic expenses. This will drive high competition between merchants, who must pay attention to consumer trends and update their inventory accordingly to avoid revenue losses and unwanted stock.
The digital purchase of goods gives merchants a library of immediate data which can be used to determine what their customer wants. For example, sellers can decide which products perform best and which added features consumers prefer (such as next-day delivery) in regions their brand sees higher demand. By being aware of these factors, inventories can be stocked smartly, keeping shortcomings minimal and customers coming in.
Seller preparedness is key to success
Merchants should start creating a roadmap for the future, keeping inventory high and business going, as supplier shortages are inevitable. In addition, consumer spending is fast-paced in the digital space, so constant restocking of new products is crucial for keeping up with customer demand.
A globally-sourced inventory is what makes businesses successful and profitable. By accessing different markets, rather than relying on just one, merchants can receive imports from anywhere in the world and choose the most fool-proof option. Unfortunately, the average amount of time it takes to pay a supplier has reached approximately 66 days worldwide, which hampers sellers’ global supplier reach in the event of local shortages and their ability to deliver their product efficiently to the customer.
To survive in 2022, sellers need to rethink their payment system from a financial standpoint. Investing in reliable and cost-effective fintech solutions, which enhance and automate financial services and processes, is the answer.
Cross-border payment leads to positive supplier relationships
Maintaining good supplier relationships can succeed only by adopting a cross-border payment strategy. The right payments partners can help businesses retain more of their profits by providing advice in navigating long transfers and international exchange fees. They can also offer solutions to keep suppliers happy, who prefer a stable and efficient payment process.
Paying suppliers on time and in the most convenient currency for them will prevent their supply chain from facing disruption, strengthening not only the supplier’s trust in the seller but the merchant’s confidence in daily operations.
Implementing a robust cross-border payment system is helpful for inventory upkeep and building an international business where new customers from across the world can engage with the brand. For example, during the 2021 Chinese New Year (celebrated in February), online sales generated 906 billion RMB ($139 billion).
E-commerce in 2022 should be seen as an opportunity to grow by adapting to ongoing changes in markets across the world. Global outreach is essential, and along with it comes a set of new responsibilities, with cross-border payments being at the forefront. Sellers should learn from past mistakes and start rethinking their strategy now.