Written by Derek Aten | 4/22/2022
Since the COVID-19 pandemic plagued the world in early 2020, we have all seen drastic changes in our daily lives. The shutdown forced us to reinvent how we work, shop, consume content, and so much more. We’re seeing companies offer fully remote or hybrid work models, as well as employees who will turn down in-person jobs without hesitation. Consumers who refused to purchase online are now shopping via delivery Apps and eCommerce websites. Social platforms such as YouTube and TikTok have seen massive growth in users consuming content; while thousands of new creators and influencers were born into the digital world. The demand for merchandise from these creators and influencers grew tremendously, and consumer purchasing behavior shifted overnight.
During this shift, the market has experienced countless challenges. Many countries went into lockdown, with brick-and-mortar stores closing their doors to the public. Consumers continued to place orders for their merchandise, but companies were unable to fulfill those orders due to lockdown ordinances. As countries slowly began to open, we continued to see disturbances in many sectors of the global markets.
Companies continued to place orders with their suppliers. Suppliers continued to place orders with the factories providing raw materials. Fulfillment began on the backlog of orders, and more pressure on the global supply chain occurred. Demand continued to increase, while supply remained stagnant, causing raw material and finished goods costs to skyrocket. Due to the ripple effect seen in the supply chain, companies were left in the dark on delivery dates for their orders, as well as uneasy about additional shipping costs incurred.
Sea shipments jumped from thirty to ninety days to arrive in the ports. From there, vessels were lining up to await unloading, sitting in port for another thirty to sixty days. This led to a shortage of empty shipping containers that were needed to continue fulfilling bulk orders. When merchants finally received their bill for shipping, they were shocked. Many saw additional expenses upwards of $5k per order. I spoke with a merchant that imports raw materials and they were hit with a $12k cost increase for one container.
Fast forward to today, China is once again shutting down cities due to the COVID-19 outbreak, currently implementing its zero-tolerance policy. Last month, Shenzhen went into lockdown for a week. Shanghai followed suit shortly thereafter. History is repeating itself in 2022, and this time, it may be worse. The war in Ukraine is putting serious pressure on the cost of oil, which directly affects the cost of product shipments.
China exports 31.6% of global apparel. In the last two years, blank clothing suppliers have increased their costs on multiple occasions and struggled to maintain stock availability. We’re seeing companies move production to other countries in order to reduce costs and minimize risks. This holiday season, we expect significant shortages in blank clothing as well as prices continuing to rise.
Here at Killer Merch, we are taking proactive steps to ensure that the shutdowns in China will have minimal impact on our creators. We have onboarded many additional factories across the globe. Due to our efforts in building relationships with these factories, Killer Merch is expanding the capabilities of what creators can produce without COVID-19-related limitations. In many cases, we are experiencing quicker production cycles with these factories than we do with our local vendors.
I encourage everyone to study the past in order to better plan for the future.
“A generation which ignores history has no past — and no future” - Robert A. Heinlein.