Brands | Industry Updates

ONLINE SELLERS BESIEGED WITH REDUCED SALES AND MARGINS DUE TO SUPPLY CHAIN DISRUPTIONS, REVEALS BUYHIVE SURVEY

Published: September 27, 2022
Author: Fashion Value Chain

An overwhelming majority of online or D2C (Direct-to-
consumer) sellers worldwide have been forced to increase their prices. This is on account of
higher procurement costs, caused in turn by the pandemic and Russia-Ukraine war, a new
survey by global B2B sourcing platform BuyHive has revealed.
While 82% of sellers surveyed confirmed that their costs have increased due to higher prices
from suppliers, over 72% said they have already increased their prices, or are planning to.
Despite the increase in prices, 64% of surveyed sellers also agreed that profit margins have
reduced as a result of higher costs. Furthermore, the respondents also noted that their sales
have reduced because of the increase in prices.
Over 140 online or D2C sellers from the US, UK, and India participated in the BuyHive
survey. These sellers either retail their products via major e-commerce platforms like
Amazon, eBay, Etsy, or Flipkart or run their e-commerce stores through platforms like
Shopify.
‘The online and D2C sellers have been badly hit by the increase in procurement costs and
are finding it hard to grow their topline or retain their profitability margins. The BuyHive
survey also reveals the link between global supply chain disruptions and business risks for
D2C brands or online sellers. While many sellers are choosing to change their suppliers
because of the ongoing disruptions; it might directly affect their product quality and impact
their business in the long run,’ said Minesh Pore, CEO of BuyHive.
Nearly 73% of the surveyed sellers said that they have started looking for other or cheaper
suppliers to keep their procurement costs in control. When asked about the reasons for an
increase in their procurement prices, 68% of the sellers blamed Covid-19 related
manufacturing disruptions, while 70% reasoned that international freight prices are
responsible.
Finding alternative suppliers, however, is proving to be a challenge for most online sellers.
Nearly 50% of those surveyed agreed that they are not able to find trustworthy suppliers,
while almost 60% lamented that they are not able to find cheaper suppliers. Just over 50%
of the sellers agreed that they had concerns or doubts about the quality control at new or
alternative suppliers.

‘The disruptions in international travel along with the continuing surge in travel costs have
created new problems for small or mid-sized retailers worldwide in finding new or alternate
suppliers efficiently. Online platforms like BuyHive are filling in the gap by offering ‘sourcing
as a service’ on demand,’ added Pore.
When asked how they found their current suppliers, nearly 70% of surveyed online sellers
said they used Google or Bing search engines to find them, while around 49% said they had
used B2B e-commerce platforms like Alibaba. Almost 55% of sellers were introduced to their
current suppliers through a friend or business associate.
The survey also revealed the significant opportunity for new suppliers to bridge the gap in
buyers’ trust and pricing. A little over 47% of sellers said they find their current suppliers
trustworthy and reliable, while only half of them agreed they had no problems returning
defective goods or units. However, less than 44% of sellers agreed that they found the
prices from their current suppliers attractive.
On the impact of the Russia-Ukraine conflict on their business, 55% of sellers said it has
increased their costs and reduced margins; while over 49% said it has led to reduced sales.
Over 53% of the sellers also agreed that the conflict has caused more difficulty in sourcing
goods.

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