We start with our new series "Myos Experts". Experienced online merchants and service providers report on their experiences on topics such as e-commerce, financing, and trade.
COVID-19, Suez Canal blockade, closed port of Yantian: the cost of shipping goods from Asia to Europe continues to rise, with many entrepreneurs reporting up to 400% mark-ups on import costs. There is no end in sight and the important Chinese New Year and Christmas business is at risk. How are experienced Amazon merchants dealing with this? We asked 3 Myos experts.
„The extreme increase in freight rates from China came as quite a surprise to us, as we have been importing large quantities from China for many years and the costs have been stable until now. In addition, we have grown constantly from year to year and have to increase order volumes accordingly. Thanks to the help of Myos, we are able to close the delta in equity in the pre-financing of goods and thus place larger order volumes. In times of high freight rates, this is in fact our main strategy, because it allows us to counteract the higher freight costs with lower purchasing costs. As a second mainstay, we are successively trying to shift contract manufacturing to Europe - this will be essential in the future."
"For us, the issue is particularly difficult because we are blessed with very strong growth. We strictly adhere to our ambitious business plan and are bold in terms of order quantities and timing. The enormous delays in rail and sea freight are simply not compatible with our growth, no matter how well we plan. In order to be able to calculate reasonably, we have switched to air freight for transport. The extreme transport costs are partly offset by the high order volumes and the resulting lower purchase prices. In terms of cash flow, we count on the support of Myos: without pre-financing of goods, our targets for Q4 would not be feasible. For the future, we are already looking around Europe and are now sourcing our cosmetics from Germany."
"The topic of logistics is currently a great challenge for every merchant. In April, we still thought that the import prices at that time were the tip of the iceberg, but unfortunately that was not the case. We are trying to get a grip on the problem by combining all our shipments and importing them together. In addition, we try to place higher end prices to keep our margins at the same or at least a similar level. It remains to be seen whether and how competitors will follow suit. There is one good thing about all this for us: we are forced even more than before to focus on the clear "performers" in our portfolio and to weed out products that are not performing well. This in turn ensures healthier growth in the long term."
In order to counteract the high transport costs and optimise the transport of goods, our customers pay attention to some important aspects. It is necessary to calculate the transport reasonably in order to ensure transparency in the delivery as well as a reduction of the transport time through, for example, a transfer to air freight. Likewise, larger orders should be placed in order to counteract the higher freight costs with reduced purchasing costs. Here, Myos supports you with the pre-financing of goods and gives you the opportunity to order larger quantities of goods. In general, it is helpful to combine consignments and also import them together in order to have a reduction in costs. Another option is to relocate contract manufacturing to Europe. With these basic factors and good planning, it should be possible to offset the high transport costs in the long term.