Laden...
Why Skyrocketing Import Costs Are Hammering Amazon Sellers (And You)Shipping one container from China to the U.S. cost $2,000 a year ago. Now it’s up to $15,000, leaving sellers scrambling and causing product prices to rise.
Why Skyrocketing Import Costs Are Hammering Amazon Sellers (And You)Tyler Rodriguez, an Amazon third-party seller based in Florida, has seen his import costs from China triple since the start of the pandemic. He’s had to bump prices for the toys he sells on the site by 10 to 15%. And he’s among the lucky ones. Rodriguez is part of a growing segment of the U.S. economy getting crushed by rising import costs from China. Before the pandemic, Amazon sellers and their fellow U.S. retailers could import a 40-foot container from China for approximately $2,000. Now, that same container runs as much as $15,000. And Rodriguez, who still hasn’t seen the brunt of the pricing surge, is bracing for what’s to come. “It started getting crazy,” Rodriguez told me. “I don’t know what the upper limit could be.” The shipping cost surge is most acutely hitting Amazon’s third-party sellers — who operate on thin margins and often compete with Amazon itself — but it’s also shocking the rest of the import-reliant U.S. economy. To account for the greater costs, companies like Rodriguez’s are raising prices, and others are going out of business. And with industry experts predicting this will go on for months, it’s time to brace for a prolonged period of upheaval for businesses and price increases for the rest of us. “Anyone selling shoes, or cameras, or surfboards, or anything super big, they're definitely getting absolutely smashed right now,” Rodriguez said. The chain of events that led to today’s shipping price spike began with China’s shutdown at the start of the pandemic. When the country closed its factories, ocean carriers took ships offline because they had nothing to ship. Then, just as China started ramping back up, demand for products soared as homebound Americans went on lockdown buying sprees. The result was a classic marketplace squeeze, where shipping capacity couldn’t match demand. So prices skyrocketed. “It hurts if you're a Walmart or Kohl’s. It can be almost devastating if you're a smaller importer,” Will Urban, the chief revenue officer at the freight forwarder Flexport, told me. “That additional $13,000 per container, that could be all their profit right there.” Leyla Zhao, who works with Amazon sellers and is based in China, told me the ports in China are congested, short on containers, and are working slow due to the pandemic. The pandemic’s devastation in India caused even more sellers to look to China for products, leading to further stress on the system. “The export volume is more than before,” she said. There’s little chance the pressure lets up this year. Rates are locked in for the next few months. And then merchants will stock up as we approach the holiday season, leaving little room for a respite. Meanwhile, the ocean carriers don’t seem to be in a hurry to restore capacity, seemingly enjoying the rates they can charge and wary of going back to ‘normal’ before they know what normal is. The short-term effects are already apparent. Some companies that Flexport works with have shut down, while others are passing along the price increases to their customers. “Cmpanies have a choice. They can either just die on the vine — which they're probably not going to do, or try not to do — or they're going to pass it on to the consumer,’’ Urban said. “And that's what ties to inflation.” Urban said his family is going to do its holiday shopping early. For Rodriguez and his fellow Amazon sellers, the plan is simple: “You raise prices and hope that containers become cheap again.” Meet Big Technology’s Headline Sponsor: FlatfileOne of the worst ways to spend your time is manually formatting spreadsheets. Thankfully, our friends at Flatfile have created Portal, the elegant import button, so your customers can confidently import their data without you ever having to format their messy Excel files again. Further Reading:An ‘aggressive’ fight over containers is causing shipping costs to rocket by 300% (CNBC) Higher Shipping Costs Are Here to Stay, Sparking Price Increases (Bloomberg) News BriefsFlorida governor signs bill barring social media companies from blocking political candidates (Washington Post) Florida Governor (and likely 2024 hopeful) Rick DeSantis signed a bill this week that prohibits social media companies from suspending political candidates ahead of elections. This bill is the most significant government encroachment on the rights of social media companies to moderate speech on their platforms in the U.S. (hello First Amendment) and it will likely be challenged in courts and eventually struck down. Still, the bill shows how governments and lawmakers are afraid of social media companies’ power and are trying to claw it back however they can. Even in the U.S. where private freedom of speech is enshrined in the Bill of Rights. Apple’s Fortnite Trial Ends With Pointed Questions and a Toast to Popeyes (New York Times) Epic Games’ lawsuit against Apple, while wonky, is a big deal for Apple’s business. Epic is suing Apple over its App Store fees, at a time when Apple is relying more on those fees since people are holding onto iPhones longer. The trial concluded this week. And while many thought it would be a slam dunk for Apple, there’s now a sense that Epic may walk away with a partial victory. The judge is expected to rule this summer. Amazon’s Prime Zoo Would Get a Powerful Lion in a Deal With MGM (Bloomberg) Why would Amazon, an online retailer that’s sunk billions into original programming, spend another $8.45 billion to buy MGM? The reasons seem obvious: 1) MGM programming gives Amazon customers incentive to renew Prime 2) Jeff Bezos has a big ego and wants a hit show 3) Amazon has a lot of money to experiment with, so why not… Yet none of these explain what made Amazon pull the trigger. Amazon Unbound author, and recent Big Technology Podcast guest Brad Stone, who’s studied Bezos for years, weighs in with some more developed thoughts. He points to advertising and spinoff programming as core components of the deal. Now we’ll see if regulators let it through. How the Twitter/Media Feedback Loop Can Work to Undermine Our Understanding (Insight) We know the news media is over-reliant on Twitter, but it’s hard to pinpoint exactly how that shapes our coverage. Professor Zeynep Tufekci tackles one example, using news organizations’ refusal to consider the “lab leak” hypothesis to illustrate the problem. A few high-profile scientists on Twitter who disputed the leak possibility ended up shaping the conversation, as those open to it kept their heads down. Then, when traditional media blacked out coverage of the lab hypothesis, it only added fuel to the conspiracists on the edges. Advertise with Big Technology Want to reach the most influential people in the tech world? Big Technology is a good place to find them. The newsletter has openings available in July and September, including some new ad slots. Email [email protected] to learn more. This Week on Big Technology Podcast: New York Times Reporter Jack Nicas On Apple Vs. Epic Games and Apple In ChinaJack Nicas joins Big Technology Podcast fresh out of the Epic v. Apple trial, where the Fortnight maker is suing Apple over the 30% cut it takes out of every dollar we spend on apps downloaded from the App Store. Nicas takes us inside the courtroom, explains what’s at stake, and makes a prediction for where things net out. In the second half, Nicas breaks down his reporting on Apple’s questionable privacy practices in China, where the company stores user data in servers all but owned by the Chinese government. To subscribe to the podcast and hear the interview for yourself, you can check it out on Apple, Spotify, or wherever you get your podcasts. Tips, Comments, Ideas?Send them my way. I read every response. Thanks again for reading. See you next Thursday! If you liked this post from Big Technology, why not share it? © 2021 Alex Kantrowitz Unsubscribe |
Laden...
Laden...
