A substantial number of major online retailers, most notably Amazon, tried to foresee the increased demand in activity for the festive season and introduced “Black Friday” seasonal-type deals for their most popular products – attempting to quell the increased demand once Christmas rolled around.
Like other Ecommerce companies, Amazon, have taken on warehousing to combat Brexit and the pandemic-induced disruption to the supply chain that has caused demand to boom. However, this has itself caused a major shortage of warehouse space, with property agent Cushman & Wakefield, reporting that there is fewer than 50 million sq. ft. available warehouse space in the UK, the lowest level since 2009.
The lack of warehouse space is being exacerbated by the recent shortage of available labour, in this instance warehouse workers, with firms competing to fill thousands of vacancies by offering staff pay rises of 30% or more, according to the Independent.
The rise in shipping costs for the smaller eCommerce retailer is bound to negatively impact already tight profit margins, with the cost of shipping increasing by as much as 480% in the last year. Most companies will now be forced to pass on fluctuating operational costs to their customers as they have been unable to absorb them in the past.
Further, delays in delivery are likely to disappoint eCommerce consumers in an industry where brands are only as good as their reputations. In response to customer demands for instant gratification, online businesses may experience lost sales and negative reviews in the immediate future due to no fault of their own.
As end-user prices increase and disappointed customers increase in an already highly competitive market, some online brands are likely to see their business fortunes decline.