Shipments in Limbo in the Midst of COVID-19

A recent article by SupplyChainBrain discussed the effects that COVID-19 is having on the global supply chain. As factories resume production in China, retailers are confronting the reality that their shipments may be ready to arrive, but they have nowhere to go. As some factories have had to either shut down or only sell certain products, the inventory that was ordered last quarter is now heading to the U.S., but it may never leave ports due to distribution center closures. 

What this may all amount to in a short period of time is an oversaturation of surplus—and over the next few quarters, the market will see a number of things:

1. Whether or not retailers are able to open
2. How they survive with what they’re allowed to sell
3. How they process freight they hadn’t anticipated 

Although some factories in Asia are back up and running, we are still dealing with a shortage in shipping capacity. Like a carefully played game of chess, strategy is guiding the incoming ships to reposition empty containers of goods. In the month of February alone, cancellations equaled a year’s worth of activity at the busiest terminal at the Port of Long Beach. That’s 1.7 million 20-foot equivalent units that were cancelled and may have nowhere to go. 

Another challenge is handling containers that may sit on the water that are full of overstock goods. Some of the main purchasers of these goods are retailers whose stores are closed, and while they may have the ability to purchase, they may not want to do so because these goods may be out of season by the time they’re available. 

So, what can we expect once the economy recovers and business resumes? That all depends. In what seems like a domino effect, we’re dealing with the results of one thing leading to another: 

• Store closures lead to items remaining on shelves 
• Items remaining on shelves lead to warehouses being overstocked
• Warehouses being overstocked lead to an unavailability to store inventory that’s sitting in a port
• At this point, whether or not the system can handle the increase of inventory will depend on company supply chains and the solutions they have in place

One way that retailers can prepare for what’s coming—and prevent from drowning in surplus—is by leveraging a B2B sales channel to sell directly into the secondary market. This solution (in the form of a private online auction marketplace) enables the retailer to sell to thousands of business buyers, offsetting more loss and moving inventory faster. 

B-Stock’s auction marketplaces are customized and scaled based on each retailer’s needs and goals. That’s why nine out of the top 10 U.S. retailers are leveraging our platform to drive demand and achieve higher pricing, as well as a faster sales cycle—all while maintaining brand integrity. 

If you’re ready to harness the value of the secondary market for your excess inventory, schedule a demo today.