While we continue to pull ourselves out of the worst pandemic in more than a century, reinvigorating the economy has proved to be more difficult than simply flicking on the “start” button.
The reality is that getting products to customers has been incredibly challenging and frustrating.
Even now, the third quarter takings of the biggest brands such as Apple and Amazon have pointed towards disappointment – a sign that the global supply chain crisis is affecting even the largest of companies.
Amazon recently claimed that due to higher costs of fulfillment, its fourth-quarter sales could be wiped out. While Apple has said that it has lost $6 billion in sales due to failing to meet the demands for its products.
Put in a sentence: this holiday season is going to be tough for companies and customers.
“It’s going to be a rough holiday season for sure,” said Tuna Amobi, an analyst at CFRA Research. “Expectations are going to come down, across the board.”
Demand has never been more robust. And when it comes to Apple, they have shelves full of new products and devices – they just can’t actually put them on physical shelves.
Over at Amazon, their preparations for the holiday season are going to cost them. It is going to spend billions of dollars on hiring workers, paying them more than usual, and money put into distribution channels.
On the back of strong growth last year, Amazon is seeing slower sales growth as consumers who came online to order in record numbers have begun to return to physical shops.
While at the same time it’s had to spend more on employment and warehouses.
“People were hoping that this quarter was the bottom,” said John Tomlinson, director of research at M Science. “It doesn’t seem that’s the case. Some of the challenges they laid out didn’t seem to get worse, but they didn’t get much better, either.”
And with creeping inflation, it is now another unwanted ingredient for the holiday season. “There’s just a lot of weird stuff going on,” said Michael Pachter, an analyst. “We haven’t seen inflation like this in 40 years, and it’s all due to tight supplies, COVID-related surcharges and rising labor costs.”