A majority of online or D2C (Direct-to-consumer) sellers worldwide have seen their profit margins reduce as a result of higher procurement costs, caused in turn by Covid-19 and Russia-Ukraine war, a new survey by BuyHive has revealed.
Over 140 online or D2C sellers from the US, UK, and India participated in the BuyHive survey. These sellers either retail their products on Amazon, eBay, Etsy, or Flipkart or run their e-commerce stores through platforms like Shopify.
Reasons for increased prices
While 82 per cent of sellers surveyed said that their costs have increased due to higher prices from suppliers, over 72 per cent said they have already increased their prices, or are planning to. Despite the increase in prices, 64 per cent of surveyed sellers saw their profit margins reduce as a result of higher costs.
‘The online and D2C sellers have been badly hit by the increase in procurement costs and are finding it hard to grow their topline or retain their profitability margins. The survey also reveals the link between global supply chain disruptions and business risks for D2C brands. While many sellers are choosing to change their suppliers because of the ongoing disruptions, it might directly affect their product quality and impact their business in the long run,’ said Minesh Pore, CEO of BuyHive.
Nearly 73 per cent of the surveyed sellers said they have started looking for other or cheaper suppliers to keep their procurement costs in control. When asked about the reasons for an increase in their procurement prices, 68 per cent of the sellers attributed it to Covid-19 related manufacturing disruptions, and 70 per cent said the international freight prices are responsible.