How the Coronavirus Is Causing a Shortage of Inventory for B2B Sellers

COVID-19, more commonly known as the coronavirus, seems to be getting more disruptive with each passing day. As more areas are declaring states of emergency, the government is looking at a wide range of measures to offset the financial impact of the pandemic, including business bailouts and even cash payments to families.

In the midst of the havoc that is being created as brick and mortar retailers are forced to shut their doors, B2B sellers are also feeling the strain. While there are many factors contributing to the current problems facing B2B brands, they all tie directly to the pandemic and the efforts being made to stop it.

Manufacturing Disruptions

Unsurprisingly, the biggest concern for B2B sellers is quite similar to what B2C vendors are facing — manufacturing shutdowns stemming from the coronavirus. As we’ve previously noted, restrictive measures that keep workers from going to their jobs has resulted in many factories being entirely shut down.

Tech — a major B2B area — was one of the first industries to be significantly impacted by the coronavirus. A single computer is made up of hundreds of parts, many of which are produced at different locations. If even a single facility is shut down, production of the entire unit is delayed.

While such shutdowns were previously restricted to China, more and more companies in the United States are also mandating that workers stay home. B2B suppliers will soon run out of stock as they run out of their reserve inventory (if they haven’t already). Many B2B and B2C products won’t be available until several months after production resumes.

It should come as no surprise that many B2B brands find themselves limiting orders or notifying clients of delays in order fulfillment. Without product in their warehouses, the best that many B2B providers can do is plan for the time when products are once again available.

Transportation Restrictions

Another increasingly important issue for B2B vendors are the transportation restrictions affecting large parts of the globe. The border between the United States and Canada is being shut down. Many expect the quarantine measures taking place in Italy to spread to other areas in an attempt to combat the virus’s spread.

Such border closures are also impacting the shipment of commercial goods. As Thomas W. Derry notes in an interview with DigitalCommerce 360, “For a majority of U.S. businesses, lead times have doubled, and that shortage is compounded by the shortage of air and ocean freight options to move product to the United States — even if they can get orders filled.”

As such, many B2B suppliers simply can’t get products to their customers, regardless of actual item availability. Even in areas where government-mandated travel restrictions aren’t in effect, many companies have preemptively placed travel bans on their employees. This means that the in-person meetings and presentations that are so often a part of B2B transactions are largely shut down.

While meetings can still occur via teleconferencing, the loss of the networking opportunities presented by B2B conferences represents a missed sales opportunity for many.

Changes In Company Spending

Because so many companies are being forced to shut their doors, cancel events or have staff work from home, their revenue stream is being directly impacted. This has a carryover effect to B2B companies.

When clients no longer have access to their normal cash flow, they will look to a wide range of cost-cutting measures to stay afloat — which could include cancelling orders of B2B products or subscriptions to B2B services.

As just one example of this, a report from eMarketer notes, “Already, there is evidence to suggest a slowdown in Amazon ad spending, particularly among smaller third-party sellers that already have tighter cash flow. It’s possible that this trend could extend to the other digital platforms if problems continue.”

While this will certainly represent a major challenge for many B2B suppliers, it could also present new opportunities for more digitally-oriented businesses. The same report notes that facilitators of virtual events could see a boost in business as companies look for new ways to reach a target audience confined at home.

For B2B brands that deliver physical products to their clients, cost-cutting efforts could result in the cancellation or postponement of normal orders as companies attempt to keep their finances in order. Even if you have inventory available, it may not get sent out as it normally would.

What’s Next?

Unfortunately, it is becoming abundantly clear that we are not out of the woods yet as far as dealing with the coronavirus. As the number of confirmed cases continues to grow in the United States, Europe, and other parts of the globe, it seems that social distancing and other precautionary measures will continue to be in effect for the foreseeable future.

B2B brands should remain in close contact with their suppliers and clients and be aware of the constantly changing logistical challenges posed by this pandemic to try to keep business running as normally as possible.

Until then, continue following the Sourcify blog and other reputable news sources to better understand what your business needs to do.

We’ll do our best to help you get through this time.