Why Retailers are Facing a Toy Shortage During This 2021 Holiday Season
Dec 1, 2021
10 mins read
“The line between disorder and order lies in logistics.” ~Sun Tzu.
During these unforgiving lockdowns during COVID-19, most US toy businesses either cut back on or completely halted their production. As all kinds of shoppers re-enter the shops, companies have a hard time fulfilling this surging demand. With bottlenecks in manufacturing and rising labor shortages in transporting goods, businesses struggle to counter toy shortage.
Many retailers are reserving trucking spaces or ships and doing their best to counter the toy shortage. As the toy industry and supply chain suffer from this shortage, we can expect more out-of-stock situations for desired toys.
Toy shortage in the US has emptied toy store shelves and ensured that highly-preferred toys do not find a place in small toy stores. As the 2021 holiday season began early, toy shopping started early. But the audience could not find the popular toys of their preference, whether it was board games or other toys.
6 Reasons holiday retailers are facing a toy shortage in the US
If people ask whether there is a toy shortage, the answer is undoubtedly a big yes. Missing shipping containers, port congestion, backlogs in ports and warehouses, and shortage of trucks are causing a supply chain nightmare to the toy industry. It is a colossal task for toy businesses to piece together a supply chain with one delay after another.
The primary question for many is what is causing these toy shortages in the US and globally. Below are six reasons why holiday retailers in the US are facing a massive toy shortage.
The huge problem facing the US toy industry is that there are not enough workers to get products unloaded and shipped. Worker shortages have made it challenging for retailers and logistics providers to allocate deliveries to their fleet drivers. With many toys stocked in ports, toy shopping is witnessing a logistical crunch.
Power shortage in China
To meet their official energy targets, Chinese factories are facing power shutdowns and factory closures leading to possible shortages of many goods during this holiday season, including toys. With China facing balancing economic growth and climate change issues, this move could create huge short-term costs that the world is facing now.
“The toy industry is particularly susceptible to shipping delays because 85% of the 3 billion toys sold each year in the United States come from China.” – Ed Desmond, executive vice president for external affairs at the Toy Industry Assn, Oct 15, 2021
Shipping delays like canal blockage are crucial reasons for delay in shipping toy products and raw materials. With global supply chains still recovering from the lockdown restrictions, shipping delay has caused a dent in the supply chain resilience.
The process of goods moving from overseas factories to the American addresses is like a relay race. A piece of equipment stuck at one point can cause a ripple effect and result in delays in the entire supply chain.
The primary reason for shipping delays is the fragmented approach of US ports towards data privacy, business secrets, and security. This meant that ports operated as separate territories rather than as a part of the national system. This is because the US ports did not share the access of commercial data with other ports, terminals, carriers and shippers for planning purposes.
With a chassis waiting, a truck driver is alerted to pull the chassis to the customer’s warehouse. Situations like the Suez Canal blockage where congestion elsewhere keeps the port jammed are a recent example of this challenge. If there is congestion, shippers with full warehouses may not be able to dispatch drivers to collect additional containers.
With overstuffed warehouses, the cargo piles on the docks leave ports short of needed equipment. These overstuffed warehouses are a big reason for the inability of businesses to meet the toy shopping demand.
A rise in transportation costs
With global shipping facing a massive logistics crisis, all shipments from lumber to toys are impacted. A steady rise in demand coupled with lack of ships, labor, and lack of enormous shipping containers has increased transportation costs. As the peak volume demand for toys increases, there is no surprise in shipping companies hiking the shipping rates.
Backlog in ships entering the ports
In some locations, containers have been sitting at ports or in terminals for 30-60 days.- FreightWaves, 2021
Cargo delays at the Port of Long Beach and Port of Los Angeles have affected multiple supply chain touchpoints. Congestion at ports started increasing as the holiday season approached, leading to a backlog of ships entering the ports. The delay of vessels entering the ports resulted in time lags for unloading of goods.
How delivery logistics software helps toy companies improve their last-mile delivery performance
The U.S. toy industry enjoyed a nearly 17% increase in sales last year and a 40% increase in the first half of this year as parents looked to entertain their kids at home, according to NPD Group, a market research firm. – Oct 2021
As children are spending more time at home due to lockdown restrictions, parents need to find ways to entertain their kids. An increased demand for toys is a product of that. As demand regains in the market, many parents want to buy their kids toys at discounted prices.
Most toy consultants believe that toy shops won’t be able to fulfill the orders on highly-demanded toys. Even toy companies like BasicFun and PlayMonster have minimized their advertising. Toy shopping has increased more than pre-Covid levels this year, and it is a massive challenge for toy retailers to enable last-mile logistics successfully.
The only factor in control of toy retailers is to improve their last-mile delivery efforts through some essential measures. As businesses counter driver shortage and peak demand simultaneously, the first most important step for boosting their last-mile logistics efforts is to invest in proper delivery logistics software. Here are the reasons why toy shopping companies should invest in delivery logistics software:
Dynamic route optimization
Peak traffic, no entry windows, volatile weather, delay in products reaching the warehouse can slow down deliveries. During special times like this 2021 holiday season, people want their ordered toys to reach them on time. Frustrating them with delayed deliveries during these celebratory moments means unhappy customers.
A dynamic route optimization software is a crucial component of a delivery logistics software that makes deliveries seamless for toy retailers. It provides the most efficient routes for the last-mile delivery based on delivery constraints like traffic, delivery window preferences, etc. It updates the last-mile carrier agents about any traffic jams or road blockages and sends them efficient alternative routes in those given circumstances.
Enabling Flexible deliveries
This holiday season, buyers want to do toy shopping with flexible delivery options for a higher convenience of online shopping.
Imagine a customer orders a toy for their child but misses the parcel that is scheduled for home delivery on a particular day. It would be great if that customer could visit the retailer’s site and update the time and address to receive the parcel later. It can be incredibly beneficial for a customer if they receive the package even at the office address. This is the kind of flexibility that toy shoppers expect from their retailers.
A delivery logistics software provides real-time updates to customers that help them change the location and time of deliveries in just a few clicks. It helps fleet drivers manage their ad-hoc delivery requests based on the preferred delivery windows without disturbing their actual delivery schedule. It makes it easier for toy retailers to handle cancellations and returns using the same solution.
Improves order management
With demand for toys higher than the supply, delays are bound to occur this holiday season. When these delays happen, the toy businesses must inform their anticipated or unanticipated delays to manage their expectations better. Wouldn’t it be great if toy brands proactively inform customers about delays before they get frustrated and call back?
A delivery logistics software with automated notification systems helps toy businesses alert their customers of any potential delays. This assists them in managing their consumers’ expectations better, winning their trust, and increasing brand loyalty. Automated delivery updates enable them to keep customers informed on their exact delivery times, ensuring their availability to accept orders and improving their happiness score.
Effective allocation of delivery requests
As driver shortage plagues the delivery of toy businesses during this holiday season, effective allocation of delivery requests has turned out crucial for them. Whether a toy business manages deliveries with its in-house resources or partners with a third-party logistics provider, delivery allocation plays a pivotal role in making their toy deliveries successful.
Fleet managers have their responsibilities cut out to balance the driver shortage and overflowing delivery requests. A delivery logistics software helps them allocate deliveries based on driver skill set, proximity, vehicle capacity, vehicle health, break time, Hours of Service (HoS) regulations, and a preferred delivery window of customers. This enables fleet managers to allocate deliveries to the right drivers without burdening them.
Improves shipment visibility
When toy businesses deal with huge delivery volumes this holiday season, their biggest challenge is managing real-time visibility.
A fleet driver is fulfilling 200 deliveries on a given day, and suddenly there is a vehicle downtime due to numerous breakdowns and road closures. If this is not informed to the logistics team, it may result in delivery delays for hundreds of orders leading to the cancellation of shipments. It may even result in theft or spoilage of items causing substantial revenue losses to the business.
With delivery logistics software, businesses monitor if vehicles in a fleet are diverting from the planned route or time spent idling. Other than giving the logistics team better control over the fleet, it minimizes thefts and spoilage of toy items awaiting deliveries. Its AI abilities provide predictive insights to fleet managers that help them accurately plan where their shipment should be at a given time.
Sensing toy shortage, toy businesses have already been buying early to get the right products into stocks early. The present logistical crunch has given toy businesses a fresh perspective into resilience and demand planning in the supply chain.
Investment in technology like delivery logistics software has become an essential step for toy businesses to stay ahead of the competition during these unforgiving times.
A delivery logistics software solution from Locus helps toy businesses plan their routes depending on the number of orders in a location. Its optimal route suggestions minimize idling, maintenance, and fuel consumption, thereby reducing fleet management expenses. It enables toy retailers to onboard their 3PL delivery executives if their in-house capacity gets exhausted.
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ABOUT THE AUTHOR
Lakshmi Narashimman is one of the senior writers at Locus. He is a voracious reader and a passionate writer who loves making complex aspects sound simple.Read other blogs by this author
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Why Retailers are Facing a Toy Shortage During This 2021 Holiday Season