Fighting for Freight: why it is happening and what can be done
This has been a tough year for toy companies. Chinese factories have been harder to work with; safety inspections have been more costly in time and money; prices have been going up and freight has been a nightmare.
Talk to any importer and you will soon hear horror stories of trying to find a container or a ship to put it on. Concerns are rife about toys arriving on time and what will happen if they don't.
There is a must read, front page article on this subject in the July 27, 2010 New York Times entitled: "Retailers Pay More to Get Cargo (No Guarantee)." Here is how the article positions the problem: "Fighting for freight, retailers are outbidding each other to score scarce cargo space on ships, paying two to three times last year's freight rates - in some cases, the highest rates in five years. And still, many are getting merchandise weeks late."
What has caused the problem?
The problems stem from 2009, when stores slashed inventory. With little demand for shipping, ocean carriers took ships out of service: more than 11 percent of the global shipping fleet was idle in spring 2009, according to AXS-Alphaliner, an industry consultant.
Carriers also moved to "slow steaming," traveling at slower and more fuel-efficient speeds, while the companies producing containers, the typically 20- or 40-foot boxes in which most consumer companies ship goods, essentially stopped making them.
How expensive has it become?
The cost of shipping a 40-foot container from Hong Kong to Los Angeles without a contract, or the spot rate, was about $871 in July 2009, a five-year low. This month, that spot rate reached $2,624, a five-year high, according to the industry consultant Drewry Shipping Consultants, as reported by The Journal of Commerce. That exceeded even the cost before the recession, which was about $2,000.
What can be done?
The article suggests that you may consider paying the freight company more money. In return, they make someone else's container off and put yours on. More ethical, is the suggestion that you bring goods in earlier. That's not so easy to do when everything else (inspections and production) are taking so much longer.
The good news in all of this is that business is better. If it weren't there wouldn't be a shortage. In the mean time, it's another challenging year for the ever resilient toy industry.
Carlos commented:
To be honest, it snduos like you want to become a store owner rather than a distributor' ( the companys that actually supply the stores) THAT is a whole different thing and a major effort. I own a online shop, and I can help you in that arena:Start off by doing some research for companys that offer turn-key adult stores. These companies will host, and maintain you site, as well, in some cases, serve as a distributor by providing a inventory of products you can use on your site and offer drop shipping services.Some people will try and tell you that you're locked into using THAT one company as a distrubutor, but I actually use three different distrubutors, *none* of them are my Turn-key company I use them *only* for hosting my site because I wasn't a fan of their perfomance as a distributor. *You* will always be in control of what your website carries and the prices you charge.You'll pay a set up fee, and mine even applied a template so I was technically ready to go and if that company provides a large inventory- you can select the products you wish to carry, make adjustments to the template to customize it and go live. You still need to do the background stuff set up a domain name and a business/tax licence whatever your local laws require as well as a Credit card processor, and a business bank account. I'm not saying its a snap, but its isn't a Herculean effort either.About dropshipping This is a wonderfull alternative to actually having to warehouse a lot of stock yourself: Someone orders a Rabbit vibe, you put in the order to your distributor, for a small fee, they send it out to your customer for you. Its worked quite well for me.The real difference between stores is the marketing- market your business, pass out cards, throw events, demos, whatever your customer base will be all local at first but eventually but at time goes, you'll get a more diverse base. I live in Maryland and I recently vacationed in Vegas. In checking out the other side of Vegas I went into a shop and ran inot one of MY business cards. Marketing works. Also research all you can about your stock the more you know and can talk about, the more people trust you as a business. I've sold products while having a freindly conversation about toys without really meaning too!The biggest snag I had was getting a Credit Card processor. With CC processors getting tough on Adult content, some (many)companies have been downright Nazi-ish, even dictating what a cleint can sell or not sell.. even giving me grief about the packaging of the products, which I had nothing to do with, and demanding that I fuzz out any nudity on the product images and I carry over 1000 different products! I use Linkpoint I recommend them *highly* they don't give you crap or take you through the ringer like many other processors do. They handle transaction on my site AND and point of sale transactions we do at a toy party or event. I was on vacation and I did business with just my laptop! You could use PayPal but they have an inconsistant stance on Adult businesses. One auditor looked at our site and cancalled our account, another looked at it with no changes and reinstated us and that LAST thing you want is they way you get paid being left up to the personal opinions of a stary auditor on any given day. You'll pay less per transaction as well. This is vital, because chosing a company that might revoke your account can leave you dead in the water and out of business.Good Luck and I hope this helps you.
Bjorn commented:
Ha! These guys are the worst chewers-my male B T has dsyeroted 5-6 dog beds, countless toys, chewed the tags out of some of my t-shirts, and got ahold of a few DOWN PILLOWS-lots of fun Anyways we got our little devil a toy from petsmart for x-mas mad of canvas it looks like a trout-they come in other shapes, but we take ours fishing, and it was made by a company called half-ton of yanking fun . ANYWAYS aince x-mas he has onle managed to chew off the tag, and the fin off of the back, which for him-this is outstanding. Highly recommend these toys to any dog owner-im going to go stock up before i go and get my dobie puppy. Also, canvas training toys-used by hunters for teaching dogs to retrieve are also really durable-can also find these at most larger petstores. GOODLUCK, use doxie owners need it!
