Following surges of sales and exponential growth during the pandemic, online marketplace sellers are experiencing their busiest period of global sales this year. As consumers moved online by default, the shift from physical stores accelerated by five years, according to IBM’s U.S. Retail Index. As a result, marketplace sellers are preparing their Q1 2022 inventory earlier this year to meet pent-up demand and avoid supply issues that hindered sales during the beginning of the pandemic, such as stock shortages and longer delivery times.
With the U.S. 2021 inflation forecast rising from 2.9% to 3.6%, relationships between sellers and suppliers are under greater pressure. The demand for competitively priced goods and the prospect of facing logistical issues are now challenging sellers to gain a competitive advantage. Time delays in overseas supply chains caused by multiple parties in the critical path, handling fees and reconciliation issues continue to be obstacles for marketplace sellers. To overcome and prevent tripping over these hurdles, sellers will need to address three key pillars to exercise due diligence ahead of the festive trading season and come out on top of an e-commerce race they will not want to lose.
In any industry, having a poor foundation can limit growth; the same can be said in e-commerce. Like building a house of cards, if one part of the supply chain falls, the others can easily follow; the best thing to do is build a robust knowledge of your supply chain. Later down the line, finding that new suppliers do not meet unique needs can cause enormous amounts of money and time to be lost.
Sellers should be able to pay suppliers in their local currency and avoid the hidden fees that can come with cross-border selling. Research from The Hackett Group shows that upper quartile companies converted cash three times faster than median performers. They collected from customers 19 days faster, paid suppliers 20 days slower and held less than half the inventory. The dangers of not paying suppliers on time mean that those essential relationships that sustain supply and demand are disrupted, and trust can be lost. However, transferring money in local currencies can provide a range of benefits to vendors by enabling suppliers to receive their money securely around the world in their local accounts at a faster rate and streamlining their invoice procurement.
You can instantly transfer money to suppliers in their local currency with supplier payment solutions, creating happier vendors. In addition, you are granted access to real-time payments at ideal rates, saving time and money.
The second key factor sellers and vendors need to consider when going to market is the time it takes for cross-border sellers to go through the respective regulations and interpret them with a localized understanding. When transferring money, sellers also run the risk of a buffering period when funds directed to suppliers take a while to reach them, requiring them to diversify to minimize risk. The average number of days it takes a company to pay a supplier has reached 66 days worldwide, and sellers cannot afford to take that long in the build up to the busy holiday season.
Instead, turnaround times can be vastly reduced when paying in local currency. No extra time needs to be allowed to convert money when going between suppliers, consumers and sellers in different parts of the world. With quick turnaround times, the rate of supply output can marginally improve, which will help sellers stay afloat as consumer purchasing patterns and demand for products increase.
Cross-border payments and operating in a global supply chain also risk scams, errors and delays as money moves through multiple parties. To mitigate this risk, payment providers will need to validate both ends of the supply chain to support sellers and operate in real-time to reduce delays by providing transparency and speed.
Furthermore, payment providers can verify sellers and suppliers to reduce the risk of scams that consumers face, causing them to lose money. Verification will undo the culture of un-trust in supply chains and simultaneously cut down on the scams that sellers face from false suppliers.
The third factor to bolstering solid supplier relations is honing in on risk when exposed to a growing supply chain. With a busy holiday season up ahead, suppliers will need to ensure they have a robust cross-border network that can circumvent new challenges that sellers might be unprepared for, such as stock shortages. If they do not, the risk of the buffering period with payment delays could be one of the many challenges that sellers face.
Last year, around $56 billion was lost among consumers to identity fraud in the United States alone, creating a culture of un-trust between sellers, suppliers, and consumers. Mishaps like these can be easily combated with an increased emphasis on vetting sellers and customers to ensure all parties are credible.
Sellers need vetted access to suppliers in low-cost destination hubs to solve their challenges to grow in the e-commerce market. Locations like China have low-cost suppliers that will provide sellers with the protection and acceleration in sales growth they need. Paying international suppliers should not cause you headaches and, instead, can be a quick and easy process.
Neo-banking is the way forward
With faster, more efficient and trustworthy payment avenues, sellers are in an excellent position to demand and negotiate better rates with their suppliers. Thanks to features such as neo-banking that can offer low operational costs that target growth for sellers and will help them stay afloat amid inflationary periods.
In addition to instant transactions and low costs, partnering with a payment provider will allow sellers to streamline and match the supply with the growing demand for online purchases.
During online trade, there will be issues with cross-border selling, but there are solutions. There is potential to grow your business through exclusive access to trusted Chinese and global suppliers offered through supplier pay schemes, which will set your business apart.