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Small-business owners: We’ll go to China to make sure we have enough stock

“What we’re doing now is placing a larger order and bringing it to our warehouse [from China] directly,” said one small-business owner.
Image: Global Supply Chain Issues Persist In Lead Up To Peak Holiday Season
Stacked shipping containers at Kwai Tsing Container Terminal in Hong Kong on Nov. 10.Anthony Kwan / Getty Images

Supply chain issues have led to shortages of pet food and Christmas trees to toilet paper and baby gear. Major retailers, such as Walmart and Home Depot, have been able to charter private cargo ships to keep their shelves stocked. In one extreme case, the maker of Beanie Babies chartered more than 150 flights from China to bring the stuffed toys to the U.S. and bypass port congestion. But those are expensive solutions that smaller businesses can’t always afford. 

To ensure they have enough product to satisfy customers, smaller companies have had to get creative by cutting out delays where they can. In some cases, that has meant going to China to pick up orders directly from the factory. In others, it has led businesses to open up their own warehouses in the U.S. to bypass the congestion at the ports in California.

Pish Posh Baby, an online baby gear store with a brick-and-mortar location in New Jersey, used to occasionally pick up product in China. It did it as a way to save money, as manufacturers would sometimes offer discounts for picking up directly from their factories. But with the current supply chain clogs, trips to China have taken on a different purpose. 

“Now, very often, manufacturers don’t have the margins to give discounts, so we’re going to China simply to have product,” said Charlie Birnbaum, the chief operating officer of Pish Posh Baby. “We’re not saving money, and we’re doing it more often.”

We’re going to China simply to have product. We’re not saving money.”

Birnbaum said that by bringing in containers of product on its own, Pish Posh Baby has been able to have more control over distribution, getting items to customers faster than it otherwise would.

“We’d normally be relying on the U.S. distributor to pick up product from China and bring it to their warehouse. Then we’d place an order, they’d ship it to us, it would go to our warehouse and then out to customers,” Birnbaum said. “What we’re doing now is placing a larger order and bringing it to our warehouse directly.”

Pish Posh Baby isn’t alone. 

Kids2, a toy manufacturer that owns several brands, including Baby Einstein, has had increased demand from retailers looking to pick up items directly from its factories in China, owner and CEO Ryan Gunnigle said. In all, he has had 10 major retailers come to him with requests to do just that.

He has also helped partners secure certain items they have struggled to keep in stock, like computer chips.

“Retailers are coming to larger companies like ours to help them solve some of the supply chain challenges,” said. “We had one retailer come to us and say we can partner with you and increase our demand by 30 percent with you. Conversations like that have come up four or five times.”

Gunnigle said he saw where things were headed early on and was fortunate that his company already had a solid footprint in China before the supply chain started backing up.

“Having the local infrastructure allowed us to increase our response times and capture more opportunity,” Gunnigle said. “But we’ve really had to change how we work. We have weekly supply-and-demand meetings. We actually have so much inventory in the supply chain, and you don’t want to end up with too much or too little.”

He said it’s a fine balance, because, even with the infrastructure it has in China, if Kids2 were to run out of stock, it would take about six months to replace. 

If the company were to run out of stock, it would take about six months to replace.

That’s because even if companies can actually get hold of the products directly in China and afford the cost of transporting them to the U.S., backlogs await at U.S. ports. Ships are idling offshore at ports along California. Once ships are able to dock and unload their freight containers, the containers wind their way through the ports’ processing centers, awaiting labeling and pickup by shippers. 

The process can now take weeks as opposed to days, said Levi Conlow, the CEO of Lectric eBikes. Conlow said that from the moment inventory arrived at the port, it took five to six weeks to get to him when delays were at their worst in February and March. 

“The third-party logistics and distribution centers in L.A. have been unusable. They don’t have the bandwidth to get things out,” he said.

Lectric eBikes struggled to stay in stock and meet demand long before the supply chain clog. As a result, Conlow was used to pivoting quickly. When things began getting congested at the ports this year, he started laying the groundwork to entirely forgo the processing system at the Los Angeles ports and acquire his own warehouses. 

“Trying to get in stock was always a challenge. We were never spoiled with simplicity or a sane world,” Conlow said. “We realized we had to get out of L.A. We brought fulfillment in-house to Phoenix in August. Within 30 days, I became a company that was in stock.”

The dramatic steps smaller companies are taking to stay in stock and meet demand show just how much strain the supply chain is still exacting on retailers. As Birnbaum said, there are “issues all the way through from sourcing materials to getting it to our customers in the U.S.”