Right now it sucks to be a major retailer or manufacturer, but it's an awesome time for entrepreneurs who design, build and sell their own things. In particular there's a gigantic opportunity to cash in this holiday season.
Here's why. The global supply chain's current state of havoc has increased shipping costs from China, the world's factory, tenfold. MGA Entertainment is one of the world's largest toy companies, and CEO Isaac Larian told Bloomberg "I've been doing this for 43 years and never seen it this bad." A year ago MGA was paying $2,000 per shipping container delivered from China--and this year they're paying $20,000 per container.
Worse (for them), once those containers arrive, there's no guarantee they'll be speedily unloaded. Random COVID cases shutting down port facilities, even for relatively short periods of time, generate backlogs that take weeks or months to resolve. MGA recently spent six weeks waiting for 600 toy-filled containers that had already arrived at the port of Los Angeles to simply be unloaded.
Photo by Teng Yuhong on Unsplash
The knock-on effect is that stores can't get product. "There will be a shortage of toys this fall," Larian said. "It's going to be a tough year for retailers." Bloomberg reports that some retailers, desperate for inventory, have resorted to buying old stock that would ordinarily be liquidated at outlets and closeout stores, and are selling that in place of new goods. "Retailers are having a really hard time filling their shelves," observes hedge fund investor Steve Azarbad.
That's why the independent design entrepreneur who manufactures their own stuff, locally, stands to make a killing this holiday season. Pent-up demand for toys and other gifts will be there, it will be high, and it will be met with frustration as desperate parents and family members find picked-over store shelves stocked with product from 2018.
These frustrated consumers are going to turn to sites like Etsy in droves. They will be thrilled if they're able to find some cool object that would make a great gift and more importantly, is in-stock and ready-to-ship. Now is the time for those Etsy shop owners to start tanking up on locally-available raw materials and cranking up production.
Remember TreeHugger Systems, the Etsy shop that makes the 3D-printed camping accessories? That could be you. Remember that other Etsy shop, Matolaki, that makes those wooden Montessori toys? Two days after we wrote about it, Matolaki's founder sent us a message saying "my little Etsy shop has been bombarded with orders from the US and Europe."
So design something cool, design something useful. Design something you can make and sell. Hopefully you'll even give us something to write about. But either way, demand is there, and opportunities like this don't come along all that often. So we really hope you're in a position to jump on it.
Coincidentally, later today (Oct. 6th, 11am EST) we're running the second part of our "Mockup to Market" webinar on DIY product design & development with Jimmy DiResta. Today we're covering prototyping: Tools, techniques, tips and more. If you want to watch, it's free, and you can sign up here.
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Good thing we make so many of the tools people need to build things right here at home. Oh wait.
I'm a designer from China. Expensive container costs lead to a backlog of factory inventory. This also slows down the pace of our development of new products.
Our container costs have only tripled if that, so has port time and raw material prices. Some of MGA's numbers don't add up, my ships come thru the same port and max wait time has been 4 weeks. Anyways the biggest costs increases continue to be the tariffs enacted from Trumps days. Those duties dwarf all the other charges on my freight forwarding bill.