- Recent inflation numbers are the highest they've been in over 40 years.
- The stock market has been falling since November, 2022 is the second worst start for a year in history (the first was 1932).
- Wal-Mart reported earnings this week and fell the most it has since 1987; earnings less than expected and poor guidance given that consumers are stretched thin. Some have no choice but to buy what they need not what they want. Similar story with Target who just reported earnings.
- Record gas prices. And we're just now entering the summer travel season when gas prices typically rise. Even in WA state some stations have reprogrammed their gas pumps for double digit gas. Gas prices will continue to rise.
- There is no attempt to de-escalate the situation with Ukraine so the war machine will continue. This impacts many commodities, but food and energy are the biggest concerns. Ukraine and Russia produce nearly 30% of the global wheat. Nations like India are now prohibiting the export of wheat and other commodities.
- The price of fertilizer has risen 4x.
- There are real concerns of diesel shortages coming up. Diesel is used for transporting goods, farming, industrial etc.
- The Federal Reserve has only raised the federal funds interest rate to 0.75%. They say they will raise it continually throughout the year. Who knows? However when the consumer cannot afford to buy groceries or put gas in their car, the Fed has no choice but to do something. Rising rates will negatively impact the stock market and the housing market too.
Now, you may think that I am just writing this to sound all gloom and doom. I'm not but I'm not sure everyone realizes how bad things are in the economy and what is on the horizon. We will work our way out of all of this some how. But it will probably take a few years. With that in mind, perhaps think about how you can prepare for a worsening economy. Who is your audience and what will they buy in a tough economy? What can you do to reduce shipping cost? Perhaps source less bulky items, find cheaper packaging solutions, etc. Are you priced competitively? Are you able to source needs vs. wants for your buyers? Review your business and tighten up where you can to help your margin.
To share some of the things that I've done. 1) I eliminated my listings for bulky items to reduce shipping costs for the buyer and gifted or donated those items, out of sight out of mind 2) I've purchased my shipping materials for at least one year 3) I reviewed my sales to see which are selling the best and the worst -- I've marked down to clear out my laggards and focused my sourcing on the winners. Will it work? I hope so, time will tell.
