Supply Chain Woes Mean You Should Start Your Holiday Shopping Now
The global supply chain is a mess. Online scalpers are rampant, and demand for the newest electronics remains sky high.
Sorry, but this year’s holiday shopping season is poised to disappoint—even if you start early. You can see this now if you try to buy a PlayStation 5, Xbox Series X, or a PC graphics card. Online retailers continue to sell out in seconds, even though they’ve been on the market for almost a year. These days, your best bet for nabbing one may be to camp out at a retail store.
Unfortunately, the situation will likely remain challenging in the coming weeks and months. PCMag spoke with four analysts who study the electronics industry, and they warn that all kinds of products could be in short supply during the holiday shopping season. Here we explain why you should begin your gift buying as soon as you can.
“There are going to be plenty of products and [sales] channels that are going to be sold out much quicker than we’ve seen in the past,” says Ryan Reith, an analyst at research firm IDC.
“Even in a normal functioning year, there are always shortages. But they have never really been as pronounced as they are today,” adds Shawn DuBravac, chief economist for electronics manufacturing trade group IPC.
Why Are Products in Short Supply?
It all started with COVID-19. The pandemic has been disrupting manufacturing, driving up demand for computing at home, and causing workers to rethink their careers and quit. That’s led to a historic chip shortage, backed up mercantile ports, and a labor shortage that’s depriving factories, trucking companies, and retailers of enough workers.
As a result, companies have been struggling to churn out as much product as they’d like. Meanwhile, stores and e-commerce sites are receiving lower inventory than expected. The bad news is we’re unlikely to see significant relief ahead of the 2021 holiday season. Forrester Analyst Alla Valente expects the supply chain problems to persist “well into next year.”
“And it could exacerbate,” she says. “COVID is still here, and there are many fluctuations going on, so it’s difficult to predict.”
How Bad Will It Get at Stores?
If you’re trying to buy a hot item, such as a PS5, good luck. Retailers will have lots of products to sell because companies prepare months in advance for the holiday shopping season, the analysts point out, but you may not find your first choice at the store.
“It’s not like you’re going to see a shortage of smartphones, tablets, or laptops. But it could be that you won’t find certain models for a certain product category,” DuBravac says.
“Sometimes consumers don’t always feel these kinds of disruptions,” he adds. “They might go into a store to get a certain tablet. That very specific tablet isn’t available, but another tablet is, and that’s sufficient for their needs.”
Still, consumers should prepare for slim pickings. PC makers have been facing a backlog of orders over the past year due to the semiconductor crunch. Now analysts are noticing the chip shortage is hitting the smartphone industry, although Apple has been relatively immune.
“Some of the products might be delayed. Others might be completely unavailable,” says Forrester’s Valente. “I know as US consumers, we are so accustomed to getting what we want, getting it quickly through this frictionless delivery in 48 hours. That’s not how anything is going to work this year,” she says.
Are Price Hikes Coming?
“It is also likely that we will see prices increase with demand being high and inventory low,” says Runar Bjørhovde, an analyst with research firm Canalys. “The shortages are causing a shift towards high-end and flagship devices as these are prioritized by vendors.”
IDC analyst Ryan Reith agrees. The chip shortage has pushed many PC makers to focus on pumping out higher-end laptops models over low-end ones to collect more profit, he says. Hence, consumers may struggle to find budget PCs during the holiday shopping season.
Reith also notes that shipping products from Asia to the US has been getting more expensive for electronics makers. “The cost of both boat freight and air freight are still about three times what they were pre-pandemic,” he says. “Depending on the route, they could be up to nine times higher than what they were. So the cost at some point is going to get passed down to the consumer.”
The price hikes have already been ensnaring PC graphics cards. But for now, IDC has only noticed price increases of a few percentage points in other products, such as TVs and monitors, although that could change soon. “I think we are probably going to see more as we enter the November time frame, where actual buying ramps up,” Reith adds.
What About Discounts?
Despite the potential for price hikes, Reith expects retailers will still try to offer discounts during holiday sales events to draw in customers. Otherwise, they risk losing shoppers to their competitors. For example, the deals could include bundling products with subscription-based services, which don’t rely on a physical item.
But not everyone is so optimistic about the discounts. “Some retailers may completely neglect the sales holiday entirely, and instead prioritize non-discounted sales,” says Bjørhovde. “From most retailers though, we’ll likely see fewer deals and worse deals for the upcoming holiday season.”
“We are also seeing some signs of fake discounting with prices recently being pushed up to create a perception of discounts in November and December,” Bjørhovde adds.
What Should I Do If I Can’t Buy What I Want?
If you can, start your holiday gift-buying now. It seems many people already are.
“We see that consumers are already placing orders for Christmas,” says Valente. “It’s the seventh or eighth quarter of the pandemic and consumers have already changed their shopping and buying patterns more.”
If you can’t nab that hot electronics item, be prepared to get creative. “That may mean giving a traditional gift card or cash,” DuBravac says. “It could be a newer theme such as NFTs or cryptocurrency, or giving their children IOUs.”
If you get really desperate, you can always buy from a scalper on eBay, but expect to pay up. Resellers will no doubt be out in full force, competing with consumers to buy the hottest items. Various resellers have told PCMag they plan on snatching up video game consoles, such as the new OLED Nintendo Switch model, knowing they’ll be in high demand this holiday season.
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