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E-Commerce Is Booming—But Only For The Nimble

One of the most exciting trends in small business since the pandemic has been the growth of e-commerce—to the point that investors such as the unicorn company Thrasio are buying up small, mom-and-pop online stores and aggregating them into a stable of brands.

Marketplace Pulse, an industry publication, found that firms acquiring successful Amazon brands have raised more than $7 billion in capital since April 2020.

But there are many challenges confronting small e-commerce stores. Many are run by self-funded, home-based solopreneurs. These founders don’t always have the resources to keep up with consumer demand in an environment of shipping delays, supply chain challenges and inflation driven by higher raw materials costs for suppliers.

It’s what Gary Huang, founder of the 7 Figure Seller Summit, a free community event with more than 3,000 attendees, and a veteran Amazon seller, calls the “perfect storm in e-commerce.”

“You have to be very agile as an entrepreneur right now,” says Huang. “You’ve got to be a speedboat weaving in and out of these choppy waters like a fish.”

With World Entrepreneurs’ Day upon us, I spoke last week Huang, who is based in Japan, for his insights on what’s shaping the ecommerce landscape and how current and future ecommerce entrepreneurs can make the most of it. Here’s an edited version of our interview.

Elaine Pofeldt: How would you characterize the environment in e-commerce right now?

Gary Huang: One of the biggest challenges entrepreneurs face right now is high shipping fees. Before Covid, to ship a 40-foot container from Shanghai to the U.S. would have cost you $1,300. Today it’s over $20,000. If your freight forwarder is charging you $25,000, it’s up to you to pick up the phone and get a better rate.

Elaine Pofeldt: Wow—that’s a big jump. What is causing the high fees?

Gary Huang: It’s all because of the lack of supply and lack of containers. There’s humongous demand but not enough supply. Many sellers work with factories in China that were affected by Covid. There are new outbreaks in China. They are affecting the ports. One terminal had to be shut down. All of the shipping there has come to a stop.

Elaine Pofeldt: So what can sellers do about the lack of supply?

Gary Huang: Seven-figure sellers don’t put all their eggs in one basket. You really have to diversify your sourcing, look for backup suppliers.

We’re seeing sellers move away from China to India. They are sourcing from India because the shipping rates are a lot lower. We’re seeing a lot of sellers use third-party logistics warehouses. These sellers are using a warehouse stateside to hold their inventory.

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Elaine Pofeldt: How are sellers coping with inflation?

Gary Huang: Some are starting to adjust their prices.

Elaine Pofeldt: It seems like the environment is very challenging, yet many e-commerce entrepreneurs are still making money. How can entrepreneurs profit in this environment?

Gary Huang: The main thing is this year you have to be super agile, pivot very quickly. As small business owners, we’re more able to do this than bigger players. Speed is one of the things that separates the winners from losers.


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