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Get Ready for the Holidays 2021


Get Ready for the Holidays 2021

In the heat of summer, the holiday shopping season can feel like it’s a long way away. Experienced e-commerce merchants know better. Simply put, capitalizing on the holiday season requires a lot of effort, and a lot of advanced planning. If you want to meet those seasonal quotas, you’ll want to start strategizing right away.

So, what steps can you take right now to position your e-commerce brand for seasonal success?

1) Develop a seasonal sales plan. 

First and foremost, you’ll want to create a basic plan. What are your goals for holiday sales? And, what are some specific sales, promotions, or deals that you want to offer your customers in order to help you achieve those goals? Start finalizing sales and specials now.

2) Start developing seasonal graphics.

To help your customers get into the holiday spirit, you may wish to develop some special graphics to use on your homepage and on social media. Developing these graphics may take a little time, so don’t wait until the last minute! Start generating your marketing collateral today.

3) Identify top sellers.

Hopefully, you have some data available to show you which products were your bestsellers during last year’s holiday shopping season (and in the weeks leading up to the holiday shopping season). Since these are items you know to be popular among seasonal shoppers, plan to showcase or highlight them again this year. (You may also wish to spotlight some of these items in your sales and promotional deals.)

4) Consider gift cards.

Do you provide gift cards to your e-commerce store? Creative gift card ideas tend to be popular around the holiday seasons, so if you don’t already offer them, you may wish to consider launching and highlighting them for Christmas shoppers.

5) Plan gift sets and bundles.

One of the best ways for you to upsell is to bundle items that go well together naturally; for example, you might offer an incentive to buy a sweatshirt and a toboggan together, perhaps branding it as a “winter wear” pack.

6) Plan an email marketing campaign.

Email marketing is one of the best ways to drum up interest in seasonal sales. Start drafting a string of emails right now, including some teasers, deal/promo announcements, follow-ups, “last chance to get it before Christmas” emails, and so forth. Abandoned cart emails can also be effective.

7) Start thinking about remarketing.  

During the holidays, one of the most effective forms of marketing tends to be remarketing. This will allow you to keep your e-commerce brand top-of-mind among those who visit the site without completing a purchase. You can also use remarketing to reach out to customers who select a product, then abandon their cart. Again, developing a good remarketing plan can take some time, so we’d recommend that you begin the planning process now.

8) Create gift guides.

Another way to upsell during the holiday season is to create gift guides. These may be blog posts, infographics, or special product category pages on your website, where you can put together items that are similar in price, in style. The goal is to make it as easy as possible for your customers to find the perfect gifts for their friends and loved ones.

9) Design posts for Instagram.

You’ll want to leverage the powers of social commerce to hit your holiday sales goals. Start by putting together some Instagram posts that you can use to drive traffic to your e-commerce platform.

10) Make sure your website is ready.

During the stressful holiday shopping season, the last thing you want is for your customers to have a difficult time completing their orders. Be sure your website is optimized to provide a positive user experience. Test and verify that it’s optimized for mobile use, that it loads quickly, that there are no broken links, and that there are clear calls to action throughout your copy.


Mark Kapczynski is the Chief Marketing Officer of Gooten, a globally distributed company that operates a smart supply chain for brands and retailers that are looking to utilize print-on-demand manufacturing to transform the way they do business.

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The 2020 Holiday Season Logistics Guide

Ensuring that every item is in the right place at the right time can be quite difficult- there’s just so much work that needs to be done! If your business is middle-sized to big-sized, this task will be even harder.

But even if your company is small, you must still keep track of the planning process, including item movement and placement. If your cargo reaches its point of consumption in due time, and your point of origin equipment is ready to ship, your company’s logistics runs well. If not- time and money are quickly lost, and the company could take a hit.

You must therefore plan your resources well and learn how to move things around efficiently. Your warehouse facilities are important, but so are inventory planning, resource management, and supply coordination; not to mention transportation and customer response. These factors must be taken into account very carefully.

With the holidays knocking on our door, I can see why so many business managers are starting to freak out. The holiday season is hectic. A company’s resources can quickly change, so it’s time to develop a logistics guide and stick to it. Here’s how to prepare your supply chain for this season.

Help your customers buy early

This season is different from any other holiday season we’ve been through. That’s because the Coronavirus pandemic has changed things around for good. This year, we won’t see too many last-minute decisions among customers. Most clients already pre-ordered their Christmas gifts on Black Friday, while others did it all the way back in October. Since stores are not open to the public anymore (not everywhere in the world at least), and there’s a fear attached to in-shop purchasing, a higher number of customers decided to get their gifts online; and so, transportation can get messy if it doesn’t work right.

However, if your customers are not ordering online yet, here is what you can do to persuade them to buy now. The longer they wait, the messier your logistics process will get. Here’s what you can do.

-Present the product’s benefits in more detail. Don’t stop at only listing the product’s features. Get access to a Virtual Assistant Platform to automate your listing processes and get your personal tasks done in no time.

-Use vivid language, but don’t go overboard with it. Express what you mean in a simple yet motivating way. For example, instead of saying, This car protects people in case of an accident, you could say, If you’re driving this car, you’ll walk away unharmed in case of an accident.

-Do not use jargon, not everyone gets it, and you might lose clients because of this. I

-Customers don’t hold specific data in their minds for too long, so make it short. Present your product’s benefits in a concise way. You could even summarize your product’s strengths; for example, instead of saying, Here are 12 reasons to buy this product, change it to, Keep these two things in mind.

-Highlight your company’s benefits from a logistics perspective. If you collaborate with Amazon, for example, expose the transportation benefits that your company is offering. What differentiates you from your competition in terms of logistics?

Optimize your inventory accordingly

If you haven’t done this by now, get to work. This year, your inventory must be well-organized. So, start optimizing it.

-Measure your results by using the right KPIs such as stock rotations and customer availability rate.

-Use the classical ABC analysis to track your product quantity and measure quality- pair it with a PARETO analysis.

-Use chatbots to promote your content on social media and track those results as well.

-Make an inventory vs. sales cost analysis to examine if your products sell well, and which ones should be taken out of your inventory.

-Reduce the MOQ or the Minimum Order Quantity. Do not produce more than you can sell, this will add to your overstock. Instead, negotiate with the supplier or change it, if they don’t agree with your requirements and do not satisfy your needs.

-Develop a more centralized inventory, especially if you have more than one warehouse, store, or factory. Estimate your transportation costs accordingly and include specific analyses on financial, logistical, promotion, destruction, or productivity costs. Be sure to include everything in your inventory.

Be prepared for this year’s shipping costs

During the COVID-19 pandemic, things have changed for the worse. The transportation costs will most likely increase as the holiday season gets closer. Some transportation companies offer little to no help to small businesses; others are kind enough to work with the managers. Your best option would be to hire a mix of carriers and choose the one you like the best.

You could look at regional carriers first since their costs are usually lower. Check out their services, and if you’re not satisfied, change the company. Another important thing to look at is the last-mile delivery costs. Choosing a local or even a national company will help you out financially.

Get the necessary support

And here’s the last thing we’ll be discussing today- getting the necessary help. If you’re not doing well and don’t know where to start, seeking support should be something to prioritize. You could develop new partnerships and engage with new elements. Think about what changes you could benefit from.

Could you be working with superior technology? Could you offer your staff a more flexible schedule?  What other valuable assets could you be bringing to the company? How could you change it for the better? What part of your logistics process could actually improve?

Preparing your company for this holiday season will be nothing but ordinary. However, you must learn how to predict 2021 trends and bring your logistics process to a new level. Do not leave things for the last minute, start preparing now. If you realized that you need support, go get it. If you realized that you could change some things to save your business, go do them.


You could be needing eCommerce support or new delivery options. Maybe your KPIs aren’t functional. Maybe your customer’s orders are not in place at the right time. Maybe you are not working with a cost-effective delivery company that gets your goods safely from the warehouse to the customer. Maybe something must change- but you don’t know what.

If that is the case, follow the guideline above, and add whatever you see necessary to it. You will have a great holiday season from a logistics perspective if you can set everything up for success ahead of time. Prepare, work hard, and accomplish. Make this your 2021 goal.


This guest post is contributed by Kurt Walker who is a blogger and college paper writer. In the course of his studies, he developed an interest in innovative technology and likes to keep business owners informed about the latest technology to use to transform their operations. He writes for companies Edu BirdieXpertWritersResumeWriterReviewsand on various academic and business topics.

Retail: The 5 Big Challenges to Overcome in 2021

New technologies are adapting to consumer aspirations and their new demands, some triggered by the Covid-19 health crisis. In this context, what are the new challenges for retailers? How does one adapt to meeting these challenges and succeed in standing out from the competition? Here’s an overview of the 5 major challenges to overcome in retail.

Playing the proximity card

As travel has become more difficult since the Covid-19 pandemic, purchasing behavior has developed in favor of proximity. Everyone has been re-centered around their “home” and repositioned around their city, region, or country. This strong demand for proximity has, in fact, led to reconsidering points of sale as vectors of reasoned consumption.

With a broader vision, stores with local stock are able to juggle physical and digital commerce thanks to e-booking. This definitely classifies the point of sale as a phygital approach.

Diversify offers and promote quality products

From the supply perspective, the principle of marketplaces is developing more and more. With a greater diversity of products, retailers can respond more broadly to the needs of their customers: either with their own products or through a partner catalog. Be cautious, however, and avoid confusing customers by working with questionable or suspicious sites.

Furthermore, well-being is taken into account, pushing consumers to look for quality and eco-friendly or healthy products. This direction implies a policy of promoting quality offers, both in terms of navigating vendor sites, as well as the in-store experience.

Make the case for societal commitment

The aim here is for companies to:

-show that they favor “made in France” items,

-talk about their donations to works and associations, or their social and environmental commitment, as Nature & Découvertes does through its foundation;

-demonstrate their willingness to act in an eco-responsible manner: for example, by consolidating purchases to promote greener logistics, or by using carriers until the last kilometer capable of recycling old equipment when installing the new.

Caring for customer relationships

While the evolution of the health crisis remains unpredictable, customer loyalty has become a major issue for retailers. What was once simple to implement through almost equivalent systems becomes more complicated when wanting to stand out.

Benefits remain a loyalty tool but must be complemented by a notion of consumer ownership and involvement. To do this, retailers can:

-refine their business actions according to the consumers’ profiles;

-promote sponsorship within the network of retailers;

-allow customers to choose their rewards;

-set up one-on-one, personalized loyalty programs.

When it comes to loyalty today, it is essential to move away from the traditional “earn-and-burn” methods of awarding points to be transformed into benefits in order to move towards a more personalized relationship with customers.

Focus on support and facilitate purchases

At the point of sale, it is essential to help the customer choose their products and to offer them the same flexibility as online sales. Online ordering is a real comfort solution for the customer. It allows them to reserve a product on-site or from a distance, makes it available to the customer in the store or in another point of sale, informs the customer of its availability in real-time, or even have it delivered at home.

It is even possible now to link the order to a meeting with an advisor via appointment. This one-on-one meeting helps support the client in their purchase, and for the brand to work on the upsell and cross-sell axes.

In the same way, offering tutorials or workshops can also be beneficial, as Leroy Merlin does through its DIY tutorials, or Cultura teaches in its creative workshops.

Ultimately, online sales will always be successful in the end. However, a brand that is not a pure e-commerce player can gain notoriety by capitalizing on the synergy between physical and simple digital commerce. In any case, there must be no gap between the two modes of purchase, and access to offers should be totally consistent between the different sales methods.

Retailers that are able to meet customer expectations and awareness are sure to gain a commercial advantage over their competitors. Note that today’s small businesses have the same tools as the big brands to position themselves, such as vendor sites, click & collect, and e-booking. They are therefore likely to play an essential role in these new consumption patterns, demanding product quality, eco-responsibility and traceability.

This article originally appeared on Republished with permission.

ship paperboard

Protecting Your Product: 10 Necessary Shipping Steps for Your Business

Packaging is essential when it comes to your product, for both protection and presentation. Consumers expect to receive a certain quality of packaging with their product, especially as the popularity of social media reviews and unboxing videos continues to rise. Not only does the packaging need to keep your product intact throughout the shipping process, but it needs to be easy to reuse if a customer wants to return the purchase and must safely ship it back.

To protect your deliveries, you need to utilize high-efficiency shipping materials customized to the product size.

1. Pack Efficiently

The efficiency of your packing determines the state of your product when it arrives at its destination. There are important questions to consider when selecting the box size. How fragile is the product? Does it have sharp edges? The product should fit in the box easily without leaving much airspace around it. Consider air pillow packaging to secure the product snuggly and limit excess space in the box. At the same time, you must avoid over-packing the box or container with too much cushioning. Cushioning can include:


-Bubble wrap

-Packing peanuts

-Foam or cardboard inserts

Avoiding wasted space in the box enhances efficiency and helps customers receive their purchases in good condition.

2. Choose the Right Packaging Materials

For products that require cushioning, it’s critical to choose packaging materials that are specialized for protecting your specific product. Styrofoam peanuts might work for most shipments, but more fragile materials might need to be bubble wrapped or supported through air cushions.

If the product needs to be kept cold, gel packs are an affordable and effective alternative to dry ice. It’s also essential to choose a high-quality tape to seal the box. You need industrial-strength, water-activated and pressure-sensitive tape, so your parcel doesn’t split open during shipment.

3. Select the Right Box

The box you use for shipping goods is directly responsible for how protected and well-presented the product is on arrival. A new or gently used box is essential for maximum security, and it needs to be structurally designed for the specifications of your product.

Customized boxes specific to your product are a worthwhile investment for secure shipping and intact delivery. Consult experienced shipping and packaging experts to determine the cardboard grade and fluting that best protects your products.

4. Add More Wrapping for Longer Distances

Generally, the farther your package is traveling, the more protection it needs. If you’re shipping internationally or to a far-off domestic location, there are more opportunities for your package to be dropped or mishandled. Adding an additional layer of wrapping, ensuring the product is secure in the box and using extra tape can make sure the product arrives safely.

5. Don’t Wrap Items Too Tightly

While a secure fit is critical to keeping your product safe in the box, it’s vital to avoid packaging items too tightly. Avoiding tight packing is especially important if the items are fragile glass or soft and impressionable. Too much pressure on the product can cause the product to break, crack or alter its shape. Items should be secure but devoid of tension.

6. Wrap All Items Separately

If the package you’re shipping contains multiple products, you’ll need to wrap them separately to avoid their shifting within the box during transit. Individual wrapping and cushioning should result in your products being gently secured within the box so they can’t move around or hit each other with any force.

If any items in the package contain liquid, provide a layer of plastic packaging around all items to avoid moisture damage if anything leaks or breaks.

7. Reduce, Reuse, Recycle

Using packaging that is eco-friendly and made from recycled materials or can be reused in the future for your shipments has various benefits for the company and the customer.

Consumers are likely to support and shop again at businesses taking steps to reduce their environmental impact. As a company, there can be an initial cost to change your packaging habits. But using recyclable packaging reduces greenhouse gas emissions and saves on raw materials and manufacturing energy expenditure.

8. Design Packaging for Returns

Occasionally, customers may be dissatisfied with a product and need to ship it back to your business as a return. Creating packaging that can be unpacked and repacked enhances the consumer experience and ensures the product will still be intact when the product returns to you.

9. Label Your Package Clearly

Successful shipping requires a successful delivery. No matter how well you pack your product, if the labeling isn’t clear, then it might not arrive at the desired destination in one piece or at all.

If the package’s contents are delicate, mark them as fragile on all sides so the parcel will be handled with extra care. For big or small businesses who ship many fragile items, investing in a stamp to mark all boxes going out of the facility as fragile is good practice.

10. Parcel Insurance Coverage

No matter how well you package and protect your products before shipping, things are ultimately out of your control once it’s out of your facility. Consider insurance if you are frequently shipping fragile items or products that are not easy to replace. There is always a possibility of goods getting lost or damaged in transit, so having a financial security net can benefit your business.

In addition to adequate insurance coverage, consider implementing package tracking. Understanding tracking software and how technology is improving last-mile logistics gives you an element of control over the transport of your products and helps you ensure your goods are being delivered on time.

Final Thoughts

Human error is a significant factor when considering safety in shipping. There is no way to eliminate the risk involved as long as people are handling the packages. That’s why mitigating the amount of damage done to a product is necessary to consider before shipping.

As a business owner, you must decide how to package goods with these various elements in mind. Online consumers have high expectations regarding the condition of the product on arrival and the expediency of its delivery. The right packaging materials and custom cardboard boxes can mitigate many risks involved with domestic and international shipping to improve customer satisfaction and retention.


Cory Levins is the Director of Business Development for Air Sea Containers

holiday season box

How to Prepare Your Online Store for the Holiday Season During COVID-19

We’re already getting super hyped for the holiday season. From delicate snowfalls to generous gift-giving to spending time with family and loved ones, it really is the most wonderful time of the year.

But if you work in retail, the holiday season can mean something VERY different. Many boutique owners find themselves busier than ever during the holidays. Most years, the holiday season means long lines at malls, loads of crowds, and tons of in-person sales. But this year’s going to be totally different.

Online stores have steadily grown in popularity over the years – but COVID-19 made the shift to e-commerce accelerate at its fastest ever rate. This holiday season will be totally dominated & led by e-commerce stores. Many believe the 2020 holiday season will be the single biggest e-commerce event in HISTORY.

If you own an online boutique, that’s great news for you! It means you’ll have the chance to capture all kinds of new and existing customers looking to buy gifts for their loved ones (and take advantage of the great deals for themselves, too). But it also means you’ve got to brace yourself. Things are about to get WAY busier.

Whether you’ve already made it through many a holiday season as a boutique owner before or this will be your first one, read on to learn how to prepare your online store for the holiday season during COVID-19.

Make it easy for your customers to buy online

Make sure you’re totally prepared to accept online orders – and that your website makes the online buying experience as soon as possible. Go through your online store as though you were a customer and make sure the entire buying process is crystal clear. Take a moment to work out any kinks you find so you can provide a seamless buyer journey. If this is your first time selling online, make sure payment solutions are totally ready by running a few test purchases.

Once you’ve done that, update your website for the holiday season. Update your inventory so in-stock items are clearly marked. Promote seasonal offers and holiday deals throughout your website. Clearly display your boutique’s shipping and return policies, especially if you’ve modified them for the holidays. The easier it is for your customers to make a purchase (and take advantage of awesome holiday deals), the more likely they’ll be to do so!

Plan & stock your inventory in advance

And by “in advance,” we mean ASAP! It’s always a good idea to start stocking up on holiday inventory early, but this year it’s more important than ever. Many shipments have been delayed due to the pandemic, so the sooner you can order your inventory, the better.

Make sure you choose to work with a reliable supplier. While the increase in high demand affects retailers like you, it also affects manufacturers, distributors, and wholesalers in a big way. Order early and choose a supplier with great customer service. Supplied is a great option for online boutique owners looking for a wide variety of wholesale boutique items, flexible payment terms, and free shipping (yes, even during the holidays!)

Schedule out promotions

Many customers pretty much expect great holiday promotions from the brands and boutiques they love. Start planning out what sorts of promotions you’ll run and when you’ll run them. Stagger promos and marketing efforts carefully so you have a flow of ongoing sales instead of a few huge peaks. It’ll make it easier for you to fulfill orders and provide great service.

With COVID-19, it’ll be difficult to predict exactly how long shipping times will take. To make it easier for you to ship items out well in time for the holidays, incentivize early buying with sales. Experts predict that Amazon’s October Prime Week will cause many buyers to purchase holiday gifts earlier than ever before. Consider offering a sale during it in an effort to pick up some of that traffic.

You’ll also want to make sure you take advantage of Black Friday. Many of the largest retailers have already announced that their stores will be closed for Thanksgiving weekend, meaning there will be far fewer in-person Black Friday doorbuster deals. Try and capture some of that excitement online by offering a great deal for Thanksgiving weekend.
Expect delays

During the 2020 holiday season, getting packages to arrive on your customers’ doorsteps on time will be tricky. Encourage people to buy early. Be transparent about shipping delays you’re aware of and do your best to manage your customers’ expectations. As tempting as it may be, don’t promise a delivery date you can’t guarantee.

Once the guaranteed holiday shipping deadline passes, offer virtual gift cards that can be instantly delivered and used towards any item in your shop. This provides a way for last-minute shoppers to still support your shop.

Prepare for fulfillment & delivery

A lot of online boutique owners are out there running a one-woman show – but during the holiday season, you might want some help. If you usually do shipping and fulfillment operations all by yourself, consider enlisting a friend or an employee to help with the busy season.

If you have a brick-and-mortar location or a lot of local customers, offer in-person pickup to allow customers to save on shipping costs – and to allow you to package and mail fewer orders!

To sum up – to prepare your online store for the holiday season during COVID-19, you’d best get started now. Start ordering wholesale boutique items now so you have plenty of time to prepare for any delays, update your inventory, schedule out promotions, and allow your customers to order their gifts as early as possible.

Supplied members enjoy up to 75% off of wholesale prices on over 100,000 wholesale boutique items. And with free shipping, flexible payment terms, and no minimum orders, it’s perfect for stocking up quickly in preparation for the holiday season. Become a member (it’s free!) and place your first order today.


Joseph Heller is a small business expert and CEO of Supplied makes it easier for small boutique owners around the world to access high-quality, affordable wholesale boutique items, whether to stock their physical store or IG shop.


American and Chinese Consumers are Shopping Like There’s No Trade War

What Trade War?

If shoppers are worried about the U.S.-China trade war, it’s not showing up yet in measures of their buying confidence or holiday retail sales.

We are more than a year into dueling tariffs between the United States and China, and we know that tariffs add costs to supply chains, but how much of those costs are passed on the consumer depends on decisions by manufacturers, buyers and retailers as well as the “import-intensity” of the products we buy.

So far, if prices have risen on consumer products, it’s not dampening American appetites to buy. And Chinese consumers don’t rely to a great degree on imports in general, so China’s retaliatory tariffs on U.S. imports don’t appear to be the biggest factor in their personal spending either.

Spending and the U.S. Economy

At the end of the third quarter, the Bureau of Economic Analysis reported that U.S. consumer spending was on track for $14.67 trillion this year, reaching an all-time high.

Personal expenditures make up 68 percent of the U.S. economy, and it’s consumer spending that’s keeping growth of our economy from slowing further. (By comparison, our “negative net exports” or total exports minus total imports, comprise five percent of U.S. GDP.)

Two-thirds of spending is on services such as housing and health care, which are largely impervious to the trade war. The remaining third is spent on non-durable goods such as clothing and groceries, and on durable goods such as cars and appliances.

Brimming with Confidence

The Conference Board’s Consumer Confidence Index is a monthly report on consumer attitudes and buying intentions. Despite analysts’ expectations that concerns related to trade disputes would cause U.S. consumers to become cautious, the index shows a trend of rising consumer confidence since 2009.

Breaking Records Online

Retail sales figures tell us whether that confidence is translating into spending. Indeed, American consumers are still filling their real and virtual shopping carts to the brim.

According to the National Retail Federation (NRF), more than 165 million people were expected to shop over the five-day Thanksgiving holiday weekend. Online sales for last holiday weekend are already being reported and appear to be breaking records.

Americans spent $7.4 billion online on Black Friday, up 19.6 percent from last year. We spent another $3.6 billion on Small Business Saturday, up 18 percent from last year. And while surfing from our desks at work, Americans spent $9.2 billon on Cyber Monday, up 16.9 percent from last year. More than half of Americans surveyed by NRF said they start their holiday shopping the first week of November. Online sales for November came in at a whopping $72.1 billion.

Chinese Consumers Outspent Us All

Cyber Monday is so successful in driving online sales in the United States that Canada, the UK and Germany have all adopted Cyber Monday to kick off their holiday shopping seasons. Australia launched “Click Frenzy” day. The Netherlands’ equivalent is linked to the December 5 Sinterklaas holiday.

But hands down, the world’s largest 24-hour online shopping day goes to China’s Singles Day held on November 11 annually. This year, Chinese online shoppers bought $38.3 billion on Singles Day alone. Think of it this way – that’s more than $1 billion every hour.

This is not a one-day phenomenon. If you were to overlay China’s consumer confidence index with that of the United States, they would look similar. Despite being slightly lower for China and with a dip in 2016 that we didn’t see in the United States, consumer confidence rose between 2014 and remained high in 2019, trade war notwithstanding. In mid-2019, retail spending in China surpassed retail spending in the United States for this first time.

Retail Spending in China Exceeds US

Beyond the Tariff Headlines

Financial analysts are watching China’s consumer spending carefully amidst the trade war. Many said this summer’s drop in car purchases was a harbinger that shoppers are growing wary, but the slowdown also coincided with the end of big discounts. Others say retail sales actually underestimate the strength of China’s overall consumer spending because those numbers offer just a partial picture of personal spending on goods and services, which include large expenditures on healthcare, education and leisure activities.

For this reason, some prominent Chinese investors are nonplussed by the Trump Administration’s tariffs. They look at a decline in certain manufacturing and exports as a structural shift in China’s economy – an “economic rebalancing” – that began long before the current trade war. In their view, household consumption will drive most of China’s future economic growth, and China’s consumer spending is not very dependent on imports.

According to World Bank data, consumer imports comprise just 13 percent of China’s overall imports. Most of the large multinational consumer goods companies now produce in China for the Chinese consumer. According to McKinsey analysis, across key consumer categories including personal digital devices and personal care products, Chinese brands have become credible competitors to foreign brands, acquiring greater market share – and shielding Chinese consumers from tariffs on U.S. imports.

Consumer Spending to Play Bigger Role in China’s Growth

Consumption is playing a much larger role in China’s economic growth than just a few years ago. In 2011, consumer spending accounted for less than 50 percent of China’s GDP growth. Last year, it accounted for 76 percent of GDP growth, outpacing both manufacturing investment and exports.

In fact, China’s total exports of goods and services as a percentage of GDP has dropped from a high of 36 percent in 2006 to 19.5 percent in 2018, with exports to the United States at just four percent.

That why China’s central bank is also monitoring consumer sentiment. In recently released results from its biennial survey of 18,600 residents in 31 provinces, nearly 80 percent of respondents expressed caution about spending and a preference for saving.

China’s politburo has directed the government to focus on turning up the tap of consumer spending by China’s growing urban middle class and to kick-start spending in rural areas. The government already cut personal income taxes and began offering subsidies for large ticket energy-saving home appliances and energy efficient vehicles. The government is expected to announce more measures in the coming months designed to goose household spending.

WB Chart Title China Exports as % of GDP

Business is Ill at Ease

Economists worry the trade war is causing a drag on economic growth, not just in the United States and China but globally. Businesses say the trade war with its escalating tariffs is a “wild card” in their planning. Uncertainty is causing them to hold back on capital expenditures.

It’s looking less likely the United States and China will agree to a “Phase 1” trade deal by the end of the year, but even if they do, the partial deal may not be enough to restore business confidence. If businesses continue to hold back on investments and reduce inventories, it could start to negatively impact jobs and incomes. This may be particularly true in China where a larger portion of the population is dependent on manufacturing jobs.

Consumers Keep Calm and Shop On

Meanwhile, holiday shopping is in full swing. Some holiday merchandise is already subject to tariffs on Chinese imports, but the tariffs the United States plans to impose on December 15 will affect many more consumer products. If imposed, buyers and retailers will have to decide how much cost to pass on to their suppliers and consumers in the coming year.

For now, shoppers are keeping calm and shopping on with resilience. But as a last line of defense against slowing growth, their confidence can be fragile. Where the trade war is concerned, buyer beware.


Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fourteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on Republished with permission.