[Shenzhen 25/05/2023]Many businesses are reassessing their operations in 2023 and changing their approach from prioritizing growth to prioritizing profitability. This change is particularly noticeable since many businesses' profit margins decreased in 2021 and 2022. Consumers have also become more selective in spending and seek greater value in their purchases.

Factors Behind the Change

Several factors drive the change, such as decreasing prices, rising production costs, a shortage of workers resulting in higher wages, and increasing interest rates. Companies struggling with excess inventory may have to hold more promotional events to eliminate their surplus, which could hurt their profits.

Affected Businesses

The situation will particularly impact businesses that cater to consumers in the lower half of the income spectrum as they're more vulnerable to inflationary pressures. Despite decreases in factors such as ocean freight rates and transportation fuel, which contributed to supply chain inflation that led to higher prices for goods, warehouse rates remain high due to excessive inventories resulting from reduced consumer demand.

Imbalance in Supply and Demand

A lack of new facilities caused a shortage of warehouses. The national capacity for warehousing is currently low and is expected to remain tight shortly. This is because the number of U.S. industrial construction projects has decreased significantly year-over-year due to increasing interest rates.

Consumer Price Index

Prices for consumer goods have decreased significantly as the inflation of goods, which soared during the pandemic, has subsided. After the latest meeting of the Federal Reserve, Chairman Jerome Powell stated that he is confident that disinflation "has started." In December of 2021, the Consumer Price Index had the smallest year-over-year increase since October of the same year, at 6.5 percent annually, down from its peak of 9.1 percent in June of 2022.
The Fed is shifting its attention towards tracking inflation in the services sector, mainly labor prices, since it anticipates that the downward trend in goods inflation will persist. However, the ongoing logistical challenges may result in persistent inflation for certain goods.

About E-commerce Express

E-commerce Express is a China-based company specializing in product sourcing and order fulfillment. It was established in 2019 by e-commerce entrepreneurs and has experienced significant growth due to the global shift towards e-commerce. With a bilingual and efficient team, they handle all aspects of the process cost-effectively. They are currently one of the fastest-growing tech-enabled companies in this field. For more information, visit https://www.ecommerce-express.com.