Electronics logistics problems, delays in deliveries to Russia

Hello.

The cost of any product consists of several components - the price from the manufacturer,

logistics, promotion and sale costs. Последние включают в себя цену аренды магазинов, складов, содержания офисов и тому подобное. Составляющих намного больше, но сегодня мы остановимся только на одной – на логистике. И рассмотрим, что происходит с поставкой электроники на российский рынок, почему сроки ожидания выросли, а многие позиции просто исчезли с прилавков или заменены аналогами от других компаний.

First, let's define howbring goods to Russia. The distributor can choose to ship by air, rail or sea. It is faster to bring goods by air, but it is also the most expensive. As a rule, the aircraft is used to deliver goods that are light in weight, but high in cost and good margins. This description perfectly fits smartphones, laptops, SSDs and a number of other products. But no one will carry large household appliances by plane, it will literally become golden for the supplier. Just as push-button phones will not be brought by air, they are small, but they are inexpensive, and therefore the cost of such delivery will eat up the entire margin and almost double the price of the phone.

Sea becomes one of the main ways of deliveryand railroad. If the goods are shipped from China, then this is the preferred route for them to Russia. The choice of delivery route directly depends on the type of goods, on where the plant for its production is located. The location of the buyer of the goods plays a lesser role.

It is important to note that for many goods that haveon board the battery, separate restrictions apply, they cannot be transported without special conditions. And the logistics of any electronics that have a built-in battery takes more time and money. This explains the fact that in life we ​​often come across devices where, instead of a built-in battery, which literally suggests itself in the design, they use a connector for ordinary AA batteries. This is a way to avoid increased logistics costs when shipping to another country. And if it is impossible to get rid of the battery in smartphones, then for many other devices it is quite possible - the same smart speakers do not have built-in batteries for exactly the same reason, there is a struggle for every penny of cost.

Logistics determines not only the cost of deliverygoods, but also the speed of its appearance in warehouses within the country. Almost always it is an attempt to find the optimal price / quality ratio. You sell too cheap, you choose a long delivery, and then competitors will bypass you and have time to put a similar product in retail chains. And you will be left with goods that cannot be quickly attached to someone. The turnover will fall, the return of money will be delayed, you will have to pay more on loans - in total, the profitability of the business will sag. As a result, everyone tries to choose the path that guarantees the ability to quickly turn the money around.

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It is good to consider this point on the examplestart of sales of new models. When novelties appear on the market, they are available in small volumes, the shelf saturation period takes up to a month. This means that in the first weeks, those who have new items on the shelves receive high sales (models are not widely distributed), buyers go to them, which means that, in theory, you can sell something else, the average check is higher.

Look at the beginning of sales of the Galaxy S23 line, inIn most countries, the official start of sales is February 17, but these devices are in wholesale channels, they began to arrive in countries to ensure the start of sales. And many Samsung partners are ready to sell them here and now to lock in profits. They give such models at a wholesale price plus a small percentage. The task of Russian players is to bring these devices to the country as soon as possible in order to get the same flow of buyers. This time, retail from MTS turned out to be the fastest of all; on February 5, almost all models from Samsung appeared in several stores in Moscow.

Up to this point, MTS has already started pre-ordering withpartial payment, which also gave a result. The prices offered by the company were adequate to the market and the speed with which these devices were delivered. The conclusion is very simple: MTS is skimming the cream due to the fact that they were able to quickly bring these smartphones and start selling them. Of course, the delivery in this case was by air. Judging by the activations of the Galaxy S23 of different models, the first batches are sold briskly, they appeared not only from the countries of the Customs Union, but also from the Emirates. MTS retail solved its problem - they were the first to receive new products, attract customers, and increase their turnover.

It kind of reminds me of clipper tea raceswho brought this drink from China to Britain. Who was the first, he hit the biggest jackpot, with the logistics of new products, the situation is about the same. In the context of parallel imports, it escalated, since earlier the manufacturer regulated supplies on its own, and it was necessary to beat out a certain quota for its sales as soon as possible. But the quota was given depending on the size of the company, its geographical representation. Now the delivery time of the goods comes to the fore. And here it should be noted that often distributors do not have enough money to supply the necessary goods. Last year, large retail chains partially financed the supply of iPhone 14 of all models in order to initially receive more volume than the financial possibilities of intermediaries allowed. And for retail, it was a good deal, because despite the fall in the smartphone market in general and Apple in particular, they received a sufficient amount of goods that others did not have.

A moderate deficit is a wonderful thing for bothdistributors and retailers. Scarcity creates demand that stays above average and allows goods to be sold at better margins. Unfortunately, since the pandemic, we have developed an imbalance in logistics, when the cost of a container in some periods of time reached 12 thousand dollars and sometimes even became higher. That is at least five times higher than the pre-pandemic level.

Check out this great illustration of how shipping costs per container have changed.

Logistics costs are back to normallevel that pulls down and other delivery methods. But there is one caveat: the growth of the market, as a rule, turns into the fact that we run into a bottleneck here or there. For rail transportation from China, the throughput of checkpoints at the border, the speed of inspection of goods, plus the availability of the required number of wagons/platforms, becomes such a bottleneck. Here are the messages from one of the logistics companies in mid-January:

On the railway border. crossings from China are experiencing congestion due to lack of platforms, which will affect the transit time of delivery.

Please take this into account when planning supplies. Approximate waiting time for reloading on platforms:

Alashankou 5-8 days (56 trains delayed),

Zabaikalsk 7-12 days (21 trains delayed),

Erlian 7-13 days (7 trains delayed),

Khorgos 15-20 days (42 trains delayed).

Also, more than 400 railcars were stranded at the Suifenhe border, and the Chinese State Railways has suspended approval of a plan to send trains to these border crossings.

At that time, the actual delivery time of goodsalmost doubled and amounted to about ninety days. Considering that in 2022 distributors’ warehouses thinned out, no one began to hold stocks, as in the previous year (they were paid for by manufacturers then, now it’s the companies’ money), many positions were washed out almost instantly. And this suggests that there is a local shortage of certain things on the market. For example, original cartridges for HP printers. There is a market for them, it has not gone away - but delays in deliveries lead to the fact that in large cities they end faster. Plus, distributors misjudged demand in previous periods, played conservatively, and we found ourselves in a moderate deficit. In February, the situation is gradually improving, there are supplies, and prices are back to an acceptable level after the take-off that happened after the New Year.

Unfortunately there will be logistical problemsaccompany us for the next few years. For a number of goods, they will become permanent, since in the absence of credit lines from manufacturers, retail players and distributors cannot create stocks to compensate for changes in demand, its increase. The absence of certain types of goods, or rather even brands, leads to the fact that substitute products, what is on the shelves, win. We don't have a shortage when you can't buy a laser printer or an air conditioner. There are such goods, but the brand of the manufacturer is different, as well as the cost. And people have become more rational, as they choose goods by availability, turn a blind eye to the brand of the manufacturer. For example, sales of split systems by one of the Chinese companies increased sharply, the reason being the price/quality ratio, the availability of these systems in warehouses in Russia. At the same time, sales of such systems from Samsung have fallen almost to the floor, they have become even more expensive, and at the same time the waiting time has increased, they cannot be bought here and now. A time of opportunity for brands that previously could not count on so much customer attention.

Time is a factor that affects anybusiness. The higher the turnover of the goods, that is, the faster it is sold, the cheaper it costs you. And it is impossible not to take into account the time factor in your calculations of future sales. Therefore, sometimes the math looks absurd when suppliers deliver goods by air and pay several times more for logistics, but benefit from the lack of goods from other companies and receive a guaranteed profit.

I hope that this short digression, devoid of a large number of details and details, will allow us to appreciate how important logistics and a reasonable approach to it are.

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