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Alibaba.com B2B Pulse:
July 2021

At Alibaba.com, our mission is to be an ally to small and medium-sized businesses (SMBs) and help them succeed. To better serve these businesses, we’re issuing the Alibaba.com B2B Pulse, a monthly update that serves two primary purposes: First, we will aggregate the biggest macro developments relevant to US SMBs and second, we will share proprietary insights into US B2B demand that we observe on the Alibaba.com global B2B marketplace. We hope this helps our customers, media, and wider community of people in the B2B world have a richer understanding of the landscape. We also hope to have some fun with this as B2B sales often act as a leading indicator for what’s to come not only in retail trends, but even changes in our everyday lives.

5 things about US B2B SMBs this month

1. Small and Medium-sized Business confidence in the economy at the lowest point since
March 2021

Small businesses are feeling less confident in the economy. The NFIB Small Business Optimism Index saw a decrease of 2.8 points in July, overturning the 2.9-point increase in June. According to a recent survey of 560 small businesses by the Wall Street Journal, only 39% of small businesses expect improvements in the US economy over the next 12 months. This is down from 67% in March, and is likely due to the spread of the COVID-19 Delta variant. Because of this decline in confidence, only 55% of business owners reported capital outlays over the past six months — a historically low average.

2. 49% of SMBs report difficulty filling jobs, a 48-year high record

Small businesses are having difficulty filling open positions with qualified workers. In fact, the NFIB’s monthly job report shows 49% of business owners have open jobs but are unable to fill them. This is the highest record in 48 years (see table below). In the construction industry, one of the hardest-hit sectors, there are 59% of jobs open for skilled workers, and 66% of construction companies reported “few or no qualified applicants for their open positions.”

3. Container costs see a 236% year-over-year increase

Container shipping costs soar to new heights. On July 15, Bloomberg reported rates as high as US $9,733 for a 40-foot shipping container from Shanghai to the West Coast, up from US $2,900 — a 236% increase from a year ago, according to the Drewry World Container Index. But that price doesn’t paint the full picture. On July 28, the Freightos Baltic Daily Index showed that a shipping container to the West Coast — premium surcharges included — had rates as high as US $18,345. And a container to the East Coast? As high as US $19,620. The surge in Delta variant cases and the typhoon in China are leading causes for these price increases.

4. International supply chain disruptions increase from 12.2% to 15.9%

Supply chain disruptions continue to plague small businesses. According to the U.S. Census Bureau’s Small Business Pulse Survey (SBPS), the number of businesses who reported international delays increased from 12.2% in April to 15.9% in July. But these disruptions are also felt domestically. The SBPS reports that “38.8% of US small business respondents reported domestic supplier delays” in the most recent portion of the survey (July 12-July18). That’s up from 30.9% in April.

5. Rising input and supply costs are creating inflationary pressures

In the quarterly CNBC/Momentive Small Business Survey, 70% of small business owners report experiencing rising supply costs, and as a result, 39% have needed to raise their prices as well. Additionally, 41% of small business owners are reporting a rise in wages, feeding into employers trying to cover costs. According to Mark Vitner, a Managing Director and Senior Economist for Wells Fargo’s Corporate and Investment Bank, “inflation is likely to remain elevated because of commonplace supply shortages” over the next 12 to 18 months.

US B2B trade trends on Alibaba.com

The trends we see in B2B trade and transactions can often indicate what is ahead. As one of the world’s largest B2B ecommerce marketplaces, activity on Alibaba.com can offer unique insights into what’s happening in B2B trade, what we might see in future B2C trends, and even the broader economy.

Top five categories averaging 73% growth in daily demand in July 2021 vs. July 2020

  1. Commercial Service Equipment
  2. Sports & Entertainment
  3. Toys & Hobbies
  4. Construction & Real Estate
  5. Minerals & Metallurgy

Commercial Service Equipment and Sports & Entertainment are two categories that saw the most growth year-on-year (July 2021 vs. July 2020) at 141% and 65% respectively. Within these categories, trade show equipment (+447%), restaurant and hotel supplies (+324%), wedding supplies (+157%), and RVs and campers (+526%) saw the most drastic uptick in demand.

These changes in trade likely point to the fact that the US was preparing for the economy to open back up in the beginning of the summer. However, on July 27, 2021, the CDC updated guidance on the COVID-19 Delta variant and offered their recommendation to wear masks inside — even for vaccinated individuals, and we predict that we see lower trading volumes in these areas in next month’s report.

Taking a closer look at month-on-month movements, here are the biggest “movers” between June 2021 and July 2021:

Biggest changes month-on-month (July 2021 vs. June 2021) were:

Within Electronic Components, Accessories & Telecommunications, Old & New Integrated Circuits (84%) saw the greatest increase in demand, which is indicative of the global computer chip supply constraints reported elsewhere.

Another category that saw an uptick in July demand was Office & School Supplies (4% increase between June-July 2021) — US businesses and organizations were gearing up for school and office re-opening in the Fall.

Interestingly enough, while electronic devices and e-learning have been hot topics, analog writing utensils have seen marked growth:

  • Pencil Cases & Bags (26%)
  • Pencils (23%)
  • Stationery Sets (34%)
  • Writing Accessories (24%)

As US retailers prepare for the upcoming holiday and shopping season, Gifts & Crafts demand also grew month-over-month:

  • Flags, Banners, Display Accessories, Frames (19%)
  • Festive & Party Supplies (14%)

What’s next?

August is typically a busy sourcing month as retailers stock up for the end-of-year holiday season. Stay tuned for the next issue of the Alibaba.com B2B Pulse to catch a glimpse of how the 2021 holiday season might look.

Download full report

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