How Microchip Shortages and Supply Chain Disruption will Impact Black Friday and Cyber Monday


Posted by Mike Fitch on Nov 18, 2021


Let’s be real for a second: times are a little chaotic. Between supply chain disruptions, a workforce shortage in almost every industry, rapidly rising inflation and a continuing lack of microchip availability (oh, did I mention we’re still amidst a global pandemic?), it’s safe to say this year’s Black Friday and Cyber Monday will look a little different. The technology channel plays an incredibly vital role in this time of year, from e-commerce security to retail access points to logistics optimization, just about everything in the holiday shopping season is touched by today’s modern and next-gen technology stack.

 

Experts are predicting a season where demand is just as high or higher than ever before, but pandemic and non-pandemic-related obstacles potentially stand in the way. So, what can we, as the IT channel, realistically expect to see in e-commerce and retail shopping this holiday season?

 

Photo by Kayle Kaupanger on Unsplash


Some Context: Why We’re Facing a Tricky Holiday Shopping Season

 

Global Microchip Shortage — There’s a good chance you’ve been impacted in some way, whether big or small, by the global microchip shortage. As a personal anecdote, a car dealership I recently visited admitted that they can only carry about 5–10% of the inventory that they carried just two years ago due to the lack of chip availability. So, what’s causing this microchip shortage? To start, the edge and IoT device explosion. With more than 127 new devices connecting every second, there are now more devices than humans on earth. What do all of the now 10 billion+ devices have in common? They all contain a microchip of some sort, and as a result, many of the 2021 top gifts will be impacted.

 

Supply Chain Disruptions — Extending beyond the aforementioned microchips, a laundry list of everyday consumer products is having difficulty staying in stock or replenishing empty stock. It largely started with disruption from the pandemic, where the global supply chain largely shut down, and today is paying the price as it struggles to catch back up. Consumers gave up their travel, entertainment and experience purchases and instead used spending money on goods for their homes. Many overseas factories were forced to close last year and couldn’t keep up with consumer demand for these items. Once manufacturing plants re-opened, they were forced to wait on container ships that were busy shipping protective gear, masks and hospital gowns around the world. From there, it’s been about playing catch-up, and there’s good reason to suspect these shortages won’t alleviate until well into 2022.

 

Understaffed Retail Stores — Retailers are trying to stay optimistic ahead of the holiday season, but according to a UKG survey, three-quarters of US retailers believe that the current labor shortage will not allow companies to keep up with what shoppers expect. That same survey saw that 64% expect to see a year-over-year decline in employment, even though shopping demand is expected to rise 8–10% this season year-over-year. Much of this labor shortage is due to hesitations around working in the grueling retail market, wanting higher pay or risks of contracting COVID-19.

 

Rising Inflation Rates — Consumer prices have risen 6.2 percent from a year ago, the largest annual increase in more than three decades. Even more recently, overall prices rose 0.9 percent in October alone, with gas, energy, vehicles, medical care and groceries taking a brunt of the hit. This rise in the inflation rate all ties back to the supply chain disruptions, but the White House has assured that these price increases are “transitory” and will return to a more sustainable rate once backlogs have caught up. One way some groups are looking to help right the inflation ship while reducing waste is by simply not buying anything through the Buy Nothing Project.

 

Photo by Julius Silver from Pexels


What to Look for: Holiday Shoppers Become Prime Targets for Cybercriminals

With the retail and e-commerce world in a state of… havoc…, cybercriminals are salivating at the opportunity to exploit vulnerable individuals. Since the start of the pandemic, cybercrime activity has risen more than 300%. As consumers begin to grow in frustration from the limited stock on some of the more popular holiday gifts, malicious phishing, malware and ransomware attacks are expected to be more prevalent and relevant than before. For example, if someone has been desperate to buy a PlayStation 5 for their grandchild to no success at the major retailers, they may be more susceptible to opening and clicking an email promoting “PlayStation 5 in stock” from an unknown sender.

 

What can you do to stay more vigilant? This holiday season and beyond, only open email from trusted sources. As you navigate the web, ensure you remain on credible websites and never present bank or credit card information without verifying the source first. The best rule to live by: if it seems too good to be true, it probably is a scam. Businesses can be more vigilant by offering more security measures, such as logins and even multifactor authentication (MFA) before consumers can make a purchase.

 

TL;DR: Catch Me Up to Speed

  1. When the pandemic hit in early 2020, manufacturing plants (of all kinds) around the world shut down during COVID-19 outbreaks.
  2. Consumers stopped spending money on experiences and started spending money on their homes, which now doubled as an office and/or classroom.
  3. Many of these home goods required microchips, causing a surge of demand in the semiconductor industry.
  4. As manufacturing plants slowly re-opened (not all did), many cargo ships were full sending personal protective equipment (PPE) like masks and gowns to hospitals around the world, causing a bottleneck.
  5. Today, we’re still playing catch-up from the backlog of this extreme supply chain disruption, and the lack of being able to keep up with consumer demand is causing the highest rise in inflation in more than 30 years.
  6. Between short-staffed retail stores and lack of product availability, cybercriminals will be waiting to pounce on vulnerable individuals looking to get ahold of this season’s most popular gift items.

Recommended Resources: Additional Insight from the Experts

It’s not all doom and gloom, however. The holiday shopping season is the time of year when many businesses begin to turn a profit, hence the naming of Black Friday where companies go from being “in the red” to “in the black” (although that tale may be a myth…). Regardless, this year has many question marks being answered by companies that are making lemonade with the lemons they were handed. Big-name companies are proceeding with their best deals of the year based on inventory and staff available. But above all, as both consumers and businesses, the best piece of advice while shopping this Black Friday and Cyber Monday: have patience. As Arnold Glasow put it:

 

“The key to everything is patience. You get the chicken by hatching the egg, not by smashing it.”

 

Photo by PhotoMIX Company from Pexels



About the Author

TD Synnex Editor

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Mike Fitch
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Content marketer and communicator through and through. ASU grad with more than 10 years of B2B tech marketing/communications experience.