The cost of trading crisis: How SMEs can operate more efficiently

The latest economic forecasts predict stagnated growth across the UK economy next year and a recent survey has found that three-quarters of SMEs are pivoting in response to existing economic difficulties.

With a wide range of national and international factors adversely affecting the UK food and drink industry, B2B online marketplace ShelfNow shares how small and medium-sized F&B businesses can continue to operate efficiently against a backdrop of rising prices.

Applying the lowest minimum order quantity

As supply chain pressures continue to impact the F&B industry, high minimum order quantity requirements (MOQs), are particularly detrimental for businesses at the current time and additional factors such as the introduction of higher wholesale prices and additional levies on deliveries are playing a part in influencing this.

Responsible for handling payments, invoicing and fulfilment for some producer partners, ShelfNow advises SMEs to apply the lowest minimum order quantity so that products can continue to be effectively delivered to buyers despite the current challenges. In addition, the company recommends consolidating deliveries where possible and recommends that buyers and producers consider ways to increase the total number of drops made per delivery.

This can include buyers in a local area consolidating deliveries to make it easier to meet minimum order quantity requirements. Offering a multidrop delivery service for its partners, ShelfNow’s fulfilment system supports small and medium-sized brands in terms of reducing costs and improving efficiency, by ensuring that multiple orders can be dispatched at the same time.

As well as helping to improve internal cash flow for buyers, this also helps to reduce carbon emissions made on the road and allows buyers to make lower volume and smaller quantity orders.

Focusing on higher margin ranges

The latest ONS data has revealed that prices of food and non-alcoholic beverages rose last month to their highest rate since March 2009, when the world economy was in the midst of the global financial crisis. For many SMEs in the food and beverage sector inflation remains a key challenge this year and ShelfNow reports that a combination of factors including the Russia-Ukraine war, COVID-19 and poor harvests are exacerbating the trend.

As the costs of raw materials like glass and ingredients such as sugar increase, producers have begun to increase wholesale prices to maintain sales margins. Due to the ongoing impact of COVID-19 and lockdown restrictions, ShelfNow has also seen partners miss harvest seasons as a result of worker shortages, with some brands struggling to produce enough products this year.

With experience working alongside thousands of artisan food and drink producers and trade buyers, ShelfNow suggests that buyers from both the hospitality and retail sectors focus on creating higher margin ranges to overcome these existing issues and boost resilience during the current economic climate.

Selling directly to buyers

With many traditional wholesale models applying additional costs for businesses, ShelfNow advises that there are several benefits to be had for smaller and medium-sized food and drink businesses who opt to sell directly to buyers.

As well as prioritising efficiency and sustainability through its fulfilment model, ShelfNow takes only a small commission from partners which allows these businesses to make significant savings on costs that may otherwise have been spent on additional fulfilment procedures, such as hiring warehouse space. The company’s intelligent online marketplace includes private messaging to allow brands and buyers to communicate and trade directly before prices are agreed upon and orders finalised.

With rising fuel prices continuing to impact SMEs this year, ShelfNow has also recently absorbed the 20% surcharge in fuel costs to remove this concern for its partners and continue offering a reliable fulfilment service.

Sajid Ghani, Co-founder and COO at ShelfNow said: “Our trading platform is centred around reducing middleman costs for SME food and drink businesses and we remain committed to this in light of the challenging economic climate we all find ourselves in.

There are some easy steps that owners can take to alleviate current pressures on trading. At ShelfNow we’re proud to work with some of the world’s best artisan brands and independent businesses to offer an extensive range of products which are available at unrivalled price points for our buyers. Our marketplace can help SMEs to save up to 25% on typical wholesale costs.

We’re always looking for new ways to support our partners and as the year begins to draw to a close we will be continuing to reevaluate our current practices, particularly in light of the expected hike in energy prices this October.”