Don’t Let Chinese Tariffs Compromise Your Profits

How are small online sellers handling the trade war with China?

Last week, Inventory Optimizer’s Director of Support and Product Implementation, Ryan Carbone, sat down with the COO of a 7-figure ecommerce seller to discuss Chinese tariffs and their impact on small businesses.

Craig Barnell is the Cofounder of Fishers Finery, a digitally native brand specializing in award-winning silk pillowcases, bedding, loungewear, and more. Barnell started Fishers Finery 11 years ago, and he’s been using Inventory Optimizer for over 7 years to manage inventory and forecast demand effectively.

How do Chinese tariffs affect small businesses?

Tariffs, particularly those targeted at China, can disrupt small business operations immensely through “canceled bookings, rising costs, stockpiling supplies” and the fear of passing on costs to customers.

To ensure success amidst uncertain supply chain conditions and raising Chinese tariff concerns, businesses must prioritize proactive inventory management and demand forecasting.

For Fishers Finery to navigate the escalating tensions from the trade war between the United States and China, Barnell has relied on Inventory Optimizer these past few months more than ever before.

As a supplier of primarily silk goods, over 50% of Fishers Finery products come from China, where the mulberry silkworm is native.

As tariffs started escalating from 10% in February to 20%+ in March, Fishers Finery sat down with experts at Inventory Optimizer to discuss a plan. And thankfully, they did—by mid-April, tariffs imposed on China had reached 145%.

“How does Inventory Optimizer help you navigate the world of tariffs to ensure you have the right product without being overstocked and spending more than you need?”

Every day, Fishers Finery relies on Inventory Optimizer for:

“Trends—positive, negative, or neutral, seasonality, but then also taking into account minimum order quantity, length of your horizon from the moment you issue a PO to the time the product is going to arrive in the US. Keeps track of current inventory and product that’s in various stages on purchase orders.” Craig Barnell

When we sat down with Fishers Finery in March, we discussed adjusting their forecasts to only look at their top-selling products.

Why?

You can’t risk going out of stock on your most essential ASINs—if the primary ASIN goes OOS for more than 8 days, you lose the sales attribution to the parent listing and your organic listing plummets. No small business can afford that, so Inventory Optimizer helped Fishers Finery focus on the highest-performing ASINs and develop a plan.

To get inventory in the States ASAP, Barnell immediately booked air freight because it was less money to expedite shipping by air than risk waiting to see how high the tariffs would climb.

This ended up being a great decision—almost immediately after, the tariffs increased to 145%

What about slower-moving SKUs?

For slower-moving SKUs that are less of a core competency, we advised lowering the service level to decrease the amount of safety stock.

Service level is one of our features that allows you to increase or decrease the probability of running out of stock so you can push your service level or competence interval to 99% (which causes you to order more).

In a contentious global situation, where you don’t want to focus on the bottom-selling SKUs, we recommended that Fishers Finery push their competence levels up to 99% to get as much product as possible into the US before the tariffs were escalated.

Fortunately, Fishers Finery heeded our advice—they were able to order their product while the Chinese tariffs were 10%. Then, they pushed the service level back down to the flatline forecast (or 0 for certain products) while they wait to see how the tariffs evolve.