“When white America has a cold, Black America has pneumonia”: Why these Black-owned companies are being hit even harder by supply shortages
By Jared Council
For a four-month stretch in mid-2020, Atlanta-based hair care brand Meraki Organics Inc. had to mark several items as “sold out” on its website because of a shortage of ingredients and bottling components. This year, founder Amber Makupson said, issues with glass and other raw materials are affecting product availability heading into the peak shopping season, with no end in sight.
“Black Friday and Cyber Monday are integral selling days in retail,” Makupson said. “Having a product out of stock during a peak selling season will directly affect your annual revenue.”
She later added: “We are still facing shortages due to the pandemic; I am unsure when things will be back to normal.”
Makupson is among Black business owners in the beauty sector, one of the fastest-growing online retail segments, who said months-long supply chain issues prompted by the pandemic continue to weigh on operations and profits.
Some of the supply-chain impacts have been customer-facing, the business owners said, such as unavailable products or higher prices. But others have been internal, such as having to allocate more cash flow to beef up inventory or having to curtail marketing and research-and-development spending.
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Those issues are compounded by some of the longstanding challenges facing many Black-owned businesses, including lack of access to capital, mentors and other resources that can help them navigate tough times, they said.
“It kind of goes back to the old adage: When white America has a cold, Black America has pneumonia.” said Justin Moore, founder of Houston-based skin care company Holly Hall Supply Co. “All of those disparities that Black businesses already deal with in terms of access to capital … that’s obviously going to be an issue when the nature of your cash flow is changing and not in the right direction.”
Moore said prior to the pandemic, he would order new inventory from his manufacturer three to five weeks in advance. Today, that figure is eight to 10 weeks, he said, and he’s taken on “more debt than I would have preferred” to increase stockpiles.
Dviniti Skin Care LLC, a Philadelphia, Pa.-based maker of natural skin care products, has also been ordering more inventory several weeks earlier than normal to avoid running out, founder Marquita Robinson-Garcia said.
Higher upfront inventory spending, as well as the increasing cost of raw materials used for components such as product labels, has led to a 25% decrease in monthly cash flow this year compared to last year, she said. Dviniti had mostly been absorbing increasing operating costs throughout the pandemic, Robinson-Garcia said, but will likely raise prices for customers after the new year.
Robinson-Garcia said she’s been in the beauty industry for more than a decade and is blessed to be in a position where she can help mentor other founders of color. She said one of the biggest struggles she’s seen some Black founders have during rough stretches is trying to manage it without help.
“I think sometimes when we face challenges in our community, we have a tendency not to want to reach out,” she said. “And I think that these are just some social, or maybe cultural, things that … get in the way of the business. I think we have a heck of a lot more to overcome than the supply chain.”
Another supply-chain related issue is the cost of shipping and transportation, which have grown partly because of labor shortages in the logistics industry.
Akosua Nyarko, founder of Canadian fragrance company Lavender Clouds & Poetry, said before the pandemic it would cost less than $14 CAD to ship a 15-milliliter bottle of fragrance from Edmonton, Alberta to New York. The cost today is $19 CAD.
“I have been absorbing the [increased] cost of shipping,” Nyarko said, noting that she doesn’t want high shipping fees to impact sales. “And it’s just something that I have had to do in order to continue to grow my business.”