Plastic houseware price keeps increasing in recent years, which pose many challenges for both suppliers and buyers. The rise in plastic houseware price is attributed to the increase in the cost of production and marketing. To maintain a consistent price and make profit, manufacturers and retailers have to optimize the cost. In this article, we will explain why the price of plastic housewares is increasing and tips for businesses to be profitable in such a challenging market.
1. Why Plastic Houseware Price Keeps Increasing
Plastic houseware price keeps increasing due to 2 main reasons: higher production cost and higher service cost.
1.1. Higher Production Cost
The production cost of plastic houseware includes materials cost, labor cost and fixed cost (inventory, land rental cost, machine investments, etc.). Normally, the cost of plastic granules accounts for about 90% of raw material costs and over 75% of total production and business costs of plastic enterprises. Therefore, the higher production cost is mainly contributed by higher materials cost, which are plastic resins. This chart shows you the trend of plastic resins price, sourcing from Bureau of Labor Statistics:
Plastics are derived from energy sources like natural gas and crude oil. Consequently, increase in oil and gas prices directly impact the cost of plastic materials and resin.
Logistics also play an important part in plastic resins price. The Vietnam Plastics Association reports that Asia consumes the most resin materials globally, but domestic suppliers can only fulfill over 70% of this demand. So the cost of shipping plastic resins from foreign countries to Vietnam also impacts the price of materials.
In addition to higher materials cost, the labor cost also contributes. According to Briefing Vietnam, Vietnam raised its minimum wage by 6% in July 2024. The trend is also seen in the international market. Labor costs per hour increased by 5.1% in the eurozone and 5.5% in the European Union during the first quarter of 2024 compared to the same period in 2023. Similarly, Wages in the US jumped 4.4% year-on-year after rising 4.3% in the fourth quarter of 2023. So, the cost of plastic production also increases, leading to the plastic houseware price keeps increasing.
The rise in labor cost, in addition to inflation also result in higher rental cost and machinery price. Despite having the least fluctuations over time, this cost also contributes to the rise in plastic houseware price.
1.2. Higher Service Cost
Service cost includes the cost of marketing and other services to bring the products to the distributors or end-users. To be more specific, the cost can be broken down into advertising, promotions, warranty, customer care, and service staff.
Several factors are contributing to the increasing cost of marketing in the plastic housewares industry. First, the demand for specialized skills in digital marketing has driven up talent costs. Second, the need to reach a global audience requires tailored strategies, which can be expensive. Finally, compliance with data privacy regulations adds to the financial burden. These combined factors are making marketing more costly for businesses in this industry, contributing to plastic houseware price keeps increasing.
2. How to make profits while plastic houseware price keeps increasing
Given the rising costs of plastic housewares due to factors such as higher production costs and marketing expenses, wholesale buyers can implement several strategies to maintain profitability:
- Source from plastic manufacturer: Instead of sourcing from intermediaries, you should source directly from manufacturers without any intermediary fee. In the world of the internet, you can easily get access to manufacturers all over the world and choose the best one. One more tip is to look for big manufacturers with large scale of production because they are likely to offer the lower price thanks to lower cost per unit.
- Negotiate with suppliers: If you purchase in bulk or have a long-standing relationship with suppliers, you can negotiate for better pricing and terms. Another effective way is to join industry associations or cooperatives to collectively negotiate with suppliers, who highly appreciate long-term business relationships. Therefore, you can have better deals.
- Diversify supplier base: As a wholesale buyer, you should avoid relying solely on a single supplier to mitigate the impact of price increases or supply disruptions. If the current suppliers do not offer profitable deals, consider sourcing from alternative suppliers to find more competitive options. As the cost of production and service varies in each country, importing from foreign countries is a way to find alternatives with lower prices, while maintaining similar product quality.
- Optimize inventory management: If you want to save cost of inventory, implement JIT (Just-in-time) practices to minimize inventory holding costs and reduce the risk of obsolescence.
- Value-added services: While reducing price is impossible, you can offer value-added services that encourage your customers to pay more for the specialty or differences. Your customers may be willing to pay for the customizations in products or packaging as the perceived value increases. By doing this, you can justify the higher price.
Although plastic houseware price keeps increasing, the demand for plastic housewares is also getting higher and higher, seizing opportunities for businesses to make profits. Understanding the increasing challenges of rising plastic houseware prices, Inochi is committed to optimizing both production and service costs. As one of Vietnam’s leading plastic manufacturers, Inochi strives to maintain stable selling prices. We focus on building long-term business relationships, recognizing that consistent pricing is as crucial as consistent quality, especially in today’s highly competitive plastic houseware market.
With a substantial production capacity exceeding 40,000 tons per year, we benefit from cost-effective sourcing of raw materials, machinery, and molds. This allows us to offer highly competitive prices even in the premium segment. Furthermore, we provide preferential pricing for new customers, demonstrating our commitment to fostering long-lasting partnerships.
In conclusion, as plastic houseware price keeps increasing, businesses must have certain strategies to succeed. Sourcing directly from the manufacturer like Inochi is a good way to have the best deal. Please contact us for more details. Thank you!
