The supply chain diversification conversation has been happening for three years. In 2026, it's finally moving from boardroom planning to actual execution — and the numbers are striking.
Research published this week by Retail Gazette, based on a survey of 1,500 ecommerce businesses across the UK, Europe and the United States conducted by Fidelity Fulfilment and Opinion Matters, found that 87% of ecommerce companies are likely to move their primary manufacturing base within the next three years. That's not a marginal shift — it represents near-consensus across the industry.
The triggers are familiar: 145% tariffs on Chinese imports, geopolitical volatility from the Iran conflict, lingering Strait of Hormuz disruptions, and the hard lesson of the 2021-2022 supply chain shock, which proved that single-source dependency is a solvency risk. But the response has accelerated materially this year.
What "Moving Manufacturing" Actually Means
The phrase "manufacturing relocation" can sound more dramatic than the reality. In many cases, it means qualifying new contract manufacturers in Vietnam, India, Mexico, or Bangladesh — not necessarily closing Chinese factory relationships entirely. For the largest retailers, it means a China+1 or China+2 strategy: maintaining existing relationships while routing new SKU development and production through tariff-neutral countries.
Supply Chain Dive's reporting on sourcing challenges found that even retailers with genuine intention to diversify are discovering the process takes 18-36 months to execute properly — quality audits, compliance certifications, lead time normalization, and vendor relationship development don't compress easily. Brands like Brooklinen and Patagonia that began diversification in 2023 and 2024 are now in a much better position than those who waited for political certainty that never arrived.
For smaller ecommerce operators — the DTC brands and marketplace sellers who make up a significant portion of the 1,500 surveyed — "moving manufacturing" often means accepting higher unit costs at alternative suppliers to escape the tariff math, then passing those costs on or absorbing them into margin.
Fulfillment Is Reshaping Too
Beyond the manufacturing shift, the Retail Gazette survey found 86% of respondents plan to open additional fulfillment centers within the next three years. That's a parallel story about the end of single-warehouse ecommerce: as tariff volatility makes inventory management more complex, having geographically distributed fulfillment — closer to customers, with regional inventory buffers — becomes a risk management tool as much as a delivery optimization strategy.
STG's supply chain survey, released earlier this year, found 77% of retail supply chain leaders have already shifted sourcing away from China toward tariff-neutral countries, and 87% are increasing buffer inventory levels as a hedge against volatility. The cost of carrying that extra inventory — capital tied up, warehousing fees, spoilage risk for perishables — is itself an underappreciated tariff tax that doesn't show up in the headline numbers.
The Competitiveness Divide Is Opening
There's a widening gap between retailers and ecommerce operators who started diversifying supply chains early and those who didn't. The early movers have absorbed the upfront costs of qualification and onboarding but now have sourcing flexibility that's genuinely valuable. The late movers are facing a double burden: paying 145% tariffs on existing Chinese-sourced goods while simultaneously investing in the transition, all in an environment where consumer spending is softening.
Deloitte's 2026 retail industry outlook identified supply chain flexibility as one of the two or three most critical competitive differentiators in retail this year. The 87% planning to shift manufacturing aren't doing it because it's cheap or easy. They're doing it because the alternative — staying locked into a China-only sourcing model with a 145% tariff wall and ongoing geopolitical uncertainty — is existentially riskier.
The supply chain reset is real. It's expensive. It's happening. And the retailers who treat it as a 2027 problem are already behind.