Plan Ahead: Inventory & Supply Chain Management for 2020 Holiday Sales
This blog is part of a series devoted to providing businesses with an action plan for Holiday Season 2020.
Not to use “unprecedented” yet again—but what better word is there to describe 2020 holiday season sales?
With COVID-19, this year’s holiday sales are bringing online merchants new opportunities and challenges alike. On one hand, eCommerce is booming with shoppers worldwide opting to stay at home. Online store sales projections for Cyber Weekend 2020 hit $51.1 billion, almost double 2019.
On the other hand, the entire supply chain has been disrupted this year. Warehouses have needed to cut down staff and international suppliers are struggling to ship efficiently.
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What is a supply chain? And why does it matter?
A supply chain refers to the process from when you order inventory to when your customers receive their products. Supply chain management includes production, storage, fulfillment and shipping. Every link in this chain needs to stay strong for your sales to succeed.
As a merchant, you’ll need to plan ahead efficiently. Order the right amount of inventory in advance and stay flexible throughout your sales.
Here are 7 steps to manage your supply chain and inventory this holiday season:
Choose the right suppliers
Plan your fulfillment process
Communicate with supply chain partners early
Order the right amount of inventory
Price your products strategically
Make a plan for overstocking
Make a plan for selling out
Get excited and start preparing now.
01. Choose the right suppliers
Generally, online merchants tend to work with international suppliers to save costs. This year, however, you might want to work with domestic suppliers instead. That can help you:
Dodge any unexpected new tariffs
Avoid shipping and customs delays across borders
Replenish your stock more easily and faster
If you do choose to work with international suppliers, consider diversifying. In other words: don’t order all your eggs from one basket. Order from suppliers in various countries. That way, in case one country’s economy suffers or they have an outbreak of the virus, you won’t lose all of your inventory.
02. Plan your fulfillment process
Merchants with large inventory volumes may want to send their inventory directly to a third-party logistics provider (3PL). Third-party partners handle fulfillment and shipping for you, so you can focus on your online business strategy and marketing.
Whether or not you work with a third-party fulfillment service, choose your warehouses wisely. Opt for a warehouse within reasonable distance of your suppliers and order your inventory early. Plan ahead to give the warehouse staff enough time to sort and file your products accurately.
If you have a brick-and-mortar store, consider maximizing the space as your own warehouse. Take The Spice Suite, for example. Owner and Curator Angel Gregorio turned her D.C. storefront into a warehouse when COVID-19 started. She has plenty of storage space for small items (spices and oils), and can ensure for herself that products in fragile bottles stay intact.
With your own warehouse, you can also visualize how quickly your stock is selling. That way, you can prioritize which products to push as the holiday sales go on.
If you built your eCommerce site on Wix, use the mobile app to scan product barcodes. This'll help you save time when adding, locating, and tracking your inventory.
You can also offer your customers curbside pickup, which has been a huge part of The Spice Suite’s success during COVID-19. According to recent reports, 53% of holiday shoppers plan to buy from stores with contactless options, and major chains like Target are already letting customers pick up orders outside their locations. Store pickup takes away shipping complications and enriches your customer service.
If you are opting for store pickup, tell your customers how it works on your site’s checkout page. Always remember to practice social distancing and respect your customer’s space.
03. Communicate with supply chain partners early
Your suppliers and manufacturers really are your partners. Your success depends on each other, so work together to find a process and order volume that works.
Unfortunately, suppliers have hit their own hurdles with COVID-19. Factories have been shut down, deliveries are slower and staff may be limited. Contact your suppliers now to understand if there will be any supply chain issues. Yes, now. Well, maybe finish reading this blog, but after that.
Surprises are fun when it comes to holiday gifts—less so with holiday supply chain management. When discussing your inventory order volume, give your suppliers as specific predictions as you can. Even if you’re not ordering today, make sure you’re on the same page about the inventory you’ll need and whether the supplier can realistically follow through. If they tell you about any supply chain issues, you’ll know now to adjust your product range or diversify your products. Check in often so you’ll know if anything in the supply chain changes.
If you work with a 3PL company, check in with them too. They could be facing a shortage of drivers or fulfillment staff, warehouse closures or delivery restrictions. Develop a back-up plan with them for any fulfillment issues that come up.
To keep track of your stock levels, use an eCommerce platform with one centralized inventory report. With Wix eCommerce, your inventory syncs with each of your sales channels, like eBay or Facebook Shop, as well as leading 3PL services. Before holiday sales start, have your 3PL service double-check your supply numbers so your inventory updates reliably once sales start. That way, you can react as soon as an item sells out. Your Wix store will also automatically mark the product as out of stock, so you can’t accidentally oversell.
Anticipate low stock before you sell out with reorder notifications. Set these up with your 3PL service to get automatically notified when your stock dips below a certain level. As mentioned, fulfillment may be delayed this holiday season. If you already have reorder notifications, consider setting them with a higher threshold to give yourself time to restock. Plan ahead to keep offering your best sellers without a hitch.
04. Order the right amount of inventory
The rules here seem simple:
Order enough inventory from your suppliers to avoid selling out too early.
Don’t order excess inventory.
Find a middle ground for your product range, with enough SKUs to give your customers choice but not so many that they feel overwhelmed.
But what will your customers buy this holiday season? Without a crystal ball, how are you supposed to know how to stock your warehouse wisely?
Take a look at your industry
Review the products that sell well for your industry, both in general and during holiday sales. You’ll also want to look at eCommerce growth reports during COVID-19. The new reality altered buyer behavior and preferences, with all of the top 10 eCommerce product categories doubling in sales.
Stay updated on the new profitable product categories and trends. Then, cater your product range to match the most recent reports.
Take a look at your own sales analytics
Use previous sales data to predict this holiday season. If your online store is built on a platform like Wix, these analytics reports are automatically calculated and displayed in your dashboard. Review your best-selling products and categories, as well as the most profitable items, to choose where to order more inventory.
Ideally, you have data from last year’s sales and understand your specific customer behavior during the holiday season. However, sales trends changed so dramatically this year that you may not want to rely too heavily on last year’s data. Focus more on your store’s analytics from the last 3-6 months; this will give you a better idea of your sales trends during COVID-19.
Offer holiday pre-orders
Another way to find out what your customers want: ask them. Rumor has it that Amazon’s Prime Day will be in October this year, which means consumers are already preparing their holiday shopping lists. Start offering holiday pre-orders at a discount now to better understand your product demand. First, you’ll have a more accurate estimate to order from your supplier; second, you’ll know which products to prioritize for the holiday season; and third, you’ll be able to start fulfilling orders in advance.
Once you have an idea of your sales trends, adjust your inventory order in kind. Here are supply chain management changes to consider:
Order mini-bulk: With this strategy, you order small quantities from your supplier as needed. On one hand, it offers you more security because you won’t over-order. On the other hand, you’re more likely to sell out and can’t guarantee that the supply chain will be functioning properly when you do. Mini-bulk might be right for your business: weigh the risks of overstocking vs. the risks of selling out.
Discontinue products: Before you start your holiday sales, consider removing certain products from your storefront. As mentioned before, you may want to take down SKUs which don’t sell as well. This can help spotlight your better-selling products. You also may want to discontinue items with high return rates, like fragile products and clothing. Of course, this depends on your business. If you sell t-shirts, for example, there’s no need to reinvent your entire inventory.
Regardless, make sure you have a clear return policy on your website. Feature it in your site’s footer so customers have clear expectations when they purchase. A detailed return policy also works in the merchant’s favor, giving you fewer frustrating returns and unexpected inventory to handle.
05. Price your products strategically
Once you decide on inventory volume and order from your suppliers, you can still use your product prices to control your stock levels.
The basics: Lower the prices of your well-stocked products to sell more, and increase the prices of your lower-stock products to limit their sales.
When adjusting your prices, find the sweet spot that achieves your inventory goals without hurting your brand. Keep your pricing relatively consistent; don’t make your products so expensive or so reduced that you confuse your customers.
The usual best practices for pricing products apply during the holiday sales season, too. Research your competitors. If you want to compete with their holiday prices, lower yours, and if you want to position yourself as a more luxury brand, price higher. Also, as always, run a cost-benefit analysis. While lower prices might sell more inventory, higher prices will give you a better profit margin and keep you from selling out too early.
Instead of changing your product prices altogether, you may want to offer coupons. Coupons give you the flexibility to shift your discounts and product emphases throughout the holiday sales season.
06. Make a plan for overstocking
So, you’re doing everything you can to not overstock. Yet if this year has taught us anything, it’s the power of a backup plan. If you find yourself with excess inventory during your holiday sales, here are some ways to sell more:
Run flash sales
Offer limited-time flash sales on your site to unload your surplus inventory. On average, Wix online stores have increased monthly GMV by over 64,000% with a flash sale. Flash sales can help you sell your extra stock with FOMO-style urgency while upping your holiday season revenue.
Tip: Make sure you have enough inventory to meet the order demand of a flash sale. This may not be the right option if you only have a few extra units.
Sell bundles and subscriptions
COVID-19 has seen more shoppers buying in bulk, from toiletries to food. Follow up on that trend. Include your surplus inventory in product bundles or monthly subscriptions, and promote them in your holiday marketing.
Tip: Be sure to discount your bundles or subscriptions to give your customers more value than buying separately.
07. Make a plan for selling out
You may sell more than you expect this holiday season—hopefully you will, with the inventory to fulfill every order. However, with realistic supply chain issues and unexpected curveballs, you may find yourself with an in-demand product and not enough stock.
First, make sure your eCommerce platform automatically marks products as “out of stock” on your storefront when they sell out. If not, you may accidentally oversell and frustrate your shoppers.
Then, pause any promotions you have running for sold out products, including on-site banners and paid ad campaigns. To be safe, review and update your promotions after every major sale like Cyber Weekend.
Most importantly, communicate clearly with your customers about any shortages or delays. Modern shoppers prefer authenticity and transparency from their brands. Take it from Malaika Jones Kebede, founder of the wellness brand Brown Girl Jane:
“We’ve been grateful to experience really rapid growth, but what that means in these realities is that products are harder to come by. We’ve found that constant communication, talking and being honest about everything that’s going on, has really helped us. People are smart. They know this isn’t something specific to your business, but you have to let them know.”
To keep your customers informed, label your limited stock items. Once an item sells out, let them know when it comes back in stock. You can either send a general email marketing blast when you restock your most popular products, or add waitlist forms to out of stock product pages and notify shoppers know when the item becomes available again.
You can also remarket customers to similar products that might interest them, either in an email or on the out of stock product page. Choose relevant alternatives to encourage shoppers to stay on your site.
Ideally, you’ll be able to contact your suppliers to restock. If they can’t send you products on time for the holidays, though, here are 3 creative solutions to keep your sales up:
Repurpose materials, like using extra fabric from unsold clothing for more in-demand products, like face masks.
Shift your marketing efforts to showcase over-ordered stock.
Promote your digital gift cards. This buys you time before you restock. An added bonus: Gift cards increase your brand exposure and bring new shoppers to your store.
Remember that what we call “the holiday sales season” is really a series of promotions, from Cyber Weekend to winter holidays. As much as you should prep in advance, make sure to mine insights and adapt your business after each major sale.
Stay dynamic and develop your holiday sales strategy as you go:
Don’t have an online store yet? Create your eCommerce site and start selling today.
Tova is a content marketer with a passion for compelling business stories. Perhaps more obsessively than others, she watches the Super Bowl for the ads.