It’s hard to believe that the holiday season is quickly approaching. What does this mean for FBA sellers?
Start planning for Q4 now.
With increasing holiday demand being generated on Amazon, much of which comes from Prime users, sellers must start preparing earlier each year. Even though there are a few months until Cyber Monday, starting this process ahead of time will help mitigate risks such as capital tied up in stale inventory and contending with post-holiday returns.
We’ve compiled some of the most important dates so that FBA sellers can have a successful holiday season.
Important Dates for Q4 Planning
Now – October 1st: Start Analyzing Inventory Performance
Starting your inventory clean-up now will help you get ahead of the game. If you’re carrying too much of the wrong product, a lot of working capital will be tied up in your inventory. By initiating a plan to maximize available cash for possible holiday investments now, you’ll be able to invest in the most profitable inventory in September and October.
A good way to start this off is by auditing all investments to pinpoint the slow moving SKUs. You’ll come across some stale inventory, but be careful about how you address this. Some inventory should be strategically left waiting, especially if it’s an upcoming seasonal product.
There’s usually a market shift at the end of September, which is the point when retailers want to exit out of their investments. A dramatic decline in prices can be expected, which can be especially amplified in certain categories. This also can be seen right before Christmas, where sellers drop to the price floor. Another strategic approach to evaluating inventory is to break it down by supplier. Segmentation helps a seller see the big picture, allowing them to make the right informed decisions based on the entire portfolio.
Although this is every seller’s least favorite step in holiday planning, investing time now will free up critical cash for high ROI investments.
October 19th: POs for Cyber Monday Placed
Plan Your Buying
A well-planned, data-driven strategy will create a competitive advantage against other sellers who “carpet bomb” without analytics. Start initiating vendor communications to evaluate your supply side options and find out what will drive the highest possible outcomes.
Potential questions to ask your buyers:
- What are our potential price discounts at larger quantities?
- Can we get free freight on large orders?
- What discounts are available for “take-all” quantities? (Take-all: when you’re able to buy all available inventory from a supplier, having exclusive access.) Going into the holiday season as an exclusive buyer/seller will give you a competitive advantage.
- What if we placed a PO for 4-5X the current volume?
- Can we switch out inventory if it doesn’t sell by January?
Building a forecast model can help create a master blueprint for the entire holiday season. Potential data inputs to include are:
1) 2014 sales performance, trends and supply side information.
Sellers should focus on the investments that have the lowest risk instead of the highest upside. Low risk inventory can help combat an influx of returns at the end of the holiday season, so always remember to protect the bottom-line. Evaluating all potential risks and worst-case scenarios, such as an exit strategy, can also be beneficial.
2) Your holiday buying budget.
Evaluate the total amount of capital required. By spreading out your budget, you can ensure that every dollar is being put to work. Each investment also has a trade-off, so keep in mind the “opportunity cost” and “cost of capital”.
3) Consider demand and pricing.
Around the holiday season Amazon sellers should price to maximize profit. A lot of sellers automate their pricing, but for this period it’s smart to not fully automate your repricing strategy. Selling on Amazon during the holidays has become a game of commodity optimization. The market has so many changes, that it’s far too complex for 100% automation. The best way to handle pricing is by analyzing the data and adjusting price points based on your target gross margin. Keep an eye on your competitor’s supply so you can maximize your FBA advantage. Also, be aware of increased demand – as demand increases, prices can go higher and sellers can command higher margins.
November 16th: Target Cyber Monday Delivery Date
This is the last day to receive inventory at Amazon fulfillment centers for Cyber Monday. Be aware that this is an Amazon recommendation. In previous years, there had been a lot of issues revolving around Amazon’s delivery during the holidays. This is a result of the amount of seasonal workers handling FBA orders, so make sure that all inventory is received by fulfillment centers before this date–or well in advance.
November 18th: Clean-up Suppressed Listings
This is a good time to evaluate listings based on performance and prepare inventory for the holiday season demand.
November 27th: Black Friday
And so it begins. Holiday shopping season is among us!
November 30th: Cyber Monday
Now is a good time to start monitoring both prices and demand.
December 7th: Last Delivery Date to Receive Inventory at Amazon Fulfillment Centers
If you want your products to be delivered on time for the holidays, make sure that all inventory has arrived at fulfillment centers.
December 21st: Cut off Date For Customers to Order Standard Shipped Products
Today is when the orders will start to rush in. Last minute buyers will be placing orders, so watch demand carefully in case pricing adjustments need to be made.
December 22nd: Cut off Date For Customers to Order With 2-Day Shipping
This is the day when Prime users will be putting the most orders in, so FBA listings will be at its highest demand.
December 23rd: Cut off Date For Customers to Order With Next Day Shipping
This is your last chance to lower prices to get rid of seasonal inventory. Be aware that a lot of other sellers will be doing the same.
December 25th: Christmas
The big day is finally here! Be prepared for post-holiday returns for the next couple of weeks.
Prepare Your Team
Based on the above dates, timing is absolutely critical. Performance can be assessed by communicating and reviewing all progress by using consistent metrics. Sellers should also be constantly monitoring target inventory levels throughout all of December. As the season picks up, ask yourself “Do I have enough resources within my team to handle the holiday influx?”
FBA sellers have more deadline constraints compared to FBM sellers. With this in mind, avoid procrastinating as much as possible. Start analyzing current inventory levels now and plan out your major holiday investments. Always keep in mind that every step you take towards holiday planning will affect your bottom-line.
Good luck with Q4 and happy planning!