It’s Christmas in July, especially for your product launchers and entrepreneurs as you prepare and finalize your holidays sales plan. July is usually the deadline for getting your holiday retail planning done in retail, but the bigger your business is, the more ahead of the game you should be so you will not miss sales opportunities. Thinking about Christmas as a buyer versus being a seller is way different mindset– sellers should plan according to researched trends, designs, and materials forecast months ahead, making purchase orders in huge volumes way in advance to supply the demand. Brenda Crimi gives advice on how you can effectively employ a holiday sales and logistics strategy to prepare for the busiest season in retail, especially if you are an online seller on the leading e-commerce platform Amazon.
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Brenda Crimi and I decided to team up to talk about seasonality, holiday season planning. We’re at the West Coast and it is summer and we’re talking holidays. It is so critical that you start your planning early. For many of us, planning happens on October of the year before the holiday that you’re planning. We would have done a holiday planning thought process on what colors and materials design, things like that. I shared on the past episode my color palette. That’s when I developed the color palette was way back then. We usually start our inventory planning in January because you sometimes want to get those orders in so that they immediately follow Chinese New Year. It depends on the lead time of the product.
The bigger the orders, you need to have them planned in. We would place purchase orders in January. That will be the last opportunity. Usually, they would follow up but that made it so that the factory could immediately come back from Chinese New Year and start to plan how they were going to achieve the volume necessary. We gave them planning time as well. They don’t start on the orders immediately. They usually start on them in the spring to early summer, where they would be in full production for it. It meant that they had the planning time so they knew how many workers they need, how much materials they need, they could plan all of that. That is so important for you to make sure that you’ve got in place. Let’s talk about it from your perspective though, Brenda. The planning cycle for doing eCommerce is a little bit different and you have a little more flexibility in timing. Usually, your volumes are tremendous. Talk a little bit about how you’ve handled that.
[Tweet “Purchase orders in July are usually the last chance to get your holiday plans possible in retail.”]Thinking about Christmas as a seller versus a buyer is a whole different thing. When we’re thinking about Christmas and celebrating as a purchaser, we’re not making until Thanksgiving unless you’re ahead of the schedule and you’re very organized. When you’re selling products, you’re thinking months in advance. We’re all eCommerce, so I’ll speak specifically to the eCommerce world. The first year that we started selling online, we missed out on so much money because we didn’t know how to plan. We didn’t know what to expect.
If it’s your first year doing it, it’s so much harder. It’s still hard even when you have a new product that you’re bringing out. You don’t know how much better it’s going to do in the fourth quarter. You have an idea that I have a product. Unless it happens to be a summer specific product or it’s its own season, you would know then the season would be from May to August. It’s the same thing as having a fourth quarter. It’s set into different timeframes. Think of when we were talking seasonality, it could be a different season for you. How much percentage, Brenda, would you say the fourth quarter does compared to your other quarters?
In our total year, 40% of our business happens in the fourth quarter. Sometimes it’s more for some businesses and some categories. When you have a new product, you have to go by industry standards so to speak. Typically, you’re going to sell two to three times more at Christmas time than you would on a normal basis. It’s a delicate balance in trying to plan your inventory because you have a lot of cash outlay. A product sitting there waiting to be sold. You’ve got some money tied up in that. People need to plan for that because what will happen is if you don’t plan and you’re behind the eight ball and you’re trying to catch up, you’re going to lose revenue. That’s the worst place to be. It makes you mad.
Some of the timing things that you had talked about are specific to Amazon because that’s a big part of eCommerce. When the fourth quarter hits, all heck breaks loose and it isn’t just in Amazon. It’s with all the logistics, the ports, the UPS, the delivery trucks. Everybody is managing fourth quarter and fourth quarter volume. Your own product may not be UPS’ or Amazon’s most important products. There was one season where the strike had happened. There are all kinds of things that can happen. It’s better to be prepared.
Holiday Logistics: We want to send enough product that gives us a big enough cushion.
Timewise though, it’s our goal to have our products into Amazon for the fourth quarter by the beginning of November. Amazon typically takes seven days to check in sometimes. We’re here in Arizona, sometimes Amazon tells us to send our product to the East Coast, there are a few extra days in shipping. If it’s a busy warehouse that it happens to be shipping to, we might experience two or three days delay before it’s checked in and live. When we work with our clients, we tell them to allow at least seven to ten days on the worse, to get that product to Amazon and check in. If you’re shipping out to Amazon the beginning of November, if you follow that seven to ten-day rule, you’re looking at the second to third week of November before that product is checked in and live. You’re not the only one sending in products. The whole nation is now sending their products into Amazon. Once you hit the middle of November, things start ramping up a little bit.
You should make sure that you’re shipping in the end of October.
We want to make sure all of our products are sent in by the beginning of November. That doesn’t mean that we don’t send product in after the fact. We want to send enough product that gives us a big enough cushion. If sales take off more than what we anticipated, that we still have another two to three-week window to get things going. Amazon may give you the comment that they’re not going to guarantee but then you still have UPS, FedEx and all the other carriers in play. What are they doing? Are they behind? Even though Amazon’s telling their customers, “We’re going to guarantee it,” FedEx and UPS may not be able to hold that agreement when it comes down to it.
The eCommerce world is a little bit different when you’re the supplier of those products. Keep in mind that the juggle is how much do you want to pay for storage with Amazon. Amazon, throughout the year, charge $0.69 a cubic foot for storage of their products. The fourth quarter, it goes up to $2.40. I’ll give you an idea on what that might cost. A shoebox normally costs $0.21 a month to store in Amazon. It adds up. You’re thinking, “If I send the product ahead of time, I may be spending more in my storage fee.” You don’t want to be stuck behind the eight ball either and not having enough inventory.
[Tweet “In retail, once you hit the middle of November, things start ramping up”]Especially if it’s going to take seven to ten days to check it in. If you ran out, you’ll lose more revenue. You’ve got to really balance that and be thinking about that and have a quick response as you start to see the sales. You watch it every single day and during the holidays.
On the backend you had mentioned about the Chinese New Year’s. We put our orders into our manufacturers overseas in December. We accommodate our orders to do volume through March because you don’t know what kind of backup is going to happen when you’re going to get your product. It’s always better to give that little bit of a cushion.
Here you are busy worrying about what’s selling on Amazon. You’re also worrying about the transaction and you’re worrying about all the planning that you’re going to have to do for the first quarter of the following year. You’ve got to get your orders in and re-pack it. You’ve got lots going on at this time of year. It must be incredibly stressful.
It could be. With the dip in the summer, it’s like waiting for Christmas. I’ll take that stress over the stress of, “Where are sales? Or where are the shoppers?”
We’re going to do a very big special on Chinese New Year right before October. That’s the best time for everyone to start thinking about it because that’s when we usually do our planning for it. When you hit the holidays and you go placing those orders, you know what you’re going to do already. If you’re developing a new product, that needs to be done either post-Chinese New Year or before we had done that and actually in the summer. We’re going to talk about that more in detail, but you’re right that both things cascade at the same time. Talk a little bit before we go back into the trend set because I want to get to that. What have you seen across the board from selling patterns?
It depends on the individual brand, their business model and what their goals are. If they want cashflow then certainly put the products on sale for these crazy discounts. You’ll see that the cashflow for your Black Fridays and your Cyber Mondays. There’s plenty of volume, even if you don’t discount your product, if you’re fairly priced. Our strategy hasn’t been about cashflow, it’s more about sales volume. We don’t typically put our products on sale in the Black Fridays and Cyber Mondays and so we don’t see that spike in sales. We still realize a huge jump.
Is it because there are more people shopping? That’s why you’re going to see the bump in that.
If your business model is such where you want to move a lot more product and you’re okay with that, you absolutely are going to leverage and see volume through Black Friday and Cyber Monday.
You’ve done that before where you sold us a seasonal item. You sold gift boxes that were available only in the fourth quarter. You had them all year round but you are promoting them to get through them. How did that work? Did you do a different strategy?
We didn’t. It comes down to the business model and what your strategy is as far as cash and price. If we wanted to take less volume as for less revenue, then we could have put them on sale and moved them faster.
Less profit, you mean?
Yes.
Holiday Logistics: Our strategy hasn’t been about cashflow, it’s more about sales volume.
You opted to keep your profitability where it is and then maybe have a slightly less revenue than you would have had. Your profitability is higher so it makes them more sustainable business overall.
One of the things that’s a little bit more of a struggle is managing the inventory through this process. We could sell the heck out of it but then would we have sold out. There’s a fine line in managing the bounce of, “This is how much inventory we have, this is how much that we can move, this is how much we can get to you, this is how fast we can replenish.” All those different strategies come into play. It becomes the play of what I spoke about a little bit earlier. How much money do you have to invest in inventory that’s going to sit there for 60, 90 days before you even see it moving? There’s all that strategy that come in to play. I’m absolute to the sales work. You also have to know that there’s a process in managing it. It isn’t just, “I’ve got cashflow.” What’s that going to do on the backend to your inventory, your numbers?
Let’s back up a little bit farther in the timeline process. The reality for you is that you’re placing orders in the summer, which you know is your slowest revenue time of year. That’s got to be a serious issue for you in terms of cashflow planning, just to support enough inventory to go. You had to back up even further to preserve capital for that.
Backing up further, we’re placing orders in August for inventory to arrive by October at the latest so that we can get our shipments in and get them planned. Depending on the product and the volume and so forth, it ties up a lot of cash because you’re still needing the inventory. It’s like things don’t stop so you can either maintain the status quo or you can put it into play. Maybe you have a marketing plan that you want to kick it up and get it up in ranking before the fourth quarter so that you realize even more. You’ve got marketing dollars in play. You’ve got additional inventory in play. It’s all part of that mindful strategy. You have to put the numbers down and be conscious of them and budget for it.
It’s such a numbers game in a sense that it requires so much planning, so much thought. You have the benefit of having done it for a couple of years in a row. You see a pattern emerging. When you don’t, this is where the trends happen. Share with us how you do that, when you’re planning a new product or helping your clients with a new product category that you’ve never done before.
It’s like planning seems to be the key that we’re talking about here. Planning, especially if you don’t have prior year’s sales tracking to compare it to. We love Google Trends. One of the things I wanted to show some examples are some products that are flat during the holidays. It doesn’t experience the fourth quarter. There are products like their fourth quarter is during the summertime. Use Google Trends as your benchmark to help plan for your inventory flow. I came up with the idea of motor oil. What cannot have a fourth quarter? Motor oil, probably is not one that has a fourth quarter. The products that will be affected by fourth quarter sales are gift-giving products or products that are themed for the holidays or winter. I went into Google Trends. I typed in motor oil as my search term and I’m going to change it to the last five years of history going on here.
It’s not showing sales. It’s showing search interest of people Googling something about motor oil. They might be looking for the right motor oil for a Mustang, whatever it might be. The motor oil is in the search term.
I believe that it loosely translates into demand. There are some ups and downs and things like that through the year but it stays pretty consistent. There’s no huge spike if you look at December. This is an example of a product that’s pretty consistent along the way. We also use Google Trends when we’re having an initial product that we’re exploring. We use it to see if it’s on an upward trend or the low trend, if it has already hit its peak. We like to initially do our product search in Google Trends too. This is a great way to see what the seasonality of your product might be if it’s not obvious to you.
What you’re seeing is the overall search trend time on Google. This is pretty indicative. There’s always a summer dip, it looks like a hill. There’s always a summer dip because people are busy and not necessarily Googling as much as they would be otherwise. They’re on vacation or doing something. We see that same thing drop off at the holidays where they’re a little busy right between Christmas and New Year’s. They’re going on vacation, going skiing, whatever. They’re not Googling all day long and so you see dips at those times of year across every board. If you were seeing something that was a spike in interest, you’d see a bigger spike.
Let’s look at copper mugs in comparison.
This tells me that it stays pretty consistent throughout the year. There’s a huge spike in December, that would tell me if I was selling copper mugs, that this is a gift-giving product. You’d want to accommodate that. Look at pools for example. This was something that we talked about. You mentioned your fourth quarter may be a whole different season. December is your low point in pools. They’re not even something people consider at giving for gift ideas and things. We have different dips and things. Other products luckily are coming up when other products are seasonally dipping. Overall trend, we’ll start seeing September. October is when the climb hits.
That’s a good strategy thought process. If you’ve got a new product or you’re new in the category, this is the time for those people that you might hate the ones who make lists and do planning. They do research prior to the holidays about what they’re going to buy. This is where they start shopping. They start in the month of October and they’re looking for deals but they’re also looking for the right gift or the right product or the right thing. They’re out there searching and so to start showing up in search terms in that time and have some product in already. Maybe a tremendous early entrance strategy for you to get picked up. The other thing is that those of us that write articles about the best holiday gifts, you’re writing them in October. If your product doesn’t even show up until November, it’s too late. We won’t see them.
[Tweet “Usually, our cut off for holiday purchase orders is Nov.1. That gives us enough product to cushion the demand, a window to keep things going”]If you have a new product that you’re launching in Amazon, Amazon is all about the rankings. If you’re ranking up in the top pages, you get the exposure, you get the sales. When you’re a new product, it’s hard to launch in the fourth quarter because your sales are in comparison with established products. You’re a new product that’s only maybe getting a handful of sales and you’re competing with these others that have traction and exposure that are now tripled and quadrupled in sales because of the holiday. You’re fighting an uphill battle. Launching in the fourth quarter can be profitable. I’m not discouraging it but I’m what I’m encouraging is realistic expectations of what can happen. The good news is the shopper volume has increased, quadrupled, doubled at least. I wouldn’t set the expectation that as a new product that hasn’t begun ranking and haven’t had an initial marketing strategy that’s played out to realize triple and quadruple the sales that much.
The strategy is not to launch at that time but to do it sooner. You build up that ranking and you do what you can in there, but you also have a better expectation. If you’re going to do 40% better than you’ve done in the prior quarters of the prior months, then you can be looking at that and saying, “I need more inventory. Here is how much I can plan.” At least you have a baseline even though you’ve not sold through the season before.
I would even go to the point of not saying don’t launch. I would not do a big marketing campaign. I would do a soft launch. What that would look like is at least get your listing up, put it on the platform because it still may get exposure because of the sheer volume of shop first. Maybe do some real low-level sponsored ads. You’ll get an idea of how the consumer is responding to your product and maybe get those initial reviews and things like that. I wouldn’t avoid launching. I wouldn’t avoid putting your product up and selling it. I would avoid a big launch.
Was there anything else you wanted to show us on Google Trends?
It’s a great tool to use to help predict your product and the seasonality of that.
That’s a great tool. We look at this overall too when we’re talking, when we try to figure out timing. When we have something that is a summer product, we want to start seeing when the start of the trend is because there are always delays in a new product launch. We look at that and so that’s where I always like to be at that frontend. It gives me a little bit of that buffer room. If I get in there early then you’re exposed to those early adopters, which is great. They will spend a little bit more time going deeper in the listing, then picking the first thing because they’re not impulse shoppers. If you’re an early shopper or if you’re a planner, if you’re researching it, most people will go a little bit deeper. It gives you an opportunity to be seen and to have your product actually evaluated by somebody who’s interested. That could be good for your brand development and your growth overall. That’s a great point, Brenda, but it requires a lot of planning.
I forgot to mention when you asked me the question about the strategy and marketing. Stocking stuffers are huge. Capitalize on those key words. If your product in fact can be utilized as a stocking stuffer and maybe change up one of your images on your list team to look like in a stocking so that you’re planting the seed. The message I want to reiterate is shoppers will shop from the images before they read the bullet points. Don’t just put it in your bullet points in your back-office keywords and think you’re going to get the information across, put it in an image.
This is an important reason to start to consider your package design as well. This is a thing at this time of year. Amazon lets you throw them in the little sacks and you’re going to get a gift. If your package is not conducive to wrapping, it annoys people. If you’ve been thinking about redoing your packaging, time for fourth quarter to make it gift-friendly, it’s a great idea. It gives you a good reason to update that listing at that time and show the new packaging.
Or showcase it in a basket because people love creating gift baskets.
I know you’re a big fan of bundles. When you can make a shopper’s life easier by pulling together items that they would already naturally want to buy. It is great that Amazon pops up, “People who bought this also bought.” It shows you what you might want to put together. If I had one place in which I could get it all together, all at once, wouldn’t that be better? That would save time, energy and people will spend more because they didn’t have to work that hard. The other thing is when you’re at your last minute, you’re concerned if you order these five things from all the different places that one of them might not arrive. This is where we want to pull it together in shopping. It’s a safer choice for them. Paying a little bit extra to make sure everything is going to be together and work together. That’s a great idea.
Amazon’s going to tell you what those are. Go to the detail pages always frequently bought together right below the bullet. It’s a great idea for development of a second product and your brand. You could get something in that same genre be.
Let’s go back to your copper mugs idea. You were searching the copper mugs and it has a great spike. What might be the drinks that you’re doing copper mugs with? If you were able to bundle repackaged mulled cider and cinnamon sticks, put them together in a bundle. You improved your ability to sell even more copper mugs than the other people.
Packaging is huge. You can wrap it in cellophane and tie a bow on it. What you’ve done is not only sold the product, but you’ve also increased your brand awareness that that person might come back and buy more copper mugs for themselves.
At the end of the year, we have a problem as parents, we have teacher and sometimes they were like coaches. Teacher gets hairstyle guests like there’s a whole bunch of little gifts that go around to the people who service us. We want to give them something special. If you’ve got something that’s on the inexpensive side that you could put into a multipack. Usually when I choose something, I buy the same one for all the teachers. If you could multipack something so then they could get them that way, that’s also a strategy and idea. Make sure that you’re tagging them that gift for teachers because that’s exactly the way people search for it.
When I’m looking for inspiration, I usually go to Pinterest for inspiration.
Holiday Logistics: Use Google Trends as your benchmark to help plan for your inventory flow.
If you don’t have the photos yet, there’s a great way to create them. I did an interview with Adobe and they’ve got this whole set of new 2D and 3D. If you have skills in Adobe, like Photoshop or Illustrator, there’s this whole way of creating that in 3D image. It looks better than a photograph, I could not tell the difference. You can find a designer who can help you with those things. Even if you have to create it ahead of time and you don’t have your product yet, it can be done. Stuff hasn’t come out yet, so they don’t always know what’s going to be new for this Christmas.
We buy out liquidations. One of the things we do was a cosmetic line of Walgreens, went out of business. We took a lot of cosmetics and I put them in those little dollar-felt Christmas stockings and then tie them in the clear cellophane with a little bow. I did the imagery, put a listing and I targeted to girlfriend gifts, stocking, separate and all that. I didn’t have to do any promotion of it. Stocking stuffer, all those key words to use. I made three dozen of them and we sold all of them.
People are out there looking for stuff and they’re looking for ideas. When they see something nice they go for it. These are some great ways to do that and think about that. We’ve covered so much. Predicting the season requires lots of planning, lots of researching, and sometimes some history. Any other advice you have, Brenda, from your experience to help our product launchers here?
The thing I always go back to is don’t be afraid just to do it, fail forward. Don’t be afraid of the fourth quarter. Do the best that you can and jump in. You have to experience it once and then the next year will be better. Don’t stall out. Don’t be intimidated. Don’t bury your head because you don’t have all the answers.
Brenda is here for you to answer questions. She’ll be coming as a guest on Office Hours. You can always send her an email or check out her profile in the Expert’s Area of the platform. It is her busy season, too, but she’s here for you. A good thing for you guys to set up, post season. It’s a postmortem with Brenda. What did I do that went wrong and what could I do better next year? I fell forward. I did something but I could do better, but I’m not sure what it is. Go over your numbers and bring the information and set up a consult with Brenda to talk about that. That’s a great topic for you. Be better, so that you can capitalize on the opportunity and the learnings that happen for you over that fourth quarter and for next year.
I want to remind everyone that I’ve got another Holiday Design Trends coming up. It’s different than the Color Trends because we’re going to talk about patterns and some things that you do different at the holiday season from the design side of things. It’s gift giving, so you’ve got to be thinking that way. I’ve also got Timothy Bush come in on to talk about inventory management and planning for mass market. If your product’s about to be in mass market for the first time and this is a stressful planning process and it does start much earlier, you need to be thinking that through. He’s here to advise and tell you what’s going wrong. We’ve got all of these exciting things for seasonal planning and we want to start early. Thank you so much, Product Launchers and until next time.
Tune in to Tracy Hazzard & Brenda Crimi next Office Hours. Connect with and find out more about Tracy Hazzard & Brenda Crimi in our Experts Directory.
Important Links:
- Brenda Crimi
- Color Trends – previous episode
- Timothy Bush
About Brenda Crimi
Brenda Crimi’s entrepreneur career spans over 20 years, during which time she’s operated several successful businesses, to include owning and operating a national franchise, consulting on systemizing small businesses, and inventing and bringing to market an award winning organizing product. In 2013, and between projects, Brenda started “dabbling” with selling on Amazon. Through extensive training and research, she learned the skills to leverage the Amazon marketplace, and turned that “dabbling” into a ¼ million dollars in sales her first 12 months. Because Brenda knows first-hand of the challenges and high costs associated with bringing products to market, she quickly recognized how invaluable and lucrative the Amazon marketplace could be to the success of a product launch. So, together with her husband and business partner, they formed AMZ Alliance as a platform to assist brands in navigating the highly competitive Amazon marketplace.
About Tracy Hazzard
As a Brand and Product Strategist for Hazz Design, Tracy Hazzard has ghost-designed, sourced and launched 250+ consumer products generating more than $2 Billion at e-commerce and mass-market retailers. For over 25 years, she has worked with design-leading brands like, Martha Stewart Living and Herman Miller to out-design, out-source and out-profit the competition. Tracy is the co-inventor of 37 patents that have helped her clients get acquired and achieve high asset valuations. In addition to being an Innovation Columnist for Inc., she has been featured in Harvard Business Review, Forbes, Wired and CNN Money. Tracy co-hosts the podcasts: Product Launch Hazzards, Feed Your Brand and WTFFF?! 3D Printing: the 3D Start Point for disruptive technology.
