The ultimate guide to seasonal inventory management

By 8fig team | October 29, 2023
The ultimate guide to seasonal inventory management

Many eCommerce stores focus on selling seasonal items, like beach towels or wool hats. These businesses have to manage their inventory carefully, as it will be prone to strong fluctuations in demand. Seasonal inventory management is an art form that can help companies leverage their peak selling periods and dramatically increase their sales. This entails building a deep understanding of your business operations, as well as the patterns in demand for your product. The better you plan your seasonal inventory, the superior your profit margins can become. In this article, we discuss the best ways to optimize your seasonal selling process.

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What Is Seasonal Inventory?

Seasonal inventory refers to products that have a high sales volume during certain sections of the year. Raincoats are likely to see increased sales in winter, and reduced interest during summer, while summer dressed will experience the opposite effect. The weather isn’t the only thing that you have to worry about; some sporting events increase TV sales and certain holidays increase chocolate and flower purchases. It takes meticulous planning and forecasting to prepare for these changes throughout the year, especially since some of them are less obvious than others. Let’s dive into some examples of seasonal inventory.

Examples Of Seasonal Inventory

When discussing seasonal inventory management it is important to understand the way that different periods throughout the year affect online sales. Even if the products you plan on selling may have a clear peak season, sales patterns can be unpredictable. Selling a product involves a lot of moving parts, including the manufacturer, warehouse, and customer. During peak seasons, it can be difficult to keep up with high-volume orders, which is why managing your seasonal inventory well in advance is so important.

1. Holidays

Valentine’s Day, Easter, Halloween, and Christmas are all holidays that prompt the sales of a lot of products. This is your chance to make up a big portion of your yearly revenue. Valentine’s Day causes sales of candy and stuffed animals to rise, while Christmas brings sharp peaks for holiday decorations, lights, and food, not to mention all kinds of gifts. In order to maximize your selling performance during these periods, you should work on promoting your items well in advance.

2. Seasons

A vast majority of eCommerce products are affected by seasonal trends. Aside from obvious choices like bathing suits or warm clothing, many lesser-known seasonal trends exist. For example, skin moisturizers see bigger sales in winter, as do vitamin supplements and baking equipment. It is for this reason that you want to do significant market research when planning your seasonal inventory. Try your best to be aware of when demand for your products is expected to surge and fall.

3. National and international events

Major occasions such as the Super Bowl drive strong demand for a wide array of products. Fans seek out all forms of team-related merchandise, from shirts and sweaters to mugs and flags. With many people organizing viewings with their friends, demand for decorations, snacks, pint glasses, barbeques, snack bowls, and more, surges as well. When planning your next year of selling, make sure that you consider all the national holidays that might be related to your product.

Many products can be given a relevant theme to increase their seasonal desirability. With the right marketing, you can make your product feel related to the holiday, whether it be Christmas or St. Patrick’s Day, for example.

A pro tip for eCommerce season inventory management.

This is a great opportunity for market research. Make sure you see what keywords people are searching for to understand how your ad campaigns might target them better. The data from this research can help you plan your seasonal inventory better and develop a deeper understanding of the market.

Seasonal Inventory Challenges

Seasonal inventory management can be difficult because it relies on precise long-term planning. This is complicated by short-term challenges that may emerge without warning. Running an eCommerce supply chain involves many moving parts, such as suppliers, warehouses, and shipping partners. Hiccups in your operations can disrupt and delay your products’ shipping times, leading to lower sales and lost revenue. However, you can prepare for these scenarios to lower the chances of them coming to fruition. Here are some basic seasonal inventory challenges you might experience.

1. Inflexible warehouse contracts

Having a warehousing partner that stores and processes all of your inventory during periods of high turnover is great. But when sales start to slow, certain issues can emerge. Some warehouses insist on contracts with rigid conditions for storage space. If your storage needs change, as is natural in the dynamic world of eCommerce, you might face large costs with reduced revenue coming it. To avoid this scenario, make sure that your contract conditions are adapted and flexible to your selling needs.

2. Stockouts

One of the biggest headaches for eCommerce sellers is stocking out. Sales come to a complete halt and you risk upsetting prospective customers who can’t make purchases. What makes this problem sting even more is that it usually occurs during the peak selling season, when you should be making the biggest share of your profits. Stocking out in this period means huge lost sales potential. Good market research to best predict demand and preparing extra stock for unforeseen surges in demand are great ways to avoid this scenario.

3. Dead stock

You can predict and plan, but sometimes, you’re going to end up with dead stock. This is the inventory you can’t sell. You’re left with it after the peak season has come and gone, which can mean major losses. Halloween or St. Patrick’s Day-specific merchandise, for example, will be tough to sell during the remaining year. Understanding your market niece and studying keyword searches can help you gain a better understanding of how much inventory you need. More data that helps you make accurate predictions is a surefire way to avoid getting stuck with dead stock.

Seasonal Inventory Management Methods

When choosing an inventory management method, you have to consider your business’s unique needs. The size of your company and the nature of your business play a major role in your decision. We recommend using an inventory management service, like QuickBooks. These will help you oversee your operations and plan the flow of goods from your supplier to your customer. However, you should also adopt some inventory planning methods to optimize this process.

1. First in, first out (FIFO)

This method is a favorite among retailers and is especially useful for those who sell goods that are perishable or highly susceptible to going out of fashion. The first products that arrive are the first ones out the door and in the customer’s hands. This means working closely with your storage partner to ensure that new arrivals go to the back of the queue and aren’t sent out first. Following this process will ensure that you don’t get stuck with inventory that is outdated or no longer sellable.

2. Just in time (JIT)

This method is useful for those who only want to keep enough stock to fill orders—the volume of inventory equaling the amount of orders filled. Some seasonal businesses prefer this strategy. Following it guarantees that you won’t overstock your warehouses, cutting storage costs. This also reduces the list of items to keep track of, simplifying the oversight of your operations. Using the Just In Time model is a great way to be highly adaptable since you don’t store huge amounts of stock, which can facilitate meeting demand for emerging trends. However, you won’t be able to meet long-term rises in demand, since your stock is always lean.

3. ABC analysis

When you have a wide assortment of goods, each with a different value and quantity, you’re going to want to use different restocking methods. How do you do this? The ABC analysis strategy categorizes your inventory, so you can better determine each category. For example, Category 1 can list high-priced items with lower stock quantities; while Category 2 lists products that are equal in both aspects. Category 3 contains a list of low-priced items with high stock quantities. When you break down your vast inventory into sections, it’s easier to manage. It may seem like a lot of work at first, but it will give you a better ability to oversee and plan the flow of your inventory.

Tips To Improve Your Seasonal Inventory Management

Every business is different, but there are basic steps that every inventory manager should consider to meet demand efficiently. You don’t want to overstock and you definitely don’t want to lose money because of a poorly-time stockout. Here are some effective ways to prevent these situations.

1. Forecast with historical data

Your sales data is a great tool to use. It can allow you to gather a general idea of what sales patterns might develop during the upcoming season. You may not have the same exact products to sell this time around, but you can consider the types of goods that your customer likes. More than anything, you should look at when demand spiked and fell. Such shopping patterns can tell you a lot about what to expect. Product attributes like price or color and how they fared during the peak season is also important. This information can help you decide which items to invest in.

2. Bundle products

Bundles are a very straightforward yet effective way to increase your profit margins, especially during a seasonal selling peak. This can come in the form of a pickleball net and paddles, which would sell great in summer, or by bundling a bluetooth speaker with a tragel bag for said speaker. You can promote bundles by highlighting that they will help customers reach the minimum expense required to get free shipping. Bundling items is also a great way for customers to discover and learn to appreciate other products in your catalogue they might have not considered otherwise.

3. Discount slow-moving inventory

Slow-moving inventory only eats into the business’s resources, especially storage costs. Goods going unsold also reduce cash flow, reducing your ability to invest elsewhere. Quickly identifying slow-selling goods and offering discounts is a great way to cut your losses towards the end of a season. This is especially important with seasonal items since demand for them can fall dramatically once the season is over. Discounts, however, should be used strategically and sparingly, since they can seriously eat into your profit margins.

4. Expand internationally

If you see that your seasonal items are selling well in your home country, you might want to consider expanding abroad. This can increase your customer base and potential sales, since different regions experience different seasons. That means you can grow your peak sales window to the whole year.

Expanding to Mexico, for example, would allow you to sell summer-related items like swimsuits or outdoor sports gear year-round, since much of the country is warm throughout the year. With different holidays and customs, selling abroad can ensure you sell more consistently. This is a big investment but has the potential to pay off handsomely in the long term.

5. Pay attention to your metrics

Data is your friend when managing your seasonal inventory. Consider your turnover rates—how fast you restock products compared to how quickly they’re sold. Measure the number of days it takes to sell your inventory. Assess patterns in seller behavior. All these details can provide insight for the next year. Every season should offer lessons that you can implement next time. The more data you follow and understand, the more you can learn from past mistakes to make better predictions and decisions.

In Conclusion

Seasonal inventory management is all about planning ahead. Understanding past sales patterns and consumer behavior will help you form predictions in the future. Being able to pinpoint how much inventory you need and for how long can help you multiply your sales and grow as a business. Even if you do make mistakes, make sure to learn from them, for example by gaining a better understanding of how demand for certain products rises and falls. There are also many ways to sell products that are mainly seasonal throughout the year, whether that be selling abroad, or marketing them for other occasions. Perhaps you want to hire a service to help you with this process, but proper inventory management is a must for any seasonal seller.

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