Managing holiday order fulfillment is a complex task. Knowing when your customers are going to kickstart their shopping can help you prepare for the season. Consider whether you primarily serve the early-bird shoppers that start in October (approximately 30% of shoppers) or you need to be on your toes for the 15% of shoppers that don't start until December. Navigating supply chain deadlines, shipping delays, and competition for suppliers' time is also essential.
Trickier aspects of inventory management, such as predicting trendy items and future demand, can be even more stressful. With all these tasks adding up, the last thing you want to happen is to run out of money. This is where advanced inventory financing can support your proactive fulfillment plans and expenses.
Let's look at some of the fulfillment challenges eCommerce businesses experience throughout the holiday shopping season. Then, learn how to address these challenges by discovering which strategies, planning steps, and financing options can make your season a success.
Potential Inventory Challenges in Holiday Seasons
Let's begin by identifying potential inventory issues that may develop around the holidays. Here are the most common problems.
You can only make a sale if you have enough products to fulfill customer demand. Running out of stock is particularly costly during the holiday season, as lead generation becomes much more expensive. Also, if you inconvenience a customer under a time crunch, they're likely to leave your store with a very negative impression. Some of the biggest stock availability issues to prepare for include:
- Sudden jumps in demand: If one of your products is seeing higher levels of demand, your typical inventory processes won't be able to keep up. Things can be especially hectic if your forecast models are inaccurate or you don't have enough data to forecast seasonal demand. Be sure to review your products and demand trends so you can stay on top of holiday fluctuations.
- Supplier shortages: Manufacturers and third-party suppliers are just as stressed during the holidays as customer-facing retailers. Reach out to your suppliers to ensure they can keep up with your anticipated demand, and research potential backup suppliers to turn to as needed.
- Delayed fulfillment times: If your suppliers won't be able to replenish your stock of in-demand products until after the holiday shopping season, it may be best to mark the product as unavailable to minimize customer frustration.
Today, many online businesses operate across several different channels. You may have an active Walmart store, Amazon store, Shopify website, and sales channels through social media platforms. While creating multiple revenue streams is vital for your business, it can complicate your real-time analytics and inventory management tasks.
Your core ERP software or logistics tools may not update in a timely manner, or the data may get confused if there's no clear infrastructure. Regardless of the underlying cause, it can lead to both your internal tools and customer-facing pages showing inaccurate inventory levels. This can result in poor forecasting, fulfillment delays, and headaches for everyone.
This issue is inventory adjacent, but it needs to stay top-of-mind throughout the holiday shipping season. There are two key types of deadlines every store operator should know:
- The last day by which customer orders will successfully move from your warehouse to the customer's front door: this can vary based on 3PL, warehouse, and carrier.
- The last day by which you can order inventory and have it available for customers: for example, your supplier may need a five-day lead-up to get new stock ready for customer fulfillment. Combining that lead-up time with the carrier deadlines is how to find your internal stocking deadline.
Don't just use these deadlines for internal notes; communicate them to shoppers so they can manage their own shopping deadlines. Even better, turn the information into marketing opportunities. Launch a last-day sale, send prospects helpful reminders, and otherwise use the information to reach out to shoppers.
Financing for Inventory Stockpiling, Shipping Materials, and 3PL Services
One of the biggest issues with managing your inventory is affording everything you need to maintain a smoothly running fulfillment operation. You can't wait for November sales to fuel December efforts. Instead, upfront financing is pivotal for things like:
- Ordering inventory to keep it at the ready in your distribution centers
- Buying packaging materials
- Paying for marketing campaigns
- Paying for marketers to generate email content for post-purchase communications
- Having funds for shipping costs for exchanges or refunds
Many stores that refuse to consider financing options are restricted every holiday season based on their current funds. Not only does this hamstring operations, but it means you won't benefit from the bump in brand awareness that will extend well into the new year.
Resolve this issue by looking into merchant financing and growth capital options. Third-party funding sources can evaluate your store's holiday sales potential and offer you financing to reach your seasonal goals. Whenever possible, opt for providers that let you spend on any operational costs rather than locking you into restricted options or on-platform administrative expenses.
How to Get Your Inventory Right This Holiday Season
2023's shopping season is expected to bring $1.3 trillion in revenue to retailers. That's a 4.5% increase over last year's big sales revenue. With holiday season eCommerce sales expected to reach new highs, you should have already begun planning for the season. However, when you connect this increase in sales with the present supply chain challenges that so many retailers are experiencing, having a firm grip on your holiday inventory will be critical to capitalize on holiday sales this year.
While there are various ways to prepare for holiday inventory, it's important that you have the cash flow available to acquire the stock needed to satisfy demand. Follow these ideas to perfect your inventory game and achieve a much less stressful holiday period.
Keep Track of Your Calendar
The holiday shopping season typically doesn't swing into full force until October. This gives you just a short window of time to complete all of your pre-planning steps, and one of those should be building out a detailed calendar. Plan out tasks, projects, and important dates like:
- December's shipping and ordering deadlines (for both yourself and your customers)
- Dates for beginning and ending marketing campaigns
- Recurring meetings for assessing inventory, pricing strategies, marketing campaigns, and other in-progress efforts
- When key members of your staff may be out of the office for vacation
- Important holidays for your target market so no one feels left out during all the Q4 celebrations
- Any deadlines regarding renewals with suppliers, 3PLs, and third-party services; the holiday shipping season is hectic, but don't let these dates pass you by
The first principle for managing holiday inventory is to avoid letting the season get away from you. Yes, inventory management is a hectic job, but failing to adequately prepare for the holidays because you were too preoccupied with other things leads to missing out on potentially high profits.
Use calendar reminders to plan ahead of time, and keep team members updated regularly. Focus on Thanksgiving through Christmas Day; this will be the most challenging and rewarding time. Use deadlines to ensure order delivery and prevent disappointed consumers.
Secure Your Orders in Advance
Once you've estimated how much stock you'll need, place your orders as soon as possible before the holiday season.
Consumers begin their holiday shopping sooner than ever, starting as early as November, so you must be ready for them when they arrive. Purchasing ahead of time ensures that the merchandise is accessible when you need it. Remember that your competitors will also purchase from the same vendors, and on-trend products, in particular, will be in great demand. So, order ahead of the pack to prevent losing out on hot products.
Leverage Strategies to Improve Forecast Demand
Don't rely on guesswork to determine your inventory levels. It's not helpful to have excess inventory taking up precious warehouse space, but it's important to avoid upsetting consumers by running out of items too soon. Forecasting can help you get a good idea of demand.
Examine your past data if you've been in the company for at least a few years. How were sales last year? Did you run out of stock? When did sales begin to pick up speed? How long did they last? Answers to such questions could assist you in calculating your inventory requirements.
To predict demand, don't only look at your recent months' sales. Demand forecasting can be difficult. Consumer tastes and market trends are constantly evolving; however, certain broad tendencies may be seen. Identifying what will be successful, how much inventory you need, and outlining your sales targets are critical to success over the holiday season.
Talk to Your Supply Chain Partners Early
The suppliers and manufacturers you work with are your supply chain partners. Collaboration equals success, so take the time to create a procedure and order volume that benefits everyone. Engage your suppliers as early as possible to resolve potential supply chain concerns. The earlier you begin, the better you can predict and avoid difficulties. So, don't delay!
Regarding inventory order volume, be explicit and notify suppliers of how much you intend to have. If they identify holiday supply issues, adapt your product variety or diversity appropriately. Maintain constant contact with them to stay informed of any changes.
Because fulfillment can easily be delayed over the holiday season, try establishing a higher threshold for reorder alerts to allow yourself more time to refill. In this manner, you may continue to offer your bestselling goods without seeing a drop in sales.
Strategically Price Your Products
Once you've determined your inventory volume, adjusting your product pricing can help you keep your stock levels under control. Cutting the cost of well-stocked items allows you to sell more of them. Meanwhile, boosting the pricing of unpopular products will result in fewer sales.
Pricing is about finding the perfect balance that will allow you to reach inventory targets while preserving your positive brand image. Consistent pricing is a solid rule of thumb. Making your merchandise too pricey or too inexpensive would only confuse your buyers.
Pricing for goods is the same throughout the holiday shopping season as during the rest of the year. You should still follow your rivals' lead and undercut their pricing to remain competitive. Increase your rates to market yourself as a more luxurious brand. Conduct a cost-benefit analysis to determine the most helpful options for your organization. While lower pricing might help you move more goods, higher prices provide a more considerable profit margin and keep you from running out of stock too fast.
Utilize Inventory Management Software
Use your inventory management software to monitor supply levels over the holiday season. Inventory management and control software can assist you in tracking comprehensive statistics and running a more structured business. You can manage your company operations effortlessly and avoid stockouts or over-ordering problems. Some of the key functions that well-integrated inventory management software can assist with include:
- Tracking demand across multiple sales channels
- Monitoring inventory levels across different distribution systems in near real time
- Automatically reporting or alerting low levels of inventory
- Using AI-powered data models to forecast product demand and recommend inventory orders
- Determining correlations between marketing efforts and orders
Even on the busiest days of the holiday season, such as Black Friday, Cyber Monday, or Christmas Day, your inventory management software can check your counts. Tracking your inventory flow might help optimize your stock for the following holiday season!
Conduct Inventory Audits
Prevent inventory disasters by auditing regularly. An inventory audit compares your financial records to your inventory counts to ensure they match. If you fail to audit, you may accidentally sell items you no longer have. Keep track of your stock levels by doing product counts or cutoff analysis (pausing operations temporarily to ensure accurate counts). Keep track of what's current and what's not when you're evaluating your stock. What has been on the shelf the longest? What sells the quickest? What needs to be taken away to create room for new products?
Inventory Financing Can Help with the Holiday Season
With inventory financing, you acquire capital to create a needed inventory and then pay the funds back as the product sells, allowing you to load your shelves without emptying your wallet before the holiday season.
Inventory financing can be beneficial in a variety of ways, including:
Keeping Up With Seasonal Inventory Needs
Consider these approaches that you can only access with flexible inventory financing:
- Preordering Inventory: If you anticipate large sales based on historical trends or market insights, use financing to preorder inventory. This allows you to offer faster fulfillment and confidently serve larger markets.
- Continue to restock inventory based on forecasts: When you see rising demand for a seasonal product, delays are risky. If you can't fulfill future demand, those customers will turn elsewhere. Advanced financing lets you strategically replenish or grow your inventory.
- Sign upfront contracts with shippers and carriers: Your third-party services may offer big discounts for bulk contracts. Upfront financing lets you tap into those deals for a better ROI instead of having to pay as you go
- Experimental product offerings: Expanding your products to include variations, auxiliary purchases, and items that serve the same markets is how you can increase cart value and grow your business. Use financing to fund your experiments and catalog expansion so you don't have to wait or run too-small trials.
No Cost-Cutting Measures
Inventory financing eliminates the need to decrease expenditures in other operating areas to place your purchase. An inventory finance platform loan will give you the necessary upfront funding to acquire things while running your business as usual.
Stay Ready This Holiday Season With Inventory Financing and Planning
The holiday shopping season might not have arrived yet, but the holiday shipping season is already here. Set your online business up for success this year with flexible inventory financing options from Onramp. With our growth capital, you can purchase inventory, pay for shipping and distribution services, and even launch marketing strategies.
We provide the funds so you can spend them on what you think matters most. Then you can repay later at a pace that matches your sales volume. Schedule a call today to learn more about how Onramp funds can fuel your holiday inventories and prevent shortfalls.