The seasonality checklist: Plan for and manage seasonal fluctuations
Selling products, keeping right amount of inventory in stock sounds easy although it does take time. Time which you should spend wisely on planning ahead for the seasons.
The best way to manage the fluctuations and maintain positive cash flow throughout the year is to develop a detailed sales and inventory plan from historic sales before the season begins to help benchmark when you need to take product from your suppliers, how long it will sit on your shelf, which weeks of the key weeks for selling that product.
- Halloween, this is a very short selling spike in the annual calendar. It comes around every year without fail in most Western countries.
- Order your stock early, start marketing it from analysing data to ascertain when the trend for online searches starts.
- Plan to sell out unless you want to keep the stock until next year. What is the latest cut-off time you can sell it to have it delivered to your customer.
Planning takes time you may think you do not have, but invariably if you take the time to plan carefully your sales will be greater and far more profitable than those that don’t.
Before you begin the planning process look at what you sold in the past. If you are a new business and this is your first selling season, talk to trusted supplier representatives, research the Internet trends by using Google analytical tools, look at competitors websites and study their marketing campaigns.
During this planning process you not only need to look at the historical events, you may need to consider the weather conditions for previous years sales, were the other national or world events that had an impact positively or otherwise, exclude any special orders or special promotional deals you may have had which were one-off opportunities.
You also need to look at the sales cycle: use the assumption you purchase 100 units to sell online and there is a four week period in which online activity trends at a peak (i.e. Halloween). If week one is your launch and you sell 10 units; week two is the peak purchasing period you sell 60 units; week three is the last minute purchases and you sell 20 units with 5 units being purchased after the event for no particular reason – you will have sold a total of 95 units.
Therefore you need to allow for the cost of the remaining 5 units. Also you will need to work on the basis that you are going to have some refunds due to non- delivery, breakage, returns under the rules and regulations adopted by the selling platforms. Therefore this may mean you will only sell 90 units profitably.
MANAGING THE SEASONAL PLAN
The question you need to ask initially is very basic; what is the most likely level of sales from the stock I am going to buy (excluding any special orders) by month, week or by day. It is very important to understand the question that you have just ask yourself and realise that you are asking what is the most likely level of sales, not how many could I sell. As you could easily get into trouble if you plan the latter.
Consider the following in your seasonal sales plan:
l Review the prior year/s sales history. Make allowances and adjustments for unusual events such as weather, periods of out of stock issues, one off promotional sales, special orders etc.
l Factoring increases or decreases based on current sales trends and the potential of sales levels for the up and coming season with a review of your competitors marketing strategies.
l If you are a niche product seller checked to see if there is any new competition in the marketplace that will either effect your sales or will be likely to market heavily against your own marketing strategy.
l If one of the major multiples have purchased the same niche product as you try to ascertain how and where they have purchased and look at their historical sales strategy. It may be that you need to take a very uncomfortable decision and no longer sell that particular product due to the level of competitors that have come into the marketplace and squeezing the margin for profitability.
Hours and staffing levels. You need to determine whether you are going to have to increase your cost base in either hours worked, temporary staff, longer hours, overnight working higher volumes of postage and packaging materials on hand to deal with the increase in sales.l Marketing plan. In addition to having an online presence, press advertising, direct mail, media advertising how are you going to reach your potential customers? What makes you unique and different? What do you offer that your competitors do not? All these questions need to be considered when putting your marketing plan together.
PLAN YOUR STOCK LEVELS.
Once you have put your initial plans in place the next step is to build your inventory plan, the question is how much stock you will need on your shelf at any particular time, what is the continuity of supply from your supply chain, what is the opportunity to purchase additional stock levels to deal with one-off special orders, how much notice does your supplier require to ensure that they have adequate supplies in the warehouse to meet your requirements.
PLAN YOUR DISCOUNTS AHEAD OF TIME:
- What is your recommended retail selling price (RRP)?
- What is your launch selling price?
- What is your promotional discount selling price?
- What is your last minute reduced selling price (if required)?
- What is your clearance selling price?
Planning your discounts goes hand-in- hand with planning your sales and stock inventory and will also decide where your profit margin is going to reside in the sales cycle. Therefore you need to keep in mind that you need to protect your gross margins in your cash flow when you are doing your clearance selling prices.
You may also want to plan an early clearance if your competitors use heavy discount tactics or if weather or other unforeseen events this for the normal selling opportunity a decision will be required during the sales period that could have a major impact on your business.
Managing the sales means that you need to take regular readings of the sales and sales trends during the sales period adjusting your sales plan accordingly along with your inventory and advising suppliers accordingly on increases or decreases of your requirements. If the sales are slow or you fall behind plan make the decision and start the process of discounts early and low so that you do not end up making massive discounts all at once.
Look behind the sales to get an understanding of why you may have to make markdowns, you need to be switched on and smart and asking the questions like: why is it not selling? Do the customers not like it? Is the product not visible? Is the price correct in the competitive marketplace? Is the economic climate against you? Has the lifespan of the product expired?
Always remember the customer is not necessarily looking for the cheapest price, they’re looking for good value from a reputable supplier that has a good history of looking after their customers to you need to balance your sales position between perceived customer value and price.