Consumer buying for Christmas starts as early as September, but the real peak starts from mid-November. Christmas is typically a peak selling season for retailers in many nations around the world. Sales increase dramatically as people purchase gifts, decorations, and supplies to celebrate. In 2014, holiday sales as a percentage of industry sales in the United States amounted to about 19.2%. For some businesses, holiday sales can be as much as a third of their annual turnover.
Retailers are starting to purchase stock now for Christmas to ensure that it arrives on time. Getting the stock can become difficult the closer you get to Christmas, so you need to know what you will need now.
Preparation should begin early if you want to get the best sales results for your business at Christmas. Make sure you do some business planning to work out how much stock you need to order. Some questions you may wish to ask:
- What pre-Christmas promotions and sales will you offer?
- Will you offer special Christmas-only products?
- What products have been selling well this year in your current product range?
- What are the peak number of orders/sales that you can handle each day?
- If you are an ecommerce business, how long does it take you to pack and ship products for customer orders?
You may wish to place orders at trade shows or with your suppliers over the next few months, so that stock starts coming in from as early as August.
Consider buying enough stock to last into January. By having larger quantities on hand, you will not run out before Christmas. Deliveries closer to Christmas may be slow to come in as product lines become out of stock and suppliers close over the holiday period. If you run out of stock, you will regret not having bought enough and you will be losing sales.
If you do happen to buy product lines that are selling poorly, you have a long run up to Christmas to get rid of them. As Christmas draws nearer customers shopping for presents will increase so even if you have to reduce prices you should be able to sell most of it by Christmas. After Christmas, New Year’s sales will also provide an opportunity to sell overstocked items at bargain prices that will cover your costs with a small profit margin.
Pop up shops can be a good way to sell overstocked items in the run up to Christmas and in the New Year’s sales. Pop ups create a sense of urgency – ‘here today, gone tomorrow’ – which adds appeal during the shopping frenzy that many consumers engage in both before and after Christmas.
Going into January fully stocked will also help ensure January’s takings are higher than if you close the doors on Christmas Eve needing to place orders with your suppliers. A shop functions at its best when fully stocked and takings will usually be higher in years when you are better prepared and better stocked.
Managing Inventory Cost
Buying stock can have a negative cash flow impact on your business, so ask your suppliers about the possibility of bulk order commitment with deliveries later.
Some e-commerce retailers are opting for ‘drop shipping’ in the run-up to the Christmas shopping season – a process where online retailers have an arrangement with bulk wholesale companies that offer to ship products directly to customers. Drop-shipping allows e-commerce retailers to handle product sales without the hassle of managing inventory and shipping.
Advantages include lower inventory costs as your business is not required to hold inventory for sales, and no risk of bulk buying products you can’t sell. The disadvantages during the Christmas holiday period is that the wholesaler may run out of product lines at some point prior to Christmas and you can then no longer sell the product. Also, the prices you pay when using drop-shipping are higher as you are paying a single-item wholesale price for each item purchased. By bulk buying and holding inventory for your business, the unit cost decreases as your purchase volume increases. For more information on drop-shipping, click here.