Strategies to Prepare for Q4
by Irina Balyurko, on October 18, 2016
The majority of product-based businesses make the largest part of their annual revenue in the last few weeks of the year during the holiday season. Selling on the Amazon platform is no exception: Amazon.com, Inc. ("Amazon") reported that revenue in Q4 2015 was around $35.75 billion. Third-party sellers accounted for 47 percent of Amazon's total units sold during Q4. According to Consumer Intelligence Research Partners (CIRP), half of the estimated 14 million new Prime members in 2015 joined in the last three months of the year.
There is no reason not to anticipate record growth and revenues from Amazon's holiday shopping in 2016 Q4. It is critical to be well prepared, and in this article we will go through a number of points any third-party seller on the Amazon marketplace needs to review in order to capture Q4 sales.
Having a well-optimized listing is one of the first musts for an Amazon seller to ensure ranking and visibility in Amazon search results. Listings with rich product descriptions, bullet points, inclusion of customer search terms and Amazon-compliant images will help sellers take advantage of the higher sales velocity on the platform. Additionally, making sure that your listing complies with Amazon's guidelines will help prevent unpleasant surprises, like having your listing suppressed in the middle of a busy holiday season.
- Review any quality alerts and suppressed or failed-to-load (if using file uploads) listings under Manage Inventory in your Seller Central account. A lot of times sellers do not realize they have a number of listings that are not visible to buyers due to listing quality issues.
- Review and optimize listings with a holiday perspective in mind: if any of your products can be gifts include that in product description or search terms (e.g. 'gift' or 'present' keywords) in order to highlight gifting or seasonal opportunities.
In inventory management, we want to highlight two critical points: the importance of inventory forecasting to ensure you stay in stock during November-January, and capital management to free up as much cash as possible to invest in appropriate inventory levels for Q4.
- Liquidate slow-moving inventory prior to Q4 to have access to more capital. Keeping slow-moving inventory through Q4 is an opportunity cost, since you could be investing that cash into Q4 inventory with higher returns.
- Review historical numbers to estimate optimal amount of inventory to maintain through January. Research any trends in your category or niche to anticipate demand for any new items.
- Know your dates, specifically Cyber Monday and the last shopping day for Prime orders. Christmas falls on a Sunday in 2016, which means the last day to ship Prime in time for December 25th will be earlier in the week than usual.
- Do not commit the holiday deadly sin of inventory management: running out stock in November-January. If you fulfill via the FBA platform, anticipate slower processing times for FBA shipments and plan accordingly. Confirm any lead times with your main vendors to ensure any potential delays are configured in your inventory planning. RestockPro can help provide restock suggestions based on sales velocity, and you can include your supplier lead times in your restock calculations.
- Watch for any announcements and reminders from Amazon on inventory process if you use the FBA platform as a fulfillment method. For example, box content information in FBA shipments will be required beginning November 1st, 2016. So if you are not currently including it, plan to make this adjustment to ensure your FBA prep and shipment times are not impacted. You can also use RestockPro to specify which SKUs and quantities are packed in your boxes, helping you stay in good standing.
- Make sure you have a solid feedback and product review strategy in place. Since Q4 is the busiest time of the year with the most order volume, capitialize on that by sending out effective, timely solicitation emails to improve or maintain your seller reputation. Consider customizing your emails with holiday templates or messages, and automate your feedback and product review solicitation process so you have more time to focus on customer service and quality assurance.
Demand and supply in Q4 have their own patterns, which means pricing correctly and repricing continuously is important to make sure you are maximizing your margins.
- Review the settings for your automated repricer, especially if you share the Buy Box. Higher demand during Q4 often leads to stockouts and increasing prices, which means there are opportunities to capture multiples of non-Q4 prices.
- If you are a brand owner, review your sales and pricing from 2015 Q4. You may be able to raise the price on certain items. Buyers are often willing to pay higher prices due to the nature of the season. Experiment with how raising price interplays with your supply to see if you can capture higher margins.
- Leverage pricing to support your inventory level. Maximizing gains in Q4 pricing is a great objective, but running out of stock is a worst-case scenario for a retail business in Q4. If your sales in Q4 are increasing faster than your inventory levels can support, consider raising prices to slow demand until you can replenish your inventory.
Leveraging promotion opportunities in Q4 is critical to propel your sales even further during the biggest shopping season. Getting in front of customers through promotions is great ROI, since intent to buy in Q4 is higher than usual.
Here are some of our suggestions to make sure you are leveraging different promotions channels:
- Review and optimize your Sponsored Ad campaigns to ensure that you are including relevant keywords for your items in your manual campaigns, as well as to capture any search terms customers use specifically during holiday season. (Similar to product-listing optimization, gifting or seasonal opportunities are great examples!)
- Consider other Amazon platform promotions, such as Lightning Deals, Deal of the Day, Savings and Sales.
- If your brand has off-Amazon presence in social media, or your own email list, leverage those channels to drive traffic to your Amazon listings.
This is the busiest time of the year for many retailers. You can capitalize on the increased order volume by preparing a feedback and product review strategy. Automating your feedback and review solicitation process to send out effective solicitation emails is a smart way to communicate with your customers during this busy season. FeedbackFive can do the legwork for you and even offers the ability to add holiday cheer to your email content or templates with fun images.
Q4 is an exciting time for any retailer, and being prepared for the holiday season through planning and analysis means healthier margins for your business. We hope these tips can serve as a guide for an optimal Q4 through preparation and management.
Amazon Q4 Holiday Season: Are You Ready?