Originally published on October 28, 2020, updated August 10, 2021
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This year, CNY presents even more challenges for Amazon sellers due to COVID-19. Francois Jaffres of Noviland explains how CNY directly impacts sellers and how to properly plan, so you can save weeks on sourcing time and avoid extra shipping costs.
Watch the webinar and you'll learn:
You can watch the webinar above or check out the show notes below for the recap and a full transcript.
Did you know that Chinese New Year (CNY) can impact five months of your Amazon supply chain? On top of that, things are even more complicated this year due to COVID-19.
It’s essential that Amazon sellers find ways to overcome any challenges that arise. In this webinar, Francois Jaffres of Noviland explores CNY’s impact on the marketplace and how sellers can plan ahead to save weeks on sourcing time and avoid extra shipping costs.
In 2021, Chinese New Year begins on Friday, February 12, and runs through February 19. During this time, “The economy in China shuts down when it comes to manufacturing. Everyone gets to be with their families and really enjoy themselves,” Francois explained. As a result, the holiday has a major impact on the supply chain across the country and worldwide.
In fact, the ripples start being felt as early as the beginning of October — five months earlier. With heavy orders coming in for Black Friday, Cyber Monday, Thanksgiving, and Christmas, factories work overtime to meet the demand. They’re also planning, of course, for Chinese New Year which happens just a few weeks later.
On top of increased demand, factories may be dealing with staffing issues. As Francois explains, “[Chinese New Year] is really a time for everyone to reflect…[some] may actually start to reconsider, ‘Is this where I want to stay? Do I want to continue working at this factory, or are there new opportunities more inland or closer to home?’" This only gets more complicated during a pandemic when factories may already be short-staffed or seeing problems in the supply chain.
Chinese New Year creates a massive bottleneck at every stage within the supply chain. Factories typically work at 120 to 150% capacity and produce more products in comparison to their output at the beginning of the year, and everyone’s in a rush to get their orders.
These are the areas to watch for common problems:
One of the most important ways to avoid these common pitfalls is through proper communication. Francois suggests looking at your interactions with suppliers as building a foundation rather than just another transaction. It’s hard, but it’s necessary to break out of the consumerism mindset and work on strengthening your relationship with suppliers.
In April and May, you may have more of a luxury to be underprepared with submitting a request for a quote, or an RFQ. Suppliers can help fill in the blanks or make suggestions about designs and materials, for example. In the lead-up to the end-of-year holidays and Chinese New Year, you’ll need to do better.
Right now is the time to be as prepared as possible. Work on formulating a great RFQ so that your needs and expectations are clear. In his work with Noviland, Francois has seen how following an RFQ guideline can improve operations. Coming up with one of your own will take time and effort, but it will be worth it in the end.
According to Francois, there are four key components involved:
Developing your RFQ guidelines isn’t “something that you’ll be able to formulate within just two or three hours,” says Francois. “A lot of the seven- and eight-figure sellers that we work with tend to spend at least 10-15 hours putting all this information together.”
The Inventory Performance Index (IPI) measures inventory management over time based on how well your Amazon business performs in key areas. How quickly do you fix listing problems? Are you keeping products in stock? How well are you balancing inventory levels and sales? Amazon watches these things very closely.
When your IPI drops under Amazon's target threshold, you could face limits on your FBA storage. One way to maintain your score in the busy lead-up to the holiday season is to enlist the help of a third-party logistics (3PL) company.
As Francois explained, “You can store a lot higher of a quantity in 3PL for a lot cheaper than you could at an Amazon FBA logistics center, particularly in Q4...you want to try to book at least a few weeks in advance, and you want to try to look at slightly higher quantities.”
This can help you also expand beyond Amazon, giving you the opportunity to try selling on Walmart, Etsy, eBay, and other marketplaces. Using a 3PL to store and fulfill inventory means that you can do things like ship part of a truck load to FBA and keep the rest in stock at the 3PL to sell via FBM and other channels.
Be sure to set aside some time to hear all of Francois Jaffres’ tips for surviving — and making the most! — of the upcoming holiday season.
Originally published on October 28, 2020, updated August 10, 2021
This post is accurate as of the date of publication. Some features and information may have changed due to product updates or Amazon policy changes.
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