In this post, we’re going to cover how to prepare your brand to maximize the Amazon holiday season and what you can do right now to be ready.
Preparing for the 2022 Holiday Season
It’s never too early to start thinking about the holiday, especially when you’re selling on Amazon. This applies to your brand, even if you’re not a traditionally ‘giftable’ item. Customer traffic on Amazon increases substantially during the holiday season because there are more people looking for gifts – for others, but that also quickly turns into looking for something for themselves. As a customer browses, there’s a chance they may also find your brand. So regardless of the type of product you sell, you’ve got to keep this in mind and treat the holiday season as a crucial time for driving sales.
You always want to reflect on your brand’s past performance. The last couple of years with the pandemic have been crazy. It’s affected eCommerce in a lot of different ways – namely, a huge increase in sales. However, there have also been increases in issues that come with increased sales, including logistics, stocking, inventory, FBA, and more.
As you look at some of those years past, take a few moments to reflect and jot down some notes of the big things that happened last year. Ask yourself questions like:
What were the issues you ran into?
What happened with inventory? Did we have enough? Where was it? Was that FBA? Was it somewhere else? Was it stuck in between?
What did we do with our pricing? Did we have everyday pricing and keep it the same all along? Or did we adjust pricing as the holiday selling season went along? If we did change pricing, what happened?
It doesn’t have to be exhaustive, but you want to start getting in the mindset of what you need to prepare for in the coming year.
You also want to reflect on your advertising and consider your metrics, including ACoS, TACoS, and spend. This will help paint a picture of what happened in previous years, both during holiday and beyond. Did some of your growth last year contribute to higher sales in January, February, and March? Were there other learnings?
This is a lot to take in, and we’re going to delve down into these topics a little further to help you maximize this upcoming holiday season.
How to Prepare for the Amazon Holiday Season
As you have your list of learnings, we’ll help you frame your previous experience and use it as a foundation to prepare for your upcoming Amazon holiday season.
Prepping FBA Inventory for the Holidays
Inventory is always one of the biggest constraints for brands on Amazon. That’s been turned up to 11 in the last couple of years with the pandemic, especially with the impact on supply chains. Many brands have faced difficulties getting raw materials, delays, expanding lead times, manufacturing issues, and more. With that in mind, let’s discuss how we recommend brands approach inventory planning for the holidays.
1. Consider your Inventory
The first question you need to ask yourself is if you have enough inventory. You may have already planned and produced all your items for the holiday selling season, and, if so, you’re ahead of the curve. Now, you can start thinking about when you need to put production schedules in place to have inventory ready to ship while still having enough lead time to get your products to Amazon.
Keep in mind that it takes longer to get to Amazon during the holiday selling season. It depends on carriers, weather conditions, and more, so make sure you’re allowing extra time to get products from your source of inventory into Amazon’s warehouse if you’re utilizing FBA. And, if you are using FBA, factor in the other places you’re using the same stock as it will affect your overall metrics and sell-through (Remote Fulfillment With FBA or fulfilling site orders via FBA).
2. Remember Restock Limits
One of the biggest things that has recently affected sellers is Amazon’s restock limits. In the past, the amount of inventory you could send in was determined on a product level or an ASIN level. This meant your sell-through of a particular SKU informed how much inventory you could send into FBA for replenishment. That’s not the case anymore.
Amazon shifted to an account-level restock limit during the pandemic. Now, an entire account is restricted from sending in new inventory based on how much of your overall inventory is selling. This doesn’t make a huge difference if your brand has a few SKUs; however, it deeply affects sellers who have a wide SKU catalog. It impacts how much and when they can restock their products.
3. Rely on your Supply Chain
If you run out of stock at FBA, you can use your stock at your 3PL or at your warehouse as a backup to fulfill orders fulfilled by merchants or FBM. When you send orders via FBM, you need to abide by Amazon’s rules and regulations that come along with shipping orders in a timely manner. If you don’t have stock at FBA, you could opt to fulfill orders yourself or via another hub in your supply chain.
Pricing Strategies on Amazon for the Holiday Season
Let’s talk about pricing strategy. There are a few things you want to keep in mind when it comes to pricing, namely inflation and demand pricing.
One of the biggest words of 2022 is inflation. Brands are already seeing that in their raw materials and the increased cost to produce their products. Some of this must be passed to customers because, as a business, you still have to make money. To do this, you must understand your margins.
Amazon Seller Central has tools to help you understand how much Amazon is getting, especially during the holiday season. Amazon increases its storage fee during this time, so you don’t want to send a ton of stock in if you’re not going to be selling it during the holiday season because you’ll be paying a holiday tax for inventory that won’t benefit from it.
Demand pricing is also something you want to consider during the holiday season. As your items are selling, you may want to increase the price as you get closer to the holiday shipping deadline for products to arrive before Christmas. Customers pay less attention to the price during those last couple weeks of the holiday season because they just want to get the item.
We’ve all panic bought on Christmas Eve, and Amazon is no different so you may want to consider changing your price during this time to get a higher profit, which can offset some of the increases that you’re facing in other areas. Remember that first word though: recession. If we’re going to be in a recession, you may need to keep costs stable to drive sales. Consider your pricing strategy and come up with a plan for it in the case we are facing a recession. This will be especially important if you start to notice sales are soft this year coming into October and November.
Advertising Strategy for the ‘22 Holiday Season
Let’s get back to advertising. It’s easy to spend money on advertising, but it’s also equally as easy to waste money on it if you’re not advertising efficiently and effectively. You always want to make sure your campaigns are optimized, but this is especially important during the holiday season. Do not start new campaigns during this timeframe because your results will be skewed.
You also want to consider your advertising spend in relation to your inventory. If you’ve only got two weeks of inventory left, and there’s three weeks until the shipping cutoff, you may want to turn off your advertising or limit it. You’re already anticipating that you’ll run out of stock, so there’s no point in paying for those sales if you’re going to get the sales organically anyway.
Watch the trends and your inventory closely, because it can change very quickly. You may need to turn advertising back on for a few days to prevent your inventory from carrying into January and paying the holiday tax for no reason. Once you sell through, turn it off again. Not only will it help you maximize your overall revenue and margins, you also won’t be paying for unnecessary advertising which will drive additional optimization.
How to Use the Holiday Season as a Springboard for Q1
The holiday is just the beginning, and you can capitalize on your momentum and use your invested sales as a springboard for the year to come. As you look at your holiday metrics, consider your successes and your learnings. If you had a particularly successful ad campaign, keep it running or turn it back on. Replenish your stock in FBA for best-sellers and ship new products in for post-holiday.
The holiday season can be a blur, so we encourage you to keep a log of what happened from before Thanksgiving through the holiday season. Catalog daily activity and trends so you can refer back to it. You can take your winnings, learnings, and best practices and develop an even better plan for next year.
The Holiday Season After 2020 & Covid
The past few years have been crazy with the pandemic, and there’s a lot of unknown for this year as well. New factors are coming into play, especially with inflation, such that no one really knows what’s going to happen. However, there are a couple of things to watch out for to help you plan.
Amazon has been constrained by physical space in the past, but more recently, they’ve been constrained by labor. Workers are needed to get products off the trucks, checked into Amazon fulfillment centers, and moved around Amazon fulfillment centers, and the labor market – especially around holiday – is increasingly competitive.
While this is something you don’t have direct control over, it is something to be mindful of as you look at how fast you can move your inventory. Again, you want to consider Amazon’s restock limits and monitor them so you can send more products as you sell through. If you are limited in any way, make strategic decisions on SKUs to send in and what to wait on until the next replenishment. You don’t want to pay increased fees on inventory that doesn’t move during the holiday season.
As you look to get your products into Amazon, consider what’s happening in the supply chain industry, specifically logistics. Are there any other constraints to be watching for? Pay close attention to the economy. Some economists are predicting we may be heading towards another recession at the end of 2022, and that may be affecting the holiday selling season. If people are losing their jobs or acting more timid about the economy, they may not be willing to spend as much during the holiday selling season.
Unfortunately, for 2022, you really have to be ready for anything! We’ve seen that in the last couple of years, and you’ll have to continue with that agility and flexibility in the year to come. Brands need to be prepared for anything.
What Successful Plan & Prep for the Holidays Looks Like
With that in mind, how do you implement while accounting for the unknown this holiday successfully?
1. Plan, but Don’t Be Afraid to Deviate
A good plan gives you an idea of what’s going to happen, and you can set it on a daily, weekly, or monthly cadence. You want to see what it’s going to look like in terms of production, getting inventory into Amazon, pricing, advertising, changes to your listing, and more. It’s better to have a rough sketch than head into the holiday blindly.
That being said, just because you have a plan, don’t be afraid to deviate from it. As valuable information comes in, adjust your plan or change it completely. You’ll also want to do the same when something happens externally that you can’t control. Don’t get locked in just because it was the plan. Plans change all the time.
2. Review your Metrics
It’s not enough to have metrics. You need to pay attention to them and use them to inform your actions. Be aware of your revenue, units ordered, inventory levels, restock limits, and advertising metrics. These can change on a day by day or week to week basis, so make sure you adjust accordingly, especially during holidays. You want to be aware of how many days of inventory you have, when you’re going to run out, and are there any adjustments you need to make if you stop selling a particular SKU.
Planning and metrics should be a part of your regular company communication, and not just during holiday. You want to talk about Amazon holiday updates throughout the year so that the entire team can be on board. Prior to the holiday, everyone should understand the initial plan and have a process to communicate updates.
Being prepared and communicative is going to set you apart from the competition and help you outsell and outperform during this time.