It. Is. Coming.
That’s right my friends, we’re right around the quarter from THAT time of year. No matter who you are, how you source, or what you sell, Q4 is your time to shine! However, where opportunity lies, so does complication.
This guide is a collection of tips that have served us well over the years, despite how we were sourcing or what we were selling. I don’t want to say doing the things in this guide will make you have a great Q4 in and of itself, that will take a lot of hustle and grit.
Tip #1 – This time of year requires you to spend more time on your business than any other. You have to be focused and keep your eye on the prize.
I realize that tip seems obvious, but too many people approach this like they would any other time in their business. When we were RA-based we worked 70-80 hour weeks in Q4, because Q4 comprised more than 50% of our annual sales. Now that we are wholesale based our preparation happens in the preceding months. With wholesale you are forced to be proactive as things sell out (and you have short windows to restock them). Knowing that, we started trailing up our inventory earlier this month. We went from a 30-day stock period to a 60-day stock period on most items, and higher on ones that we believe will see a true seasonal influx.
What is Q4?
This is a strange answer, because theoretically, you can simply look at the calendar and see that 10/1 starts Q4. However, in online sales speak, that isn’t necessarily the case. Don’t get me wrong, Halloween is amazing, and you can see some really great sales there, but that isn’t what people are talking about when they talk about Q4.
In terms of holiday sales (and what we refer to when we say Q4) we are referring to pre-Christmas sales. In the past, we have seen sales increases start around the second week of November and trail upwards into a swell to about 3-4 days before Christmas. The week or two following Black Friday (and Black Friday itself) are INSANE! We have consistently broken sales records day over day during that period.
That being said, there are steps we should start taking NOW as sellers to prepare for this awesome event. You have to understand that shipping will be SLOW…SLOW…SLOW in that period. Right now we highly suggest front loading your inventory and not banking on Amazon receiving times being normal. During the rush last year, we were seeing 15-20 day receiving times. You don’t want to rely on shipping your products last second to make sure they get there in time. I would expect that Amazon receiving times will be even worse this year, as there are more sellers and they have instituted more aggressive Long Term Storage fees to clear out their warehouses. They know it’s coming.
TIP #2: Frontload your inventory and go into the peak season heavier than you might otherwise to combat longer receiving times. If you are wholesale or PL, start trailing your inventory upwards NOW if you have not already.
That does not, in any way, mean that you should not be shipping products in Q4. You absolutely should be, and there will be more product gaps because of this, and product gaps are where you can make huge money. If you are shipping LTL, you should trail the majority into UPS during the peak time, as LTL receiving times are MUCH slower.
TIP #3: Utilize more Parcel shipping during the peak times, as LTL receiving times are MUCH slower.
What Are All These Crazy Sales Spikes I Hear About?
I don’t want to play Debbie Downer, but a lot about what we hear about Q4 is overstated, and in many cases patently untrue. The absolutely true part about Q4 is almost all products will sell more than usual will. However, in many cases it is simply a byproduct of having more traffic.
We sell heavy in the Health & Household area, and I promise the majority of our products ARE NOT destination or holiday products. So, we generally don’t see the same explosion as someone who is heavily based in branded toys. However, because there are SO MANY people online, our sales do increase (even quite dramatically), because we sell high demand products that people want.
However, if you are banking on your products selling BETTER in Q4, realize your products still have to have demand. Products that are dead ducks year-round generally don’t become hero products in Q4. Make sure you are focusing your energy on great products to start, and you will see an increase in sales.
TIP #4: Products without demand will not see a sizeable increase in Q4. Focus your efforts on products that have driven demand behind them!
That being said, some products can go ABSOLUTELY crazy! Crazy increases in price, crazy amounts of units sold. Our philosophy has and always will be “react to the market.” Don’t try to predict it. Many people get hurt because they “gamble” on finding that hot Q4 item. We believe this is both dangerous AND careless. Instead our strategy was to see what items get hot, then commit the time to hunt them down. I personally think that is even MORE important this year than it was in previous years, with the brand restrictions. You don’t want to gamble on a product ONLY to find out that it is restricted later.
Last year some of you had a great time with Hatchimals. Others of you…not so much, right?
TIP #5: Take the stance of ‘react and hustle’, rather than be ‘proactive and predict.’
I do realize predicting the winner could be a HUGE payday. That’s not lost on me. However, the odds aren’t in your favor, and the restrictions stack the deck against you. Going the route we suggest takes more effort, but in Q4 that effort pays off in spades!
How Should I Price in Q4?
This is an interesting topic as there are many schools of thought here, and many outliers that should guide your decision. My goal is to address some of the logical standpoints you can take, to better take advantage of this additional traffic.
The deeper you are on product, and thus more imperative you move a lot of units, the more you SHOULD be competitive in your pricing. Here are a few instances when I would be competitive:
– If you have lots of units, and were expecting to sell through during Q4, I would personally be more competitive on the front end, then try to maximize the last half. This allows you to reduce risk, and keep good cash flow to go after opportunities that might arise.
– If the products are evergreen, and you have consistent supply through Q4, even with projected sales increases. This is a great period for liquidity-based models as it allows you to run through even MORE units.
– If the products are naturally slow sellers, I would be more aggressive. As I mentioned, Q4 doesn’t change the dynamic of “you can’t put lipstick on a pig.” Bad products are bad, and you should not expect Q4 to be a bailout plan for all of your bad purchases. The additional traffic may help you move through some bad units, but only if you are priced competitively. It will not turn zeros to heroes.
TIP #6: Price competitively when there is risk, or you can find and replenish supply.
There are several instances where you should look to get higher margins. The primary concern here is that you make “holding inventory” something of actual value. What I mean by that is, if a product is selling currently for $25, and you are holding to get $27, is it really worth it? Similarly, the market can fluctuate down, which would be equally bad. In this regard, I would be competitive. However, if that product was $25, and we are holding for $35 with realistic expectations? That is a place where it can be worth it. Here are some of the circumstances that we might consider holding for more value:
-The product is limited, and is selling well. Limited supply in Q4 can lead to some crazy jumps in price. This would be a place where we would want to maximize the potential.
-The product is exclusive and popular. If there is a limited threat of Amazon competition, it is much less likely that you will see extreme market fluctuations.
-The product has a history of selling out and has shown a propensity to jump in value.
TIP #7: Look for market fluctuations on products with real demand. Don’t focus your efforts on maximizing bad products.
How we have managed pricing with these types of items in the past is to set a repricer at 3% above the Buy Box price and put a maximum price in. This allows us to reach our ceiling or expected price, while also showing a semi-competitive price to potential competitors. It is important to say, should you see this product start selling (which means it has hit your cap) that you should re-evaluate the pricing at that point.
How Do I Take Advantage of Opportunities?
Q4 will be wrought with opportunity as seller on Amazon, that’s no question. There is SO much traffic, it just gets crazy.
People will be excited. If you don’t like sales screenshots, stay away from Facebook this Q4, as there will be a lot of them. Why? Because people will be happy, and want to celebrate!
That being said, there is always ENORMOUS opportunity created for a buyer. If you are an OA person, you should be on the hunt for products constantly. Check the Amazon deals (Lightning Deals), but as we know there are quantity limits there. However, when Amazon runs a deal, it will likely be matched on other sites as well, without limits!
Bonus Tip: Look for Lighting Deal, or Gold Box Deal products on other sites that may be price matching for increased purchase limits!
You should be tuned into the social media accounts and newsletters of online retailers during this period, as they will likely be pumping out deals daily! There will be so much opportunity to be had here!
Bonus Tip: Follow other retailers on social media and sign up for their newsletter to get early notice of AWESOME deals. This may sound basic, but retailers are spending more time tweeting/posting deals and you know sometimes in OA every minute counts!
One last thing with these awesome deals: don’t go too heavily into them. You have to realize the best-case scenario is Amazon sells out. However, they will come back late in December or January and you need to be through your product by then. Then, you have the Black Friday deal day. Don’t let that day become the Black Friday deal disaster. This can go multiple ways. You should fully expect your products will degrade in price. There is a lot of supply, and a lot of that supply comes to Amazon. If you buy deep on products, just know that going in! Things will go down, you will have to price down with that, and then hope that it recovers later. Most products do recover, but, some don’t.
Bonus Tip: Be careful with Black Friday. Don’t go too deep thinking that you will realize the price that you see at the time, and expect that you might have to wait until later to sell the product profitably. With restrictions, this is a lot riskier practice than it used to be, and that should weigh on your decision.
We are hyped about Q4, and believe this will be an incredible year and time for our business. Our goal is to help you discover the same success in your own business.
Be careful. Work hard. Have fun!