Navigating Seasonal Fluctuations in Ecommerce

Seasonal fluctuations can create feast and famine in your business – neither are ideal. On the famine side, you may be wondering when your next sale is going to come in. This makes it hard for you to predict growth. 

On the feast side, you may be running yourself rampant trying to capitalize on all the sales coming in. But at some point you could run out of product or fill all your service windows. You’ll be missing out on sales that could hold you over during your next season of famine. 

Some cycles are predictable. Holidays, vacation timing, and changes in season can normally be accounted for. Shifts in trends or crises are a little bit harder to anticipate. If you want to make the most of any cycle, feast or famine, you have to be prepared. 

Here’s everything you need to know to navigate (and capitalize) on seasonal fluctuations. 

Understanding Seasonal Fluctuations

Seasonal fluctuations are when consumer buying habits either increase or decrease, usually based on external factors to your business. Most businesses experience regular seasons of periodic fluctuation that can be planned for. 

Some common events that you can expect every year that create seasonality are: 

• Holidays (Halloween, New Years, Christmas, Valentines Day)
• Seasons (Spring, Summer, Winter, Fall)
• Sporting Events
• Festivals and Concerts

Some events that are harder to predict that create seasonality include:

• Recessions
• Crisis
• Extreme Weather
• Election Years

You can also have some impact on seasonal swings by ramping up your marketing and offers to create your own ‘seasonal’ demand. One example is Amazon Prime Day. While not an actual holiday, Prime Day is usually around the end of July and includes deals on lots of products to encourage bargain shopping. In 2023, the holiday brought in $12.9 billion for Amazon. 

Planning Ahead

The first step towards getting a handle on seasonal fluctuations is planning ahead. Even if you have no sales data from the previous year, you can still make a plan based on industry trends.

The best months for ecommerce businesses tend to be November to January. This marks the start of the holiday season, continues through holiday shopping, and also includes New Year’s resolution season. 

It’s normal for more business owners to have a slow February and March because people are trying to pay off their holiday bills. That said, a lot of businesses are unique. Patio furniture companies don’t expect booming sales around the holiday season. And, if you sell flowers, February will likely be a busy month for you given Valentine’s Day. General trends are helpful, but not a silver bullet. 

Looking to the future and anticipating highs and lows is called forecasting demand. This is when you use your historical data to predict upcoming sales. Great forecasting includes past sales, current trends, and planned promotions to get an accurate look at seasonal revenue. 

You can either invest in a software that helps you predict this demand or forecast on your own. If going alone, you’ll want to:

1. Utilize market research to get an idea of the seasonality in your industry. This is important if you don’t have sales data from previous years. 
2. Analyze your past sales data to establish a baseline of expected sales throughout the year. 
3. Take into account any new marketing initiatives or promotions, as these can dramatically change your sales if done well. 

The end goal is to flatten your seasonal demand curve. Say you sell snow shovels and ice scrapers. You know how most people won’t buy snow shovels or ice scrapers until the day before a big snow? Try running a promotion a month or two before it snows to encourage people to prepare for the first storm of the season. 

It won’t work for everyone, but it will likely work for some folks who remember a year when they couldn’t get a scraper and were left to fend for themselves. 

Running promotions on either side of sales peak can help you flatten the curve and move more product with less stress. 

Building Strong Supplier Relationships

While you can plan and plan for seasonal fluctuations, sooner or later something unexpected will crop up and you’ll have to scramble. The only way you can make an effective scrambling plan is if you have strong supplier relationships. 

For example, when bead producers started the year in 2023, they likely didn’t expect a huge jump in sales in December. Yet, Taylor Swift dramatically impacted bead sales when she started her Era’s tour, with Swifties all over the world making billions of friendship bracelets to share with one another at the concerts. 

She created a 300% sales increase in beads and jewelry leading up to the concert. Those who were able to work with their suppliers to keep their beads in stock were able to capitalize on the increase in sales since the tour started. 

To build a strong relationship with your suppliers, try to communicate your forecasts and needs in advance. You don’t want to leave them in the dark if you’re expecting a jump or a slump. This ensures they can meet your demands. Well informed suppliers can prioritize shipments and manage lead times. 

If you can, try and negotiate flexible terms with your suppliers. Talk through bulk discounts, extended payment terms, lead times, and shipment priorities. This will help you and your supplier adapt to unexpected changes in demands. 

Last, find out what happens if your supplier runs out of stock. Sooner or later, this could happen, so you’ll want to have a plan B and plan C in place if it does. Arranging backup suppliers is a smart move for any business owner, so you’re not left trying to find someone in a pinch. 

Flexible Solutions for Inventory Management

Once you have a calendar put together and your suppliers lined up with standard operating processes in place for if they run out of stock, figure out where you’re going to keep your inventory. 

Many small and medium business owners will consider using a room in their home, or their garage as a warehouse. Others will upgrade to a pod or a storage unit. Yet, the best way to manage seasonal fluctuations and inventory is with a co-warehousing space. 

Co-warehousing provides business owners with the flexibility they need to adapt to seasonal fluctuations. Co-warehouses, like Shift, allow you to rent smaller spaces as part of a larger warehouse to save on overhead. You can also sign short-term contracts that allow you to adjust your inventory space for seasonal fluctuations. All while housing your products in a community-centered warehouse space. 

When it comes to inventory, sustainable inventory management is key. Stock up on high-demand items and take note when inventory is flying off the shelf faster than expected. This could be a sign of a market shift, and you may need to stock up quicker. 

You’ll also need to manage your slow-moving inventory. If a product isn’t moving, halt orders to prevent overstock, which is expensive and hurts your bottom line. If it seems like a product just isn’t selling, it may be a sign to hold a sale and discontinue a product to save on your warehouse space.

Luckily, if you invest in a co-warehouse, it’s easy to make sure you’re only renting the space you need. And, it’s a more permanent and safe space for your products and business compared to a flex warehouse space.

Cost Management During Fluctuations

Budgeting for seasonal fluctuations in ecommerce is essential for running a healthy business. This can look like allocating funds for increased inventory so you can maximize when demand peaks without a lot of unsold inventory or avoid overstock at the end of the peak. 

This comes down to successfully managing your cash flow. You might need to prepare ahead of time and get an ecommerce loan to account for a major increase in demand. Or, you can find scrappy ways to scale back when you know there’s a high likelihood of sales dropping off, like during an election year. 

This is another area where a co-warehouse can be a huge benefit to business. By only renting the space you really need, you’ll be able to keep your overhead costs low while expanding. Plus, with shared resources and facilities, like a kitchen and conference rooms, the space you’re renting will feel much larger than what you’re paying for. 

Customer Relationship Management

Your customers can tell you a lot about your products, services, and seasonal demand. Get in the habit of listening to their feedback, either via reviews, social media, surveys, or direct communication. This can help you spot emerging trends and opportunities. 

There are a lot of customer service tools that make interacting with your customers and collecting their feedback easier for you. 

By creating a customer-first brand, you can maintain customer loyalty even during slow times. This means they’ll be more likely to do things like sign up for your email list, and open your promotional emails. 

For some businesses, it may also make sense to create a loyalty program. That way, customers are paying you monthly for your product and services rather than solely during your peak times. This spreads your payments out throughout the year and allows you to more accurately forecast. 

Also, during consistent peak seasons you may want to train and hire temporary staff to help you get through the peaks. Don’t try to tough out these high-sales times all on your own, as this could lead to mistakes or burn out. 

Adapt to the Off-Season and Diversify Your Offerings

Another way to flatten the seasonal curve? Adapt to the off season by launching new products or services. These products and services can also be more labor intensive or expensive, because you’ll have the time to create and market them. 

A great example of this is Justin’s peanut butter. Peanut butter is a product most families buy once a month. To increase sales, Justin launched a peanut butter pouch, ideal for on the go snacking. These pouches helped increase sales throughout the entire year, and not just during normal peanut butter buying windows. 

You could also partner with a complementary business and sell their products when you’re not busy and vice versa. This takes some of the peak load off your shoulder while still allowing you to capitalize on demand and generate consistent revenue – flattening the curve. 

If your product isn’t seasonal everywhere, you could also focus on a new sales channel. For example, swimsuit sales primarily happen in the summer. But if you create eco-friendly swimsuits, you may want to gear your sales towards warm places that need swimsuits year around – like Miami. 

If you don’t have the bandwidth for new products or marketing campaigns, you can also scale down for expected sales drops. Closing part of the business, or closing down the entire business for part of the year is a strategy that can help you maximize on peak sales timing. This downtime also gives you the opportunity to prepare for next season. 

Make a Plan for Seasonal Fluctuations ASAP

Making a plan to navigate seasonal fluctuation is not something you do once and forget. Rather, it’s something you should consider revisiting once a quarter, to once a month depending on if you notice an unexpected shift. What worked last year may not work this year.

Even if you are left with a completely unpredictable year, investing in a co-warehousing space, planning ahead, building strong supplier relationships, customer management, cost management, and adapting to the off season can all help you make the most of your seasonal waves.

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And, if you’re based in Atlanta, make sure you check out our co-warehousing space.