With the holidays on the horizon, it’s time to perform your holiday ecommerce checkup to ensure things will hold up when consumer spending goes crazy later this month and into December!
The holidays are the best time of the year – they inevitably mean lots of food, time with family, and big sales if you happen to be into the wonderful world of ecommerce.
There’s a saying that I like to repeat to my employees on a regular basis: “Fail to prepare, prepare to fail” – and that’s why I wanted to write this post: to ensure you’re as prepared as possible for what’s heading your way this holiday season!
1) Cash flow
Cash flow: the amount of cash or cash-equivalents moving in and out of the business.
Remember, cash and assets are not the same thing. Cash is an asset, but once you buy that inventory and it’s sitting on your shelf, you no longer have the cash until you sell through. Now you’ve got a liability.
It’s often tempting to pay yourself a nice Christmas bonus when you see a spike in sales, but just know that come January, sales won’t be as strong – and you’ll still have invoices and other expenses to cover.
Watch over your company’s cash flow like a hawk at all times, but pay particular attention over the holiday period and into January. Don’t get carried away spending money on weird and wonderful things, otherwise the inevitable drop in sales in January could spell the end for your business.
If cash flow looks little a worrying, now’s the time to put things right or seek some kind of credit to ensure things continue ticking over. One option for securing a little extra cash is online lending tool, Kabbage.
2) Staffing level
Our sales can increase by up to 200% over the holiday period – for that reason I have to be very careful with respect to our staffing levels.
I make sure that no staff leave requests are granted during December – it may sound cruel, but at the end of the day it’s only fair – everyone on my payroll has to chip in and do their part at this busy time of year.
If you don’t have enough people on your payroll to cope with a surge in demand, it’s time to look at hiring temporary staff – or even enlisting the help of friends and family. Don’t go overboard by hiring lots of permanent staff, because when sales drop off in January you’ll still have wages to pay – and you may not have the sales required to sustain those wages.
Managing human resources during the busiest time of the year goes beyond just having lots of people around to fulfill orders.
You also have to ensure that any disputes or disagreements are resolved quickly (so as not to damage overall morale), and you also have to stand tall as the manager and owner of the business and make those tough decisions to ensure orders are sent out on time, every time.
Don’t be afraid to work hard and get “hands on” this holiday season. I can assure you that I will be doing the same!
3) Stock forecast
You can only make money over the holiday season if you have stock to sell. If you have trouble keeping your featured product lines in stock, then now’s the time to draw up some forecasts and share them with your suppliers.
It’s something we’ve been encouraged to do with most of the suppliers that we work with, and it means that 99% of the time we’re able to keep our most popular SKUs in stock. Suppliers know how much we’re likely to order, so they can build that into their production demands. If we started placing huge orders out of nowhere there’s a real chance they’d have no stock to fulfill our orders, and our holiday season sales would fall flat.
Even if your suppliers don’t want to see your forecasts, they’re handy to have for your own peace of mind. We tend to ramp up ordering as early as September, so we have enough of our most important lines to last us right through the holiday period no matter how busy it is.
“Hey Nick, you just told us to watch our cash flow!…”
Of course there’s also a balance to be struck here between having enough stock for customers to buy, and not killing your cash flow.
IMPORTANT: It’s not just retail products that you should be forecasting, either. In our office, no label paper would mean no orders could be printed and sent out. So with that in mind, you need to forecast usage of even the most menial supplies – including sticky label paper, envelopes, boxes, bubble wrap and so on. If you don’t have enough, your operations could come to a grinding halt at just a moment’s notice.
4) Online infrastructure
There’s nothing more frustrating than having your website knocked offline at the busiest time of year. How do I know? Because it has happened to me before…
Nowadays we use CDNs to ensure that our website loads as quickly as possible whether there’s one person on your website – or one thousand. If you run a basic website (such as WordPress) and you’re expecting a flurry of traffic, it makes sense to look into some kind of CDN or traffic balancing service, such as CloudFlare.
Using such a service reduces the chance that you will have to struggle with your website being offline at the most lucrative time of year.
Be sure to check things like email servers and inventory management programs are operating properly too – a broken system can cause you a lot of grief.
Each Christmas, we like to surprise our customers with a little something extra. Last year we ran a promotion giving customers a free box of lashes (worth $8 – $9) when they spent £15 on our website. Our loyal customers really appreciated the promotion, and even though we made a slight loss, it was worth it just to see all the grateful emails we received!
We’ve not quite decided what that little extra will be this year, but there are a few ideas floating around the office. What will yours be?
The holiday season is a time for friends, family and food – but before we get to that part, there’s the important business of capitalizing on the busiest time of year for your ecommerce business. Make this year a year to remember for the right reasons – perform your holiday ecommerce checkup now, and get ready for a fun, but hectic, time ahead.