Fluctuations can be a challenging part of e-commerce that needs to be dealt with meticulous attention and data-driven decisions. The ever-changing landscape of consumer behavior, influenced by holidays, weather changes, and cultural events, can lead to significant variations in sales and expenses.
Seasonality is the term used to describe regular cycles and periodic fluctuations dependent on a specific season. Effectively managing these seasonal changes is crucial for e-commerce brands to maintain stability, maximize profitability, and ensure operational efficiency.
Today, we will tell you everything you need to know to manage seasonal changes. We will analyze strategies and best practices that empower online businesses to navigate the peaks and troughs of seasonal demand while maintaining a solid financial foundation.
Factors Contributing To Seasonal Variations In Ecommerce
Seasonal variations are pretty much self-explanatory. For example, in summer, brands usually witness a rise in beach and recreational products such as beach blankets. Here are some key factors contributing to seasonal variations in e-commerce:
Holidays & Special Occasions
The yearly holidays are usually the time when sales peak. They are pre-decided and well-anticipated by both shoppers and sellers. According to an NRF report, the 2021 Holiday Sales Grew by 14.1 Percent. That’s a huge number, and online sellers must be fully prepared to benefit from such special occasions.
Here’s the US Holiday Calendar and Canadian Holidays Calendar for you:
Weather greatly influences consumer preferences and purchase behavior. Seasonal changes, like winter cold or summer heat, impact the types of products buyer’s desire. In winter, the sales of winter apparel, snow gear and other related items increase. Conversely, summer months drive demand for swimwear, outdoor gear, and beach-related products.
Online brands can effectively leverage these changes to bring unique and in-demand offerings to buyers.
Understanding the economic landscape can be a major factor in comprehending and predicting sales and expense fluctuations. Recession and other downturns lead to lower customer spending due to prevailing uncertainty. Similarly, if the economy is booming, people might be more willing to spend on non-essential items.
Nevertheless, the store should reduce inventory during recessions to manage the storage cost-efficiently. Similarly, the more readily available the inventory is during a boom, the better.
Strategies for Managing Seasonal Fluctuations
Well, now you know how important it is for an online business owner to understand seasonal fluctuations. You also have an idea of what different seasonal forms look like. But the real question is, what actionable measures can be taken to address this issue effectively?
Analyze Historical Data
Data is your best companion when it comes to making predictions about the future sales of an online store. As discussed, seasonality refers to a trend that is repeated periodically. Thus, studying historical data can help you analyze which occasions or months witness higher or lower than usual sales.
The seasonal trends will differ depending on the business niche, but there is no doubt that all businesses face it in some form or another.
Efficient Cash Flow Management
Cash flow is the lifeblood of the business, and it must be managed efficiently to ensure smooth operations. The complexity of seasonal shifts can lead to inconsistent revenue, forcing businesses to optimize their cash flow to sustain operations throughout the year. Several cash flow management tips can be followed for maintaining stability and flexibility.
Adaptable Inventory Management
Keeping the supply chain flexible is a major strategy that helps with seasonal fluctuations. If your business is overstocked or understocked, there is a high chance of increasing storage costs and losing sales respectively.
It is always good to have the Just-in-time inventory options available. This means that if the stock is low, you can order the goods just as the customer orders. Such arrangement usually requires good supplier relationships and a long-term partnership
Tracking Marketing Promotions
Marketing promotions can help neutralize the effects of seasonality to a great extent. It also gives a heads-up to the business to mitigate the adverse effects of seasonality and provide businesses with a competitive edge. A well-designed seasonal marketing campaign can boost revenue during off-peak periods to clear out the inventory.
Although seasonal changes in sales are a natural part of the economic world, they can provide significant difficulties for online brands. The fluctuations could be a nightmare if you’re not ready for it.
After reading this article, you now know what strategies to adopt to safeguard yourself from exceptionally high or low sales. But it might be too much for you to strategize and put to work. Well, don’t worry. Transcounts can help your business forecast and build a strategy to ensure you stand tall during seasonal shifts.
Transcounts offers several financial services that help you make accurate forecasts and ensure smooth operations even at times of uncertainty and distress. So, keep these tips in mind and prepare for whatever may come!