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Getting an inventory order filled by a manufacturer and shipped to your customers takes monumental levels of patience and planning at the best of times, let alone during periods when there are supply chain issues. Over 37% of businesses in Australia are experiencing supply chain disruptions, and with the busy end-of-year sales stretch right around the corner, eCommerce teams need a game plan to navigate this complex period. With this in mind, here are some critical areas to consider when planning for EOY – and a hint up front, it’s never too early to start planning!
Understand supply chain issues beyond your control
There are loads of risk factors outside your control that can, and will, slow down order fulfilment in the busiest time of year. In normal instances, businesses might be able to comfortably wait until the first week of October to place orders for holiday inventory. But the same is not true given current circumstances, and you’ll be at major risk of freight delays and losing production slots at your factory.
Here’s some of the leading supply chain challenges that are already impacting Q4 inventory planning:
- Shipping delays still haven’t cleared up: according to Supply Chain Dive, the outlook for the global shipping industry isn’t expected to improve this year. In fact, industry stakeholders expect backlogs to continue into 2023
- The war in Ukraine is also disrupting freight – in Europe, rail freight seemed like it could be a workable alternative to shipping. But now, one of Europe’s largest freight forwarders isn’t accepting rail cargo from China to Europe. Even if your eCommerce business was never considering rail freight you might still be impacted, as freight forwarders switch from rail to sea routes, adding to shipping logjams
- Australia’s skills shortage is still an issue – businesses have already grappled with shortages across industries, including heavy vehicle drivers. With burgeoning demand and lack of skills in supply-chain critical sectors, this is expected to continue impacting operations well into 2023
The bottom line is; rethink previous norms and expect inventory to take much longer to hit the shelves. But while you can’t do anything about the ongoing supply chain challenges, you can take steps to make your business more resilient.
Forecast sales to accurately predict year-end demand
Before ordering Q4 inventory, you need to know how much stock is enough.
If direct-to-consumer (DTC) is your primary channel, look back at data from previous holiday seasons to uncover repeating trends and order volumes. You can also look over your sales data and trends throughout the year to anticipate your demand and identify how much growth you might have year-over-year.
Factor in your marketing attribution as well, accounting for metrics like customer acquisition cost and return on ad spend. You might see an increase in sales by uplifting your spend on channels like paid search or Facebook ads. If you know you’re going to be spending more on advertising as the holiday season approaches, make sure you’re accounting for that potential uplift in your forecasting.
Also, don’t leave out other channels you might sell through, like Amazon, retailers, and even B2B partners. If you work with companies that typically place bulk EOY orders (e.g. corporate gifting), you can’t wait for them, as it will be too late for them to be filled. Instead, reach out to these partners early and let them know you’ll be finalising inventory orders by a specific date or they may miss out.
Lastly, advanced inventory planning can present challenges from a cash flow perspective, especially if you need to place big orders for EOY and won’t realise the returns for some time. Pre-sales are one way to get cash up front, but this tactic alone likely won’t plug the gap. Many eCommerce businesses will need to source additional funds quickly, but traditional finance providers may take too long to qualify your application. Alternative finance providers who use revenue-based finance can be a great option in this regard.
Inventory planning is never easy, but it’s made worse by current global conditions. By planning early, securing stock quickly and sorting out finance well in advance, eCommerce businesses will be well placed to succeed during the EOY sales rush with minimal disruptions.
Brian Renvoize is director of growth for Australia and New Zealand at Wayflyer.
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