It isn’t Labor Day yet, and that right there is a holiday themed image. To a normal consumer, this might be revolting. But to an e-retailer, the holidays arrive early; you must prepare now before the chaos of Q4 arrives.

And a major part of that preparation has to do with your inventory, likely your largest investment. It’s the central focus of your operation, as it’s the very thing that makes you revenue. Because of that, it’s crucial that you get it together before the holidays hit so every aspect of your business that touches your inventory — from shipping to marketing — operates smoothly.

Make More Room in Santa’s Carriage

First thing’s first, products that linger in storage are doing you a disservice — it’s time to get rid of excess inventory. Your goal during the holidays is to sell product at a rapid pace, raking in as much revenue as possible at a time when consumers are actively looking to buy. Those slow-selling goods you purchased are tied up cash that could otherwise be spent on more inventory for products that sell well. Plus, they’re also taking up space for more in-demand inventory.

If you’re using a 3PL service like Fulfillment By Amazon, it’s even more crucial that you shed such excess inventory. FBA, very aware of how popular and useful its services are, is upping the costs to store and fulfill products beginning in October. Why? Because they want to ensure that the products stored in their facilities aren’t dust collectors. The more orders they fulfill, the more money they make, and with space in high demand over the holidays, the fee raise warns e-retailers to only store the cream of the crop with them.

You must get rid of excess inventory by any means necessary.

Promotional Tactics

There are several ways to go about implementing promotional efforts that get lagging products moving, many of which are commonplace. Determine a healthy discount that gets you some cash, and set up any of the following promotions.

Seasonal Sales — Where there’s a holiday, there’s always an excuse for a seasonal sale. You’ll likely be issuing holiday sales over the course of the year’s last months, but it’s important that you create some seasonal promos before then, specifically for your weaker products. Identify straggling inventory, and develop a seasonal sale for Labor Day or Halloween that gets them out the door in advance of the holidays.

Clearance Sales — “Everything must go” is a phrase we’re all familiar with, and it’s indicative of a clearance sale — a sale discounting excess inventory that a retailer needs sold. Clearance sales are extremely useful during late summer and early fall because they accomplish two things at once: they help eradicate that excess inventory while priming customers for the promotional fiesta to come in November and December.

Flash Sales — Along the same lines as priming customers, flash sales reward your most engaged consumers and keep them connected to your brand. Flash sales are all about introducing a limited-time, unexpected promotion that motivates the most engaged of your customers to purchase. A heavily discounted surprise may or may not do the trick getting customers to buy, but, if anything, it puts you on their radar as the peak selling season arrives.

Product Management Tactics

But sometimes it’s best to focus less on the promotional marketing, and more on the product. They may be dust-collectors, but appealing presentation can shed ten pounds and hopefully ten units from that excess inventory.

Refresh Images and Descriptions — Straightforwardly put, your product images and descriptions might not be effective enough. Give them a touchup; refresh the lighting and position of slow-selling products in a way that makes them look (realistically) attractive. Keep in mind that the customer doesn’t have the first-person experience of a brick and mortar, so your photography must do a solid job gaining their confidence. Check this link out for more on setting up stellar images.

To supplement the images, product copy needs to be attractive in it’s own way as well. Be extremely clear about the product’s benefits, what it’s made of, and throw a bit of your brand on the copy to rub off on your target consumer even more. For more, check out this post on developing product copy.

Bundling — Sometimes it’s best to let the amazingness of your high-performers rub off on those less appealing products. The best way to do that, especially from an inventory management perspective, is to kit (or bundle) products.

Kitting is about taking multiple products and combining them into a single unit for sale. Essentially what you’ll be doing is taking a “meh” product that lingers on your shelves, bundling it with a product that has significant demand, and discounting the bundle in an effort to boost sales of the weaker product.


Send Santa (Or Your Supplier) Your Inventory Wishlist Early

Ok, now that those duds are out of the way, it’s time to purchase the stock that you’ll be storing, selling, and shipping over the course of the holidays. But before you can do that, you must develop a forecast.

Forecasting Demand

Figuring out how much product you’ll need can be a painful process for some e-retailers, especially those just starting off, but it’s essential. Here are some ways to determine your demand projections:

History — Above all else, your sales history will show you the way. They do say history is bound to repeat itself, right? If you’ve been in business long enough, check your year-over-year sales to get an idea of what the uptick in demand over the coming holiday months will be.

Analyze Promotional Performance — On a similar note, analyze your marketing promotions to see whether or not they significantly influenced sales history. If you’re planning on launching a promo that does very well, it’s crucial that you take it into account to some degree as you determine the amount of product you’ll need to purchase.

Pick Apart Product Performance — Obviously, you’ll need to segment demand by product to get an idea of how much of each you should purchase. Has a product been performing well lately compared to last year? Has a new product ate into the sales of another? Take factors like that into account.

Monitor Your Market — Demand is subject to change depending on plenty of factors like competition, your market, and the economy. To get an idea of what to expect overall, pay close attention to your market, and follow overall growth forecasts published by a variety of sources, like the National Retail Federation, eMarketer, and Adobe.

Be sure to continually revisit your forecasts over the course of the next few months as well. A forecast by it’s very nature is not set in stone, and you should react to changes in demand by modifying predictions accordingly.

Alert Your Suppliers and 3PLs

Once you’ve determined how much you’ll need, you must reach out to your suppliers and 3PLs (third-party logistics providers) if you’re working with any.

Chances are, plenty of other retailers like yourself are purchasing from the same supplier, so it’s important that you purchase an adequate amount of inventory from them before demand heats up considerably during the peak holiday months — you do not want to run out of inventory for a product, forced to wait for a purchase order because other retailers are doing the same thing.

And if you’re purchasing inventory and expect a steady demand, feel free to ask the supplier to send chunks of a purchase order over time. That way, you won’t have to store an enormous amount of product all at once, allowing you to better manage your inventory.

Of course, your 3PLs also must be given the heads up. Whenever you buy up some inventory, be sure to let them know so they can prepare some space for it.

Check Your Inventory, and Check it Twice

It’s always a good idea to keep tabs on your inventory — always, always track it both before, during, and after the holidays. If you’re selling on a single sales channel, this is as simple as checking the quantity within the channel and doing a count of inventory on-hand every once in a while to ensure they’re aligned. The same applies to a 3PL — constantly compare inventory updates sent by your logistics provider with what your sales channel lists and the count on-hand.

The largest issue with tracking inventory (and orders) over the holiday season is when your business is multichannel. Merchants with various sales channels from Amazon to Bigcommerce and Square find themselves overwhelmed with the volume of orders flooding in. They must check every channel for incoming orders, process them, update inventory quantities on spreadsheets, and then manually change the quantity listed on-hand by every sales channel so that each is aligned.

It’s operational overkill, and that’s why inventory and order management tools are out there. Such tools are designed to integrate with every channel a merchant uses. They act as a central hub that collects all incoming orders, tracks all inventory, and adjusts inventory quantities as orders are successfully fulfilled, writing back information to each individual sales channel afterwards.

Being multichannel also includes those channels that aren’t customer-facing: your fulfillment channels matter here, especially if you’re outsourcing fulfillment. Sending all of your orders over to your 3PLs is another time sink, but inventory and order management tools have the power to integrate with a 3PL, allowing the software to automatically route newly-arriving orders their way.

Pick and Pack Like Santa’s Elves

So you’ve rid yourself of longstanding inventory, you’ve developed your forecast and purchased inventory, and you’ve got a system in pace for tracking inventory. Now for the hands-on business: picking and packing those holiday orders.

Pick and Pack Methods

Once an orders show up, it’s time to get busy fulfilling them as effectively as Santa’s elves. Picking and packing products may sound remedial and simple, but, believe it or not, there are a couple of methods for doing so that vary in efficiency and style.

Discrete Picking — This is your most basic way of fulfilling an order, and it’s especially common for smaller e-retailers fulfilling in-house. A merchant sees an order, prints out a slip of paper that lists the order’s components, and then assembles the entire order before moving on to the next one. It’s extremely straightforward and simple, which means less opportunity for error. But that simplicity comes at the cost of efficiency.

For example, let’s say you’ve got eight orders. Each order has two or more individual SKUs, but a few of the orders share one or more of the same SKUs. If you’re using discrete order picking, you’d fulfill a single order at a time, regardless of the fact that you’ll return to the same location multiple times since SKUs are the same in some orders.

Batch Picking — Batch picking solves for that inefficiency, and it’s pretty common due to its efficiency and scalability. It’s just like discrete picking except for one thing: rather than fulfilling one order at a time, you’ll be focusing on one SKU at a time. So, for those eight orders, you’ll pay attention to the total of each SKU needed, pick out those SKUs, and then assemble all the orders.