If you are active in any forums related to selling online then I'm sure you've started to hear the buzz about Q4. Q4 is the fourth quarter of the year and represents October, November, December. But wait, it's only June. Why is there an ever-growing buzz about the holiday selling season? Let's look into it a little further.
Holiday Season – Go Big or Go Home
The fourth quarter represents the holiday season. It includes some of the biggest holidays of the year – Halloween, Thanksgiving, Black Friday, Christmas and New Year's Eve. Buyers are looking to host the best parties, give the best gifts, eat the best food and will dig deep into their wallets to do so. Many retailers report that they do as much as 50% of their annual sales in the last 3 months of the year. Below is a graphic that charts the growth of Amazon's net revenue from January 2007 to January 2015. Each one of those spikes represents the revenue associated with Q4 sales.
The fourth quarter is a crazy time of year for retailers, holiday shoppers, and travelers. It affects all aspects of business operations from managing inventory stock levels, to shipping lead times and customer experience.
Why are people talking about Q4 now? In order to do 50% of your annual sales in the last quarter of the year a seller, large are small, needs to have inventory in stock, have a plan for getting items to buyers in a timely manner, along with providing quality products among others. Time is money, and the sooner you start to prepare for Q4 the better your sales will be.
What Can I do Now?
There is already a lot of talk on the forums about stocking up and “holding items until Q4.” This works well for larger sellers who have more money than time. As a small seller, I don't recommend putting a lot of capital into purchasing inventory that won't sell for three to six months. Instead of spending money use your time wisely to understand what buyers are looking for.
Pay attention to trends: Look at what people are buying now. What is the current fad in clothing, food, toys, etc? What movies will be released in the next four months? Take notes and the refer to them when looking for products to sell for Q4.
Research hot selling toys from previous years. What characteristics do they share? During each holiday selling season, some items become “hot” sellers and, therefore, are harder to find. Think Tickle Me Elmo or Zoomers from a few years ago. Resellers that are able to find these items can usually resell them for a considerable profit. Why? Buyers in Q4 are willing to pay more in October, November and December than they do any other time of year. Predicting hot products can't be done with 100% accuracy but by understanding historical and current trends you'll have a better idea if an item will sell well.
Understand Amazon holiday selling restrictions. Each year Amazon restricts selling toys on Amazon during the holiday season. They restrict toys for merchant fulfilled (MF) orders unless a seller meets certain criteria by a specified date. However, there are times during Q4 when it is beneficial to MF orders. Understand what the restrictions are (not updated for 2015) and make the best decision for your business.
Your next step is to create goals for where you see your business in the fourth quarter of 2015.
What do you want your sales to be? Pick both a conservative and stretch goal. That way if you hit your conservative goal you'll still have something to work towards. Once you have figured out your sales goal, work backwards to determine what your inventory levels will need to be to hit those goals.
How much time and capital will you invest in your fourth quarter push? There is only some much time and money and this is no different during Q4 – family obligations, increased work hours at your “day job”, and your personal holiday spending to name a few. Be realistic about what you can invest.
Don't be afraid to adjust your goals as you move forward. If you've never experienced Q4 as a seller the be prepared to be amazed. The better prepared you are the higher the level of amazement.
What are you going to do TODAY to move your business forward by preparing for Q4?