Practical Ecommerce

Preparing for the 2014 holiday season

Many retailers, both online and brick-and-mortar, make most of their profits in the fourth quarter. Consumers in the U.S. typically think about the holiday season only after Thanksgiving. But for retailers, that is too late. Retailers must plan for the fourth quarter and the holiday season now, in July.

My business, overstockArt.com, is a pure-play online retailer with no brick-and-mortar locations. Early in the third quarter, we like to start planning our fourth quarter. We look at the following four aspects of our business and make sure we are ready.

  1. Inventory and selection.
  2. Promotions.
  3. Technology improvements and tools.
  4. People and environment.

All four require time and planning. We picked these four as they are the main drivers of our business. Other companies may have some variation to this list, but for the most part these are the major growth drivers of most online retailers. Planning in advance ensures that you have the time to accomplish your goals. This includes weekly execution steps.

Inventory and Selection

I place inventory at the top of the list since it is challenging and if you don’t have it you can’t sell it. Our company has built a replenishment model — see “Digging for gold: supply chain made simple” — that ensures inventory availability. We have a scaling effect of 30 percent for the fourth quarter. Since it takes our studio suppliers six to eight weeks to fulfill our orders, we start placing holiday orders in August. We are also reviewing our inventory availability for items that should be closed out or have major quantity reductions so that we can maintain our desired inventory turns and increase cash availability, which allows us to better invest in new inventory and in other activities. Finally, new product introductions work best in the holiday season. But new styles or major product innovations take a longer time to develop. They should be started right away (in July or August) as it is a critical step for the growth of your fourth quarter sales.

Promotions

By planning your holiday promotions early you allow your organization time to be innovative and to build the needed tools to make promotions a success. I like to plan our promotions around August. This allows us to have a nice mix and provides an opportunity to ramp up areas like pay-per-click advertising where it’s not enough to simply spend more. You have to test and consider how to spend more effectively. In addition, email promotions and storewide events are prepared, especially for Black Friday and Cyber Monday.

Website and Technology Improvements

Since technology improvements may take a long time to implement and test, it’s important to start early. I like to plan them early in the year. Some simple improvements can be done quickly but some require extensive investment, testing, and time. It is critical to have an official code freeze, a time where no code changes take place. This ensures no problems during the holiday season. Our code freeze starts November 1. Plus, we freeze internal technology changes earlier. The last thing you want is customer service agents and others having a hard time figuring out a new software during the holiday rush.

Personnel

Every organization is a collection of people. Your company needs to be staffed adequately and with the right people; that much is a given. What is often overlooked is the creation of a supportive culture that allows your customer service people and others in the organization to deliver what customers demand. Most ecommerce retailers seek to provide a high degree of customer service. At overstockArt.com, we consider delivering an unparalleled customer experience as a core competency. To accomplish this, we had to not only build systems and tools to support this goal, but also a commitment from everyone in the company to hiring, retaining, and empowering people to take care of customers. This culture is built with a purpose, which helps with adding new people — it is still not easy — when your culture supports the right kind of behavior.

Conclusion

The above four factors are a big part of making the holidays and the fourth quarter a success for ecommerce retailers. There are many more details to each of these. Feel free to ask or comment, below. I will be happy to discuss any details.

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  1. Mitch July 15, 2014 Reply

    Another point, not mentioned here, which we’ve seen successfully leveraged in quite a few brands, is personalization of the customer experience. Being able to deliver personalized recommendations and any form of digital asset, at any touchpoint, is most important in regards to customer engagement and conversion.

    • David Sasson July 15, 2014 Reply

      Mitch,
      Hi, thanks for the comment. I agree personalization is very important. I wrote this article from a 30,000 foot view. I did not get into the details of what technological improvement to look at. The main consideration is to start a personalization project early and not wait until the fourth quarter, which allows a company to test and implement this properly and not run into problems during the most critical time of the year. Lastly, I agree with you that personalized recommendations, if done well, should have a nice impact on both conversion and average cart. This kind of an improvement can have major impact.

  2. Elizabeth Ball July 30, 2014 Reply

    David, what sort of an increase are you seeing with “early bird” buyers who like buying holiday gifts from August onwards?

    • David Sasson July 30, 2014 Reply

      Elizabeth,

      Hi, this is a great comment. I assume this is somewhat different from business to business. We see some increase in October due to “early bird” shoppers. However, the real increase in sales does not happen until mid November, and further intensifies starting on Black Friday. The key as we see it is to be prepared for the large increase so that you are not reducing your quality of service or not having too many out of stock issues.

      We have not been able to “balance” the shopping over a longer period of time. It seems that shoppers are conditioned to spend money during the main holiday season.