Small businesses have many moving pieces they need to manage in order to stay profitable and successful. Retailers who operate product-based businesses have yet another factor to keep in mind; seasonal product demand. Seasonal product demand amongst other techniques can help manage seasonal business demand. Keep reading for our quick guide on how to manage your business through the ups and downs of seasonal demand.
What is seasonal product demand?
Seasonal product demand refers to the fluctuations in consumer demand for a particular product or product category during certain seasons or holidays. All businesses experience sales cycles to some extent, resulting in slow and busy times. Most retailers experience some type of increase in product demand, most commonly at Christmas. Seasonal product demand can have a significant impact on your business. It’s important to track sales data so that you can forecast seasonal demand to better prepare and overcome slowdowns.
How seasonal demand impacts your business
Seasonal demand can impact your business by making it difficult to anticipate fluctuations in your inventory needs. In addition, retailers must prepare for the possibility of increased or decreased staffing needs.
To successfully overcome seasonal demand, businesses need to prepare. One way to do this is by forecasting. If you understand your busy and slow seasons you can hire for seasonal positions, adjust inventory levels, and obtain funding as needed to ensure plenty of working capital. Stocking just the right amount of inventory is key for maximizing profits while keeping cash flow healthy. Understocking can result in product shortages that cut into your potential profits at the most inopportune times. No retail business owner wants to run out of their best-selling product right at the time when demand is at its highest! Not only does this result in the loss of revenue but also can hurt your company’s reputation. In fact, some companies earn their highest revenue during seasonal periods, resulting in their annual numbers moving from the “red” into the “black” (hence the origination of the popular term “Black Friday” to describe the day when many merchants began to turn a profit).
If you’re operating a small business, these seasonal fluctuations can catch you off guard the first few years if you’re not prepared. Be sure to plan ahead for seasonal demand and watch your profits increase.
Examples of seasonal demand
No matter what type of retail business you run, you probably experience at least a few seasonal fluctuations in demand. A few examples of seasonal demand include:
- An increase in the demand for greeting cards at Mother’s Day and Father’s Day
- An increase in the demand for jewelry or chocolates at Valentine’s Day
- An increase in the demand for certain gift items during the month of December
- An increase in the demand for scarves and coats in the winter months
- An increase in the demand for swimsuits, shorts, and t-shirts in the summer months
Accounting for these increases (and decreases) in consumer demand can help your business become much more successful by planning ahead and avoiding overstocking or understocking your products.
How to manage seasonal product demand
There are a few ways to navigate seasonal product demand, these can include:
- Ensure proper product categorization: It’s important for retailers to go through their taxonomy with a fine-tooth comb. Understand which types of products are especially susceptible to fluctuations in product demand, and when you need to increase or decrease your inventory of those products. Taking the time to prepare and adjust your products for seasonality is worth the extra effort to ensure your operations run smoothly all year round. This process is best supported through the use of analytics.
- Utilize Analytics: Knowing and understanding your sales data is crucial to identifying your top-selling products and anticipating your business needs. Without a proper overview of key seasonal inventory fluctuations, your company will be operating with several blind spots. The longer you have been in business, the better you will get at spotting trends and patterns. You can utilize software to help you identify seasonal demands.
- Follow Broader Market Trends: In addition to your own data, it’s important to look at what’s happening in the overall retail market. Understanding your target consumer and their current needs is key to preparing for seasonal demand. You won’t always be able to rely on what worked last year when new trends are changing the game on a daily basis. Some changes are predictable, and others are only uncovered by keeping up with current trends, so be sure to remain flexible and stay in the know.
- Stock up on Necessities: When there are items you know without a shadow of a doubt will be in high demand during certain seasons, be sure to stock up on plenty of these foundational items. For example, if you own a skincare company it would be wise to maintain a large stock of sunscreen beginning in the spring and summer months.
- Ensure Proper Communication: Communication across all aspects of your business is key. From how you choose to keep in touch with your consumer base to what information you provide to your manufacturers, suppliers, and other vendors – you’ll want to ensure clear and consistent communication before, after, and during seasonal fluctuations in product demand. For example, by offering discounts to consumers during slow seasons you can generate additional sales. Another example is communicating expected slowdowns to suppliers so they can deliver just the right amount of product.
- Invest in Marketing: Marketing is always a good idea. During slow and busy seasons, you should market. During slow seasons you should make an extra effort to stay in front of customers and offer special promotions.
- Plan Ahead: Use down times to prepare for the busy season. The time to plan for a rainy day is not when storm clouds are already brewing. Likewise, the time to prepare for Christmas is not the weekend before Thanksgiving. Begin planning, funding, and ordering your products far in advance in order to take the most advantage of seasonal demand. Consider using inventory financing to help plan ahead for these needs and be sure to have a good understanding of the different financing options available to you to help cover any gaps in funding.
There are many factors to keep in mind when it comes to managing your business through high seasonal demand. One of the most important aspects to manage is inventory. If you’re a new company it may take you a while to accurately forecast demand. Hang in there until you have enough data to accurately forecast. During busy seasons you’ll need to ramp up inventory, which can consume a lot of cash. Most businesses need inventory funding at some point. Perhaps for your business, the need is right before your busy season. Regardless of the timing, you can access quick and affordable inventory funding at Kickfurther.
How Kickfurther can help
Seasonal demand can take a toll on cash flow. To make sure you have enough inventory stocked and enough free cash flow, you can take advantage of inventory funding. Kickfurther is the world’s first online inventory funding platform that enables companies to access funds that they are unable to acquire through traditional sources. For companies that sell physical products or non-perishable consumables and have revenue between $400k to $15mm over the last 12 months, Kickfurther can help. We connect brands to a community of backers who help fund inventory on consignment and give brands flexibility to pay that back as they receive cash from sales.
Kickfurther can help startups fund millions of dollars of inventory at costs up to 30% lower than the competition. With more than $150 million in inventory funded to date, Kickfurther can help you get funded within a day or even minutes to hours.
Interested in getting funded at Kickfurther? Here are 3 easy steps:
#1. Create a free business account
#2. Complete the online application
#3. Review a potential deal with one of our account reps
#4. Get funded in as little as minutes