Just as the weather turns crisp and the trees shed their leaves, your ecommerce business will face changing seasons. In order to stay competitive amidst changes in the forecast, you’ll need to anticipate these seasonal fluctuations and begin adjusting your budget and inventory accordingly. 

Successful ecommerce sellers understand how crucial it is to anticipate the tides of customer demand, the impact of seasonal variation, and fluctuating trends in order to maintain a healthy budget throughout the year. While it’s normal to have highs in sales throughout peak season and lows immediately following an online shopping event, it’s important to have a plan for each period. By understanding ecommerce seasonality you can prepare your business to maintain healthy cash flow throughout the entire year–maximizing profits and ensuring success. 

In this blog we’ll review what ecommerce seasonality is, what holiday shopping events can mean for your business, and how to best leverage periods of high seasonal demand to generate sales. We’ll also review best budgeting and inventory practices for seasonal variation throughout your business.

Ecommerce Seasonality 

Ecommerce seasonality refers to the correlation between changes in weather, as well as the occurrence of major events and holidays, and the substantial increase of demand for relevant products during those periods. This creates periodic spikes in sales opportunities, revenue, marketing strategies, and inventory management for businesses throughout the year. 

Seasonality is crucial to success for ecommerce sellers hoping to optimize their business and streamline processes to grow. If you can successfully capitalize on the immense volume of sales that come with the holiday season and other seasonal events, they can be the perfect tool to drive profits and take your business to new heights. However, preparation for these events begins months in advance, so it’s critical that you understand when the right time to take advantage is. 

By understanding seasonal variation and executing appropriate demand forecasting, you can secure pivotal data to help you scale, including: 

• Predict volume of website traffic with seasonal variations. 
• Predict number of orders to optimize inventory. 
• Optimize advertising investments and timelines. 
• Deliver a stellar shopping experience for customer satisfaction. 

In order to achieve a steady cash flow, regardless of seasonal sales, it’s important to understand that your business needs to consistently predict the “when” and “how much” of customer demand to optimize inventory. 

Sellers who don’t account for seasonality often find themselves facing a myriad of problems as a result. For example, many new Amazon arbitrage sellers over-purchase seasonal products and then struggle with inventory management and unnecessarily high Amazon FBA or storage fees during the off season. In other cases sellers might disregard seasonal variation in sales and then find themselves facing immense cash flow crunches when customer demand rapidly.

Common Ecommerce Seasonal Events 

While the season changes periodically and there are many holidays throughout a calendar year, certain events hold more significant influence on ecommerce marketplaces. These high-priority events help to dictate shopping trends and customer behavior, so we’ve compiled a list of seasonal events to be aware of: 

Amazon Prime Day 

Amazon Prime Day started in 2015 and, after nearly a decade, has become one of the largest successes in online shopping events. Prime Day takes place in mid-July and boasts some of the biggest deals of the year, driving demand and customer satisfaction. 

Amazon sellers participating in Prime Day begin preparing months in advance by ensuring that inventory management keeps high demand products in-stock, ramping up advertising and PPC campaigns, and launching new products. 

Black Friday & Cyber Monday 

While there are many ecommerce “exclusive” events now, that doesn’t prevent long standing retail sales from influencing seasonal trends. Many ecommerce businesses participate in Black Friday and Cyber Monday, running competitive holiday sales. Sellers who utilize the Amazon marketplace, also have the opportunity to run deals all the way through the days between Black Friday and Cyber Monday– creating even more potential for sales. 

Since 2020, more holiday shopping has gone online than ever before, meaning improved opportunities for ecommerce sellers to capitalize on traditional holiday season sales profits. 

Holiday Season 

Starting as early as Prime Big Deals Days in recent years, the holiday shopping season has always been of the utmost importance to retail sales and ecommerce businesses. Spanning all the way from October to December, the holiday season is peak seasonality for a wide variety of products. On top of this, shoppers are always eagerly looking forward to the sales that come with it, ideally driving revenue and profits for your business. 

Back-to-School 

Late summer into early fall marks the back-to-school season for customers with school-aged children. This season is characterized by a spike in sales as parents purchase school supplies, clothing, and even dorm essentials for their children. 

Pro Tip: If you want to secure extra sales during this season, consider creating a tailored product catalog and running promotions to cater customer demands. Many sellers also run seasonal promotions, including marketing materials and discounts that highlight how ecommerce seasonal sales can streamline shopping and improve the customer experience. 

Summertime 

Although weather-based, rather than centered around an event, summer witnesses a surge in seasonality for travel-related products, outdoor gear, and swimwear as people prepare for vacation. This is also a peak season for clothes and fashion trends to drive sales. 

Valentine’s Day 

The romance of Valentine’s Day creates another chance for gift giving and, as a result, more opportunity for ecommerce businesses to make sales on presents. Shoppers are seeking the perfect gifts for partners, typically including chocolates, flowers, jewelry, and personalized items. 

Determining Your Business’ Seasonality 

Measuring ecommerce seasonality for your business is essential for decision making and maintaining agility throughout the year. To determine your seasonality, it’s critical that you take into consideration historical data and keep an eye out for major fluctuations. 

Historical Data 

Sales & Revenue 

By tracking sales and revenue figures on a periodic basis (monthly, quarterly, and annually) you’ll be able to identify peak seasons. This will help you determine when to invest the most in inventory, as well as indicate how seasonal variation impacts your profits. 

Site Traffic 

Keep tabs on your website traffic to understand when potential customers are most active. This can help you determine the best times (from seasons down to specific hours of the day) to invest in PPC campaigns, run flash sales, or utilize other promotions. 

Conversions 

Analyzing conversion rates to determine the effectiveness of your marketing efforts across seasons. Undoubtedly you’ll find that certain periods yield a higher return on investment, helping ensure that you allocate your seasonal budget as effectively as possible. 

Customer Behavior 

Once you start collecting data on customer preferences, including product categories and price sensitivity during specific seasons, you’ll be able to make actionable, data-driven recommendations and decisions for your ecommerce business moving forward. Remember, not only do you want to understand your customers’ behavior, you also want to ensure that your business and products align with it– consistently providing solutions to any pain points they might have.  

Monitor Trends 

In ecommerce where trend cycles move rapidly, rising and falling within the span of weeks a time, it’s critical that you keep an eye on patterns in data. Measuring ecommerce seasonality is essential for planning and decision-making, as they ensure that your business will keep up. 

If you can continuously monitor ecommerce trends in your business, you’ll also be able to easily identify anomalies in the data. For example, if there’s consistently a dip in sales right before starting a particular season or holiday event. Insights like these can help you to refine your marketing and inventory management strategies to mitigate cash flow crunches from these dips.

How to Manage Ecommerce Seasonality 

While acknowledging seasonality and trends in your ecommerce business’ finances is the first step to success, the process to truly optimize your business requires much more. Once you have a comprehensive understanding of your ecommerce seasonality it’s time to start implementing strategies that will help minimize the impact of trends and keep your cash flow moving at a consistent pace throughout the whole year. 

Consider the Influence of … Influencers 

With the rise of the omnichannel in ecommerce shopping, social media has become a powerful sales channel. Features like shoppable posts, in-app purchasing, and influencer storefronts on ecommerce marketplaces, drive seasonal campaigns. Trends can emerge and go viral rapidly, driving purchasing decisions during a short-lived (but high-revenue) trend cycle. 

By investing in social commerce strategies, like influencer marketing, for your ecommerce business you can expand to new audiences, capitalize on existing followers, and drive greater sales regardless of season. 

Subscriptions 

Curated subscription box services have seen huge growth in recent years. Formerly a niche market, subscriptions services now cover a wide range of hobbies and interests, as well as solving a variety of pain points for consumers. 

If it makes sense for your ecommerce business, offering subscription services or delivery options can create a reliable revenue stream outside of traditionally peak seasons. This is also a great opportunity for Amazon sellers who utilize FBA and have Prime privileges to increase their sales. 

Budget Seasonally 

In order to create an accurate seasonal budget, take a look at your sales data and cash flow trends to identify highs and lows throughout the year for your business. The biggest secret to remaining resilient to seasonal fluctuations is refining your budget to accommodate for points of increased sales, as well as decreased. Small business financing can help you offset the lows and take advantage of the highs during your seasonal changes—but first you need to know when to expect them.

Let’s look at things to consider when you’re creating a seasonal budget for your ecommerce business: 

Business Lows

After establishing when to expect lows in your ecommerce business, you can start implementing strategies to help reduce costs or generate extra cash flow during these periods. This will help to ensure that you remain at a healthy cash conversion cycle, even during lulls. 

Start by creating a list of expenses that you have to meet in order to keep your business running. This will include costs like rent, taxes, utilities, inventory, technology, and any marketplace fees. 

Spreadsheets and statements are okay, but it’s time consuming to track and forecast manually. It also leaves room for human error. Track your historical trends digitally and automatically. This data combined with your budget will allow you to prepare for healthy finances during slow periods. 

Once you’ve established what it takes to keep your business running, it’s time to start making adjustments to your budget. The goal here is to save as much money as possible so that you have capital to reinvest back into your business during high revenue seasons. Here are a few ways to cut costs during your off season:

Optimize Inventory Levels 

During your off season, demand will likely decrease. Ensure that you’re not paying for unnecessary storage costs, and keep your cash conversion cycle streamlined, by reducing inventory orders. This will help you avoid cash flow crunches that come when money is unnecessarily tied up in inventory. 

However, if you utilize Amazon FBA, be sure that you have the perfect amount of inventory (even in the off season) to avoid low-inventory fees, as these can also become costly. 

Reduce Staff Hours 

If you have part-time or seasonal employees, this is the time to cut their hours back. If there isn’t as much demand, you don’t need as many workers to keep the business running. 

Reduce Marketing Spend

If your marketing investment is tied to immediate revenue, it’s time to start making adjustments. For example, as cold weather approaches it’s likely not the time for golf club or vacation rental ads. Instead, focus on more cost-effective, evergreen methods like content marketing during these periods. 

One thing to note, be cautious about reducing marketing spend if your sales cycles are long. In some cases reducing marketing spend can help keep your business running smoothly despite limited cash flow, but in others it can reduce visibility long term.

Review Fixed & Variable Costs 

Make sure you know what expenses are necessary and which ones can be cut back on, if needed. 

By making strategic cuts to your budget during the off season, you’ll be able to reinvest that money back into your business when things pick back up.

Business Highs 

As much as ecommerce business owners dread the lows, the highs come with their own challenges. While they’re certainly more exciting, they’re also busier and potentially more expensive. 

The best way to prepare for your peak seasons is to save during your lows. Cash flow can still be an issue when business is booming due to upfront labor and inventory costs. By saving during the slower times, you’ll be able to afford the increased expenses associated with your ecommerce business during seasonal changes for the better. 

When preparing for peak ecommerce seasonality, you should create a list of typical business expenses that you’ll need to cover before you’ll see the revenue from a sales boom. All of these things cost money, so it’s important to have a plan in place with funding to cover them while demand is high.

This list will include expenses for your ecommerce business, such as inventory, additional staff, marketing campaigns, increased shipping costs, increased storage fees, and any promotions or discounts you intend to run. 

You should also have a plan for what you will do with the extra revenue . Will you reinvest it back into your business? Save it for a rainy day? Use it to pay off debt? Knowing how you’ll use the extra money will help you make the most of your peak seasonality. This will help you keep your business afloat during the slow times and take advantage of the busy times.

Stay Ahead of the Seasons 

While understanding your ecommerce seasonality and planning accordingly is critical, it’s also important that you maintain a healthy lead time on seasonal events and trends. The further in advance that you can plan for your business, the more time you have to adjust as customer behavior evolves and the unexpected happens. In addition to this, it’s also key to build up an Emergency Fund and Sleep Well at Night Buffer, on the off chance that your seasonal budget faces stressors. 

Seasonality can be a challenge for any ecommerce business, but by preparing for the ups and downs you can maximize sales throughout the entire year. At the same time, by knowing when your business’ highs and lows are, you can make strategic decisions about the right time to take on funding for your business with Viably.