What Is the Chinese New Year and How Does It Affect Your FBA Business?

The Chinese New Year is fast approaching. Familiarize yourself with the holiday – and how it affects your Amazon business.

In a few weeks, the Chinese New Year will begin, presenting a unique set of challenges for Amazon FBA sellers. For new and existing sellers alike, the holiday requires planning and attention to steer your business toward success.

When Is It?

Friday, February 12th marks the beginning of the Chinese New Year. While the celebrations can last up to 16 days, only the first seven days are considered a public holiday.

The upcoming year is the Year of the Ox. According to the Chinese zodiac, the Ox represents hard work and honesty.

What Is It?

In short, it’s one of the world’s largest celebrations, with estimates of over a billion people taking part in the fun.

The arrival of a new year is celebrated across China, with customs and traditions varying by region.

In Chinese culture, dragon dances are common for the Chinese New Year, as they symbolize good luck.

With customs and traditions varying by region, spectacular celebrations take place all over the country. Often referred to as the Spring Festival, Chinese New Year festivities are known worldwide for their glitzy fireworks display, Lantern Festival, and traditional dragon and lion dances.

During these traditions, all major businesses in China and Taiwan shut down for the holiday’s duration. These businesses, including factories, shut down for at least one week and could close for up to three weeks. Of course, this results in a pause in production for those depending on products from China’s robust manufacturing industry.

What Does This Mean for Amazon Sellers?

Since many Amazon FBA sellers source private-label products from China through suppliers such as Alibaba, the manufacturing halt can leave sellers vulnerable to inventory shortages if not navigated appropriately.

At this point, sellers should no longer expect the fulfillment of new orders before the holiday. Unfortunately, there’s little you can do to stock up if you haven’t already placed an inventory order. Marking your calendar in the months leading up to Chinese New Year would be wise.

If you’re a new seller leaping into FBA, understand this could complicate and delay your entry into the marketplace.

As you’d imagine, a heavy backlog of orders builds before, during, and after the celebration. Due to this, anticipate lengthier delays in months ahead as factory workers fulfill backlogged orders.

To successfully navigate through the Chinese New Year and the obstacles place in front of you is to communicate. When selecting a manufacturer, the importance of strong communication cannot be understated. Many suppliers with strong communication skills reach out to sellers in the months leading up to the Chinese New Year to effectively maneuver through manufacturing speedbumps.

If you have yet to have these conversations with your manufacturer, contact your manufacturer ASAP!

Don’t Sacrifice Quality

Additionally, the logjam of orders encourages speedier work. As workers rush to fulfill your order, quality may take a hit. But rushing orders by sacrificing quality leads to compounding problems for Amazon sellers.

Utilizing a China Quality Inspection company helps ensure quality control and save yourself from returns, negative reviews, or any of the potential consequences from quality issues.

While the holiday can disrupt your typical workflow, it’s important to empathize with your manufacturers and respect cultures! You may even consider buying your contact a gift to celebrate the occasion, especially if they have a history of going above and beyond for you.

In the hunt for FBA success, many forget or downplay the significance of the human element. But the benefits of a great working partnership far outweigh the cost of a token of your appreciation.

Best of luck in 2021 and the Year of the Ox!

What adjustments are you making for Chinese New Year? Leave a comment and let us know!
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Amazon Inventory Management: What You Need to Know (and Do!)

As a new Amazon seller, it’s crucial to understand the best practices for Amazon inventory management. The trouble is, this skill primarily comes with experience and requires mastering a lot of moving parts. And when compared to crafting a listing and showing off your product with stunning Amazon photography, inventory management isn’t the most exciting task on your to-do list. But if you don’t get it right, it’s going to impact your business from top to bottom.

We’re not going to sugarcoat it — sales forecasting and inventory management is tough, even for experienced sellers. The big thing to take away here is understanding why inventory management is so important and how you can avoid a detrimental stock out… never letting customers see this:

 

Let’s get to it!

Why Being Out of Stock is So Bad for Your Amazon Business

The implications of being out of stock run much deeper than you may think. Amazon inventory management is a crucial component of your business because, unlike brick and mortar stores, there are no backorders or clients who will wait patiently and just pop back in whenever a product isn’t available. Amazon shoppers will go straight to a competitor who has the item in stock, causing you to lose sales and all-important cash flow.

As if that weren’t enough, here are more ramifications for going out of stock:

  • Dropped Rankings: If you’re out of stock for a long period of time or on a regular basis, you’ll likely experience a significant drop in keyword ranking, which can be difficult to overcome even when your product comes back in stock. Giveaways and sponsored ads can help you regain ground, but you’re now operating with poor sales history and you’ll be operating with less money due to lost revenue.
  • No Organic Search Visibility: Amazon typically removes product listings without stock from its search result pages. While your listing may still live somewhere on Amazon, it’ll have a lot less visibility.

A huge part of Amazon’s appeal and what makes it arguably the world’s best business is its fast, easy access to millions of products. If you don’t manage your inventory properly, you’re going to be missing out on so many sales opportunities.

Having Too Much Inventory Isn’t Good Either

While you want to avoid having too few (or worse, zero) of inventory, you also want to avoid having too much. Inventory that’s sitting stale and stagnant isn’t making you any money — it’s actually costing you some.

On the 15th of each month, Fulfillment by Amazon (FBA) performs an inventory cleanup and any inventory that’s been in its warehouses for 181 to 365 days will incur a long-term storage fee (LTSF) of $3.45 per cubic foot. Items that have been in fulfillment centers for more than 365 days on the inventory cleanup date will incur a long-term storage fee of $6.90 per cubic foot.

Starting August 15, 2018, items that have been in Amazon fulfillment centers for more than 365 days will be subject to a minimum fee of $0.50 per unit per month. Either the long-term storage fee or the minimum fee will apply, whichever is greater.

If you’re not moving inventory, these storage fees can really add up!

Amazon Inventory Management: Knowing When and How Much to Order

So you don’t want too little and you don’t want too much. What does that mean? Take stock of your inventory and find a happy medium, or a healthy number that allows you to re-order stock while still continuing to fulfill orders.

When to Place a New Order

All new sellers struggle with how many units to buy because there are so many factors to consider. However, understanding your lead times and anticipated sales velocity can help you forecast sales and plan inventory orders.

If you’re unfamiliar with the term, lead time is the number of days that occur from when you place an order with your supplier to when the item is ready for purchase. Many Chinese suppliers typically operate on 30-day turnaround times, but if it takes another 20 days for the units to ship, clear customs and be delivered to a fulfillment center (or wherever else), that’s 50 total days you’ll need to take into account.

Like everything else in your Amazon selling journey, getting a good handle on your lead time comes with experience. As you continue to work with your manufacturer and forwarder, you’ll be able to compile data and better determine this. To help you do so, we recommend you keep detailed records of:

  • The date you order from the manufacturer
  • The date manufacturing is completed
  • The date it ships from the manufacturing facility
  • The date your shipment arrives at your home or an Amazon FBA center
  • The date your product is checked into Amazon and ready for purchase

This information will also help you evaluate the performance of your manufacturer.

Using Historical Sales Data for Inventory Forecasting

When it comes to predicting your inventory needs, examining past sales is a great place to start. If you don’t have enough data to go by, check out your competitors’ sales trends to make these predictions.

Viral Launch’s Market Intelligence is currently the only tool available that offers Amazon specific market sales trends. We use a system of complex calculations based on hour-by-hour changes in BSR to create the most accurate sales estimates. We also show past sales estimates that we’ve calculated for each product to give you an understanding of how the product has performed in the past compared to how it’s performing now. This will help you better predict how the market will behave in the future.

With the proper sales forecasting techniques and Amazon inventory management, products will stay in stock, ideally resulting in more sales and more cash flow. A win-win!

Prepare for Peak Times

As you examine historical sales data, you’ll see how demand ebbs and flows. While this may be the nature of the market, there are other factors at play that will affect your sales history and therefore, your stock needs.

To meet fluctuations in demand, plan ahead and prepare for these peak times:

  • Seasonal Demand: Consider seasonal weather and activities and how that might impact your sales. For example, anyone selling pool toys like squirt guns or floaties will naturally see an increase in sales during the warmer months. Other products may see a sales increase during the winter months or the wedding season.
  • Holidays: We all know Christmastime is huge for retailers. On Amazon, it’s all about Cyber Monday. And aside from your own country’s holidays, it’s also important to know what holidays are coming up for your suppliers. The Chinese New Year is the most notable holiday in China, resulting in widespread work stoppages across the country.
  • Trends/News Stories: Solar eclipse glasses and fidget spinners are great examples of products that capitalized on big news events and popular fads. Pay attention to what people are talking about on social media and news sites and see if you can take advantage, too.
  • Q4: Since Q4 is right around the holiday season, most brands can typically expect to see increased demand from shoppers as well as more competition from other sellers.

Preparing for peak times means anticipating longer lead times on all inventory orders, shipment delays and longer check-in times at Amazon. For reorder quantities during the Q4 boom, it’s best to find your peak sales projections for the holidays and order to accommodate it.

The goal is to always keep your inventory moving and be able to meet any spike in demand without missing a beat. By anticipating (and meeting) demand properly, you’ll be maximizing profit potential and building a better overall brand.

Managing Your Inventory in Seller Central

There are several free tools available within Seller Central, some specifically for FBA sellers, that can help with your Amazon inventory management.

On the Manage Inventory page, you’re able to perform many routine inventory management tasks, including:

  • Viewing and sorting inventory
  • Creating, copying and editing listings
  • Managing pricing
  • Adding and removing images
  • Closing and deleting listings

On the Inventory Reports page, you can find a wide range of information about your FBS inventory:

The Restock Inventory tool provides recommendations to FBA sellers on products to restock, suggested order quantities and reorder dates. Input your specific lead time and product volume to further customize these suggestions for your unique business.

Amazon also recommends that sellers keep a close eye on the shipping queue to monitor information about their shipments, including those that are in progress, in transit and at a fulfillment center.

For sellers with Professional selling plans, Amazon Selling Coach can provide you with personalized recommendations to help facilitate your success on Amazon. Discover new product opportunities, use the Match Low Price feature for pricing strategies or check out different Listing Enhancement tools to improve the quality of your content.

Selling Coach also offers in-depth inventory opportunities, including low stock alerts and Amazon’s suggested restock time using your recent sales data.

Source: Amazon

Third-Party Inventory Management Tools

While Amazon has many helpful tools, you may find it’s just not feasible to manage inventory for hundreds or even thousands of SKUs all on your own. Multi-channel sellers in particular face this problem.

There are scores of automated inventory management software tools available from third-party companies to help you manage your inventory on Amazon and across other eCommerce platforms. However, many can cost you upwards of $40 a month, so take the time to weigh the pros and cons of these services before investing.

Final Thoughts

A streamlined and organized Amazon inventory management strategy will help you stay in stock and plan ahead for peak times. While there are plenty of moving parts to inventory management, many problems that pop up are preventable. Continually monitor your current inventory levels, sales volume and lead times to make informed decisions about any new inventory shipments. Maximize your sales and profits by meeting inventory demands head on!

Protect Your Amazon Inventory in Seller Central with Max Order Quantity

After a stressful weekend convinced that Amazon had killed the promotion with one simple update, we have some great news!


We have found a TOS friendly approach to running promotions while completely protecting your inventory and have already updated our seller Launchpad with the fix!

For those of you who don’t know, Amazon removed the ability to create money/dollar off promotions. Meaning, before when a customer applied a coupon, X number of dollars were deducted from the cart’s total. However, Amazon (according to their website the change occurred on November 7th, though noticed by most sellers on Friday the 11th) has removed the ability to create money/dollar off promotions, limiting promotions to percent off only.

So what is the big deal? The big deal is that there is no way to restrict the quantity of units a customer can apply that promotion to. Even if you set the buyer benefit to 1 unit, even if you use single-use claim codes, it’s not possible. For example, let’s say you create a promotion at 80% off for your widget that typically sells at $20.00. A customer could set the order quantity to 100 units, apply the coupon, and would be able to walk away with 100 units of inventory for $400 versus the MSRP of $2000. As arbitrage becomes more popular, so does the practice of grabbing discounted products and reselling them. It could become dangerous very quickly. Even if you run a 40-50% off promotion, you still run the risk of arbitrageurs wiping out your inventory to sell on top of your listing. At that point running promotions are ludicrous.

So what is the fix? Despite what you may have read in many of the Facebook groups, there is no way to setup a promotion that will allow you to restrict a customer from being able to grab 999 units of your inventory with one promotional code. Also despite what you may read in the Facebook groups, setting your product’s settings in the “More Details” tab in the inventory management section of Seller Central to a “Max Aggregate Ship Quantity” also does not help this (frankly from our tests, I don’t think this setting serves any purpose).

For some products/categories, there is a setting in the Offers tab that allows you to set your Maximum Order Capacity to a specified number. When set to 1 for example, this allows you to limit customers to only purchasing one unit at a time. The customer does not have the ability to add more than one unit to cart whether they have a promotional code or are paying full price.

The problem here is that the majority of categories do not have this setting available in the user interface within Seller Central. So are those sellers without the setting available out of luck….? Fortunately not!

Our brilliant developer Steve was able to discover that through Amazon’s MWS APIs, we are able to update the Max Order Quantity field programmatically for products of every category. This means that for any product we can limit customers to purchasing a specific quantity for any one order! No trickery, no black hat magic. Just a simple API call and all is well.

So, we have spent the day updating our seller’s Launchpad to provide the functionality for sellers to grant us access to their MWS account. Once we have access, you can then set your Max Order Quantity in your product’s settings within Viral Launch. As you start a promotion, set the Max Order Quantity to 1, and once the promotion is ended you can remove the limitation! It is as easy as that! By setting your Max Order Quantity to 1, Amazon restricts customers from adding more units to cart than the value specified, which in this case is 1. The downside to this approach is that if an organic customer attempts to place an order for two units, they would not be able to. Fortunately when using the Viral Launchpad, you can easily adjust this setting once you have completed your promotion by going in and adjusting the settings back to unlimited.

Checkout the video in this link or watch the video down below on how to set everything up within Viral Launch to run product promotions with confidence.

 

I apologize for the short post; we were rushing to get everything updated and together. I’ll be sending out a longer post tomorrow with my thoughts on the change. I simply wanted to calm everyone’s nerves and let our community know that we have a solution!

Tomorrow I’ll be discussing why we believe Amazon made this change and why the information that I have leads me to believe that this is only temporary.

Let me know what you think or if you have any questions in the comments below!