For many retailers, sales are lower in Q1 than at any other time of the year. If you aren’t selling blankets, snow gear, exercise equipment, or supplements, you’re likely downshifting to save money for more profitable quarters. On the flip side, sales trends in 2020 thus far are forecasting nothing short of a blowout for FBA sellers this holiday season, so year-end revenues should be healthy.
Along with the usual holiday mayhem, Casey Gauss, Thrasio’s VP of Amazon SEO, advises sellers to expect more of the unexpected in Q1. We may see more of what sellers saw in Q2 of this year—supply chain disruptions, shipping delays, and stockouts. These problems are by and large out of your control. Therefore, you should prepare for anything you can control and keep a careful watch on your inventory.
While many sellers will indubitably be celebrating all-time Q4 revenue highs, they’re simultaneously staring down the barrel of the new year and expecting the traditional Q1 drop. At Thrasio, we’re hoping to extend the most wonderful time of the year into Q1. We’ve got a few ideas on how to combat shoppers’ annual spending hangover in January while sidestepping the annual logistical obstacle that is Chinese New Year.
Through strategic planning, fresh creative assets, and smart ad spending, you can turn your Q4 profits into real growth in 2021.
Plan Your Work, Work Your Plan
It’s a good time to prioritize administrative needs. First, meet with your CPA as close to the New Year as possible, and see if you can afford a safety net for the coming year. As our Chief Supply Chain Officer, Mounir Ouhadi, says, “We can’t predict black swan events like the pandemic. But we can do our best to plan for what we know is coming based on trends.”
If you’re looking into improving your current products or testing out new suppliers, keep in mind Chinese New Year will be in full swing. During the month of January in China, most laborers and suppliers take off work from their factory jobs and travel home. This creates a trucking and shipping scarcity amid slower factory output. It’s also common for factory workers to change jobs around this time. If your supplier is in China, Taiwan, or Vietnam, make sure your inventory forecasts are as accurate as possible, and ensure your orders will last through the end of January to avoid exorbitant shipping costs and quality control issues.
Ouhadi predicts sellers will overreact and over-order their products for Q1 and Q2. With the COVID-19 vaccine shipping in the first half of 2021, we might expect big shipping providers to focus on vaccine distribution in Q1 and Q2 causing constraints on logistical essentials like air freight.
If you have enough working capital, you can protect your business by stockpiling two months’ worth of future demand with the supplier or a local 3PL close to the market where you sell. Otherwise, you may want to work with your suppliers to make sure they have everything prepared to initiate production rather than leave you scrambling.
Updating your listing photos, A+ Content, and copy may be the easiest lift for maintaining your growth in Q1. Spend time during the second half of Q4 gearing up for the next shopping events (e.g. The Big Game in February, Chinese New Year, Valentine’s Day), or just a general update to compete with new branding trends.
Amazon’s algorithm prefers listings with all nine listing photos allowed, A+ Content, and a brand video. Take a look at the search results page for your product. See if you can orient the products in your main listing photo differently to make your listing stand out among your competitors. Changing positions or improving the arrangement of included items may be more eye-catching to shoppers when scrolling through search results. At Thrasio, we call them “thumb-stoppers.”
You can test new branding against your old stuff with services like PickFu and Splitly. Pickfu allows us to target Amazon Prime members only and show them the old creative against our new creative and ask which one they would be inclined to purchase. Splitly offers automated A/B testing on a variety of listing features from images to pricing.
Shift Your Branding’s Point of View
In Q4, you’re likely to sell your items as a gift for the customer to give to someone else. Conversely, Q1’s customers are shopping for themselves. Update keywords, PPC, DSP, and social media ads to help the customer imagine the product in their own hands rather than as a gift for someone else.
Additionally, our VP of SEO (and all-’round Amazon expert), Casey Gauss, predicts Amazon will only guarantee delivery in time for Christmas on products purchased December 9th or earlier. This means that people scrolling through social media and Amazon in the 15 days leading up to Christmas are more likely to be shopping for themselves and anticipating cash and gift cards in just a few days. With the pandemic still keeping many people at home, that’s a lot more time spent on social media than in previous years.
One More Thing
Q1 may be a good time to evaluate your software and subscriptions to see if you can cut back at all. Subscripturation is a huge problem in the Amazon space. So many programs only cover 1 or a small specific subset of tasks. It’s super easy for smaller companies to be inundated with tons of different tools for minor tasks..or even subscriptions you’ve forgotten to cancel. Learn more about what software Thrasio brand managers can’t live without here.
Want to learn more about Thrasio and how we manage brands? Subscribe to our new podcast, The Selling Point.