Now that it’s November, we’re in the middle of the best time of the year to be a seller on Amazon: the 4th quarter. We have Black Friday, Cyber Monday, and the Christmas buying period that goes right up to December 21st for Amazon shoppers.
If you sell on Amazon, this is the time of year you always look forward to. Unless you only sell something seasonal like bug spray or sun screen, this is also when you will see the highest sales volumes of the year. America goes on a buying spree leading up to Christmas, and if you want to succeed on Amazon, you have to succeed in the 4th quarter.
I’ll explain below what you can expect from the holiday shopping season in terms of:
- sales volume;
- how you should modify your buying of products to re-sell;
- and also how to price your products in response to the competition to maximize your margins
If you follow these steps, you should have a fantastic 4th quarter.
Holiday Sales Volume
The chart below shows my Amazon FBA unit sales volume from 2018 during the holiday shopping season, which is the busiest part of the 4th quarter in terms of sales volume. It starts on November 23rd, 2018 (Black Friday) and goes through December 21st, 2018 (typical last major shopping day on Amazon).
This is how the volume breaks down:
- November 1st – 22nd: average of 156 units per day
- November 23rd – average of December 21st: 362 units per day
- 132% increase in unit sales volume between time periods
For the first 22 days of November, my sales volume was about 156 units per day. Once Black Friday hit, volume zoomed up to about 362 units per day, and stayed pretty steady until December 21st. That’s a 132% increase in volume, which is crazy!
To put this in perspective, let’s say you have a job paying you $1,000 every 2 weeks. Now imagine getting a 132% raise during November 23rd to December 21st, where you get paid $2,320 instead! That’s pretty fantastic, right?
Increased Purchases
This year, I personally started ramping up my purchasing of products in October, and I’ll keep it up until early December, so I can get as many things in front of buyers as possible during the holiday shopping season. I increase both the breadth of my purchases, as well as the depth of my purchases. You also need to make sure you have the purchasing power to actually buy all this stuff. I’ll explain each.
Purchasing Breadth
Throughout the year, I keep track of which of my vendors and distributors I buy from and when. However, in October and November, I start buying from all my vendors, even ones I don’t buy from regularly. I do this for two reasons.
First, I have vendors whose products are seasonal to the holidays and the fall & winter in general, so whereas these products don’t sell in the spring and summer, they do very well in the fall and leading up to Christmas.
Second, while many products I sell do OK during most of the year, they do very well during the holiday season, because they make great gifts, and that is what people are really after this time of year.
Purchasing Depth
I typically buy in 4, 6, or 8 week increments from vendors and distributors depending on the products involved. However, since I expect sales volumes to go up 132%, that means I’ll run out of product more than twice as quickly! For example, if I have a product that typically sells 50 units a month and I normally buy a two-month supply (100 units), then I should buy an extra 50 units (150 units total) for the holidays at a minimum, and more if it makes a great gift.
Purchasing Power
If you plan on increasing your purchasing this time of year, you need to make sure you have enough cash or credit to actually make those purchases. This may sound obvious, and it is, but it becomes a problem if you don’t plan for this ahead of time.
Using myself as an example, a few years ago I use to use a single credit card for purchases from vendors and distributors. I started buying furiously during October and November, but I ran out of credit! Fortunately, I was able to call the credit card lender and they increased my limit, but I should have never gotten into that situation to begin with. Today, I use two high-limit cards, and I’ve only used about 50% of my purchasing power between the two. Learn from my experience and make sure you have more purchasing power than you need!
Maximizing Margins
One of the mistakes I see other sellers on Amazon make is failing to maximize their margins during the holidays. To be more precise, they maintain their price levels leading up to Black Friday, and when the big shopping days arrive, their inventory completely sells out. This may seem like a good thing, except if their stock sold that quickly, they could have sold it at a higher price. A higher price translates to higher margins for sellers smart enough to raise their prices and take advantage of the seasonal demand spike.
The other reason running out of stock is a mistake is now they have to re-stock their inventory, and if the product in question has a 4-week lead time, for example, they may not be able to re-stock in time to capture any sales during the rest of the holiday shopping season.
Also, Amazon prioritizes fulfilling customer orders over inbound receiving late in the 4th quarter, so even if you can get more inventory to Amazon, there will be delays in receiving it so it’s available for sale.
Since I’m an experienced seller on Amazon, I also know I should monitor the stock levels of my competitors during the holidays with a tool like Keepa to see how many units they have in stock. By doing so, I can determine how quickly they will sell through their inventory, which in turn tells me how soon I can raise my prices to maximize my own margins.
Remember: the easiest dollar to make selling on Amazon is when you raise the price of your product a dollar, and the 4th quarter is often the best time to try this out!
Winning in the 4th Quarter on Amazon
Let’s summarize how to best prepare for Amazon during the 4th quarter:
- Expect increased sales volume;
- Increase your purchasing breadth;
- Increase your purchasing depth;
- Increase your purchasing power (before the holidays!);
- Maximize your margins
To have the best 4th quarter possible, you should buy more stuff than usual and price it higher than usual. If you do both of these things, you’ll be in great shape for the 4th quarter.
What are your winning Amazon selling strategies for the 4th quarter? Leave a comment and let me know!
Want to see a breakdown of my yearly sales statistics? See this post.