Chinese New Year Implications for Ecommerce Brands: How to Prepare for the Shutdown

Chinese New Year

Chinese New Year is often a challenge that many ecommerce brands are aware of, but they just don’t understand how challenging it can be to navigate this holiday. This is especially true if you not only source inventory from China, but you also fulfill from China as well. 

EcommOps helps ecommerce businesses navigate the Chinese New Year every year. We are China fulfillment experts and have years of experience making sure that our clients have appropriate expectations of the shutdowns that happen during this holiday. We also make sure that brands don’t have to stop selling (if they don’t want to), and EcommOps helps brands to avoid common mistakes. 

Spring Festival Chinese New Year dragon

What Is Chinese New Year?

Chinese New Year (often called the Spring Festival), is the most important holiday in China. It marks the beginning of the new year on the Chinese lunar calendar, and it is an enormous celebration. Families of multiple generations will gather to spend time together, and since modern life can make families spread out (like through career choices or general urbanization), Chinese New Year is the holiday (and sometimes the only choice), for families to gather.

Traditionally, Chinese New Year served as an opportunity for farmers and workers to take a break from their year-long duties, and the focus on rest continues today. It’s expected that everyone takes a break, including those in labor-intensive professions like factory workers and logistics workers. 

For example, in 2024, Chinese New Year begins on February 10th, though celebrations (including the break from work), tend to begin a few days before the start of the new year. 

How Does Chinese New Year Impact China Fulfillment?

With factory workers and logistics workers taking extended breaks, ecommerce brands should expect that Chinese New Year has a significant impact on China fulfillment. In fact, even if you only order inventory from China, but fulfill domestically, there are still significant delays you should be prepared to navigate.

Couriers Take 8 Days Off

You can expect your courier partners to take around 8 days off during Chinese New Year. During this break, nothing will be shipped out of China to customers. Orders cannot be fulfilled, returns cannot be processed, and any other part of your supply chain dependent on couriers will come to a standstill. 

If for some reason you have a supply chain partner that is offering non-stop fulfillment with no caveats during Chinese New Year, it should give pause for concern. They’re likely uploading tracking numbers before fulfillment, which can cloud what is actually happening on the backend of fulfillment. 

Fortunately, the courier disruption is pretty mild. It’s only about a week delay, and the only noticeable impact will be to customers that have placed orders towards the beginning of the courier pause. 

chinese new year lanterns lucky

Factories Take 15-40 Days Off

Even if you only order inventory from China (as opposed to also fulfilling), the break in factory production will make a big impact. While the actual time varies, you can expect factories to pause production for 15-40 days. This means it is not possible to purchase stock during this pause, which means no reorders and no scaling

Then, once factories begin producing again, there will be a considerable amount of backlogged orders that will cause production delays. This can cause snafus in otherwise solid, well-thought out supply chains, which is why appropriately preparing for these pauses is crucial to planning. 

Should Ecommerce Brands Pause Their Stores During Chinese New Year?

It’s common for ecommerce brands to consider just pausing their stores and ad-spend altogether during Chinese New Year. The challenges of the production and fulfillment pause makes this seem like the easy answer, and while it’s not necessarily a bad option, you don’t have to pause your store during Chinese New Year

There’s not an objective right or wrong answer to pausing your store, so here are some factors to consider when you’re trying to make that decision for your own business:

  • You should NOT pause your ads or store if you have a winning product with healthy margins (there’s no guarantee you can pick up where you leave off before shutting down)
  • You SHOULD pause your store if your sales volume is already down and/or your ROAS is poor. It’s a great time to refresh and start with new products in the spring. 

How much you shut down (whether you actually fully pause or if you just slow ad-spending) will depend on your business, your product, and available inventory before the production pause. 

How Can Ecommerce Stores Maintain a Winning Product During Chinese New Year?

If you have a winning product, you shouldn’t pause your store. However, you have to create a strategy to be able to do this effectively without harming your brand. EcommOps helps clients navigate keeping winning products selling through Chinese New Year every Q1, and these are the steps we recommend you take to avoid disruptions:

Communication with Chinese factories

1. Contact Factories for Their Closing Date

First, you need to contact factories (or your general suppliers) to confirm how long they are closed, the last date to make orders, and when they plan to open again. This is key information to creating an inventory plan that keeps your winning product selling and your store open. 

You should get this information as early as possible, since you want to allow enough time for your stock to be produced and in your fulfillment partners’ hands before Chinese New Year. If you’re reading this and haven’t contacted your factories, you need to do so immediately

2. Plan Your Inventory Early and Conservatively 

Your inventory planning for Chinese New Year should begin as soon as the Christmas shopping season is over. Factories are going to be swamped with pre-stocking orders for the pause in production, so placing your inventory order early is key to making sure your fulfillment partners can have products in time. 

Deciding how much inventory to order, on the other hand, is a bit of a guessing game. Consider making a conservative estimate when thinking about how much product to order during Chinese New Year. After all, your Q1 numbers aren’t going to be anywhere close to your holiday numbers. 

Inventory planning for ecommerce stores during chinese new year

So, how can this look? Let’s say you currently sell 200-300 units a day during the holidays. That means you should potentially consider a 100 unit per-day target for Chinese New Year, which allows you to calculate your estimated inventory like this:

Planned inventory = (number of days from the last order date to when the factory reopens) x 100 units a day

Your goal during this period is to just maintain. Maintain your ad spend, maintain sales, and do not attempt to scale during the production pause. If you increase ad spending and get a bunch of customer orders and sell out, you cannot restock during Chinese New Year. Period. You just want to position yourself to maintain momentum and hit the ground running when production resumes.

3. Adjust Marketing Spend Based on Inventory, Not the Other Way Around

Your ad spend should be adjusted according to your daily inventory projections, not the other way around. If you spend a bunch of money on ads and sell out early in the production pause, there’s no way to have more inventory arrive until well after factories open back up. 

For example, if you planned on 2000 units over a 20 day period, with the assumption that you sell 100 units a day, then this is your hard limit on ad spending. You can’t scale because you won’t have access to inventory to support that scaling. If you scale up to 1000 units a day and exhaust your inventory in 2 days, then you’re back to square one on how to maintain a winning product over Chinese New Year. 

Even if your ROAS is mind-blowingly good, that won’t make inventory magically appear. It’s better to keep the momentum of a winning product going instead of having a spike of demand, selling out quickly, and then waiting months until you can try to find that demand again. 

Notify customers

4. Set Customer Expectations on Shipping Times

Be honest and set appropriate customer expectations on shipping times for their orders during the courier break. There’s a lot of ways to do this, including:

  • Indications on your website about possible delays
  • Notices on screen once purchases are completed
  • E-mails sent to purchasing customers 

Customers expect to make a fully informed decision before making a purchase, and customer anger usually occurs when they feel like they’ve been deceived. If you’re honest and straightforward about possible or actual delays, as well as why, it’s far less likely that they will leave bad reviews or ask for a refund. 

For our clients, EcommOps fulfills orders until the last day possible, and resumes fulfillment as soon as the holidays are over. That means if you have stock prepared with us, there’s only about an 8 day delay on some of your orders due to Chinese New Year (which isn’t crucially bad). Your customers just need to know about it!

If you don’t work with EcommOps, you should reach out to your fulfillment partner to understand when the last day they ship orders and when they resume. Then, communicate this possible delay to customers through the channels that we recommended. 

The Do’s and Don’ts of Ecommerce During Chinese New Year

Navigating Chinese New Year can be challenging for ecommerce stores, and while there’s no one-size-fits-all solution, we do have some practical do’s and don’ts that most businesses can (and should) follow: 

Do NOT Test New Products Or Scale 

We’ve already mentioned several times that you shouldn’t scale during the holiday because of the lack of available inventory, but it’s also a bad idea to test products for the same reason. You’re not going to get much market research worth any value if you can’t scale a product as new demand is discovered. 

Stick with products that are currently on the market, and plan a conservative inventory amount to sell through Chinese New Year. 

Do not sign

Do NOT Keep Upsell or Other Low Volume Products Available for Sale

Upsell and other low volume products should be marked as sold out on your website (unless you actually plan on pre-ordering and holding significant stock). It’s exceptionally difficult to have accurate daily projections for these products, and you want to avoid slow shipping speeds for non-primary products.  

Keep things simple and easy during Chinese New Year, and when factories open back up, you can start pushing upsell and low volume products. 

Do NOT Exhaust Cash Flow After the Busy Q4

You may be tempted to “treat yourself” after a busy and successful Q4, but that can hamper your ability to to prepare for Chinese New Year. Usually, an upfront payment is required to prestock, as well as a separate cost to cover shipping once your orders are fulfilled. You need that extra cash flow to prepare for the holiday, and without it, you may be forced to pause your store when you otherwise don’t need to.

Do NOT Depend on AliExpress During the Production Pause and Backlog

AliExpress may look appealing when you’re desperate for inventory, but you shouldn’t plan on using the platform when production is paused and when there is a backlog of production after the break. Sellers on AliExpress operate on smaller scales, and they generally don’t have good enough relationships with factories to get priority on inventory or even building good factory relationships. 

DO Consider Production Customizations, Including Branding and Improvements

Q1 can be a great time to consider production customizations for branding and improvements. You have the cash flow from Q4 available, you may be able to meet the MOQ required for customizations at factories, and you have the market experience to understand what needs to be changed. 

Customizations do increase lead times, so you need to touch base with your partner factory or factory management partner as soon as possible if you plan to customize, since product changes often increase the lead times you’re used to. 

china fulfillment and global logistics experts

EcommOps: China Fulfillment Experts

Chinese New Year presents a challenge for ecommerce businesses and their supply chains, which is why having a China expert in your corner is key to easily and successfully navigating the production and fulfillment pauses. EcommOps is the leader in China fulfillment, and we know exactly how to navigate supply chain challenges associated with the holiday break. 

If you’re concerned about forming a strategy for Chinese New Year, or if you’re interested in how you can leverage China fulfillment for a flexible, resilient supply chain, we would love to connect. Fill out our online form, and we’ll be in touch to create a strategy catered to your specific business needs!

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