Q4 is crucially important to most businesses, especially ecommerce businesses. Though most businesses understand that the busy holiday shopping season is important, we’ve noticed that many often fail to address the supply chain gaps that can hinder Q4 success. This is particularly true for new businesses and those which are scaling for the first time.
EcommOps is a full-service 3PL that specializes in direct-to-consumer China fulfillment, so we’ve spent years helping businesses plan and navigate the chaos that can come with Q4 logistics. We know the supply chain gaps that commonly cause huge disruptions. The best way to prevent these problems is to fill those gaps before Q4 begins.
In this article, we’ll talk about why proper Q4 planning is so important, what happens if you don’t plan the right way, and ten tips to follow to help make your Q4 a success.
Why Is Q4 China Supply Chain Planning So Important?
When we talk about Q4 planning, we’re going to take the angle of supply chain planning from China. Most ecommerce stores partner with China suppliers or agents, and that’s also where our expertise lies. Even if you don’t partner with a China factory, the majority of our advice is still applicable. With that said, let’s take a look at why Q4 supply chain planning is so important.
Q4 Represents the Most Profitable and/or Busiest Sales Season for Most Ecommerce Businesses
Q4 takes place during the holiday shopping season, which means it is the most profitable and/or busiest sales season for the majority of ecommerce business. Customers tend to be in a “shopping mood” and are prepared to spend a lot of money on gifts, even if those products are not on sale.
With that traditionally high demand, businesses generally prepare large amounts of inventory, sales events, and extra marketing to try to capture as much of that demand as possible. The extra effort takes a lot of extra planning, and without solid planning, businesses will miss out on the opportunity to capture that demand.
Customers Have High Delivery Expectations for Holiday Themed Products or Gifts
If businesses market their products as holiday gifts, or they’re selling holiday themed products, then customers will have an expectation of when their products are delivered. If you can’t get their orders to them before specific holidays (for example, before Christmas), you will face an enormous amount of customer issues.
It takes time and planning to make sure you have the inventory and supply chain to get products to customers in the appropriate amount of time to avoid issues. The last thing you want is a wave of returns or canceled orders because you couldn’t get customer orders fulfilled in time.
The Supply Side of Prepping for Q4 Is Complicated and Challenging
You need to prep your supply chain, but the work that goes into Q4 prepping is complicated and challenging. Factories become extremely busy, which usually means much longer lead times. Shipping channels tend to get overloaded with demand, which means overall logistics slow down. This adds a layer of extra difficulty when setting shipping expectations with customers.
Shipping prices also tend to get more expensive, since there is more demand than availability. If you don’t price your products right, you may end up not hitting target margins or even losing money due to unexpectedly high shipping.
Limits to Social Media Ads and Payment Processing Platforms
If you have a new business, brand, or are considering using social media as an advertising tool, poor planning can cause problems. New Facebook ad accounts usually have limits on how you can scale your ad spend, which means you could end up with not being able to push marketing at crucial points during Q4.
Payment processing platforms, like PayPal and Stripe, can place a hold on funds to accounts that have a spike in activity over a short period of time. So, for example, if you had an extremely successful start to Q4, you may find those funds put on hold, which can stall your ability to continue pushing for inventory and ads throughout the quarter.
Consequences for Not Planning Ahead for Q4
While it’s easy to imagine the multitude of things that can go wrong if you don’t properly plan your supply chain for Q4, there are two serious consequences for not doing so: refunds/chargebacks, and selling out too early:
Chargebacks and Refunds Due to Slow Shipping Times
We mentioned this earlier, but this is a huge problem for ecommerce stores. If you don’t follow through with your shipping expectations, and/or your products don’t get delivered in time for the holidays, you will get chargebacks and refund requests. Customers get frustrated that products don’t arrive in time, and they’ll make refund requests to make sure they can get gifts in time for the holidays.
EcommOps sees examples every year, and in extreme cases, chargebacks and refunds can wipe out profits entirely. In some cases, businesses even lose money because they didn’t think through their fulfillment strategy.
Unexpectedly Selling Out or Ramping Down Marketing Due to Lack of Stock
Even if you’ve thought through your shipping strategy, not doing proper planning on how much inventory to get or how to accommodate spikes in demand can be detrimental, too. It’s common for businesses to sell out rapidly, only to be left with no way to restock to take advantage of demand.
Instead, they have to ramp down marketing since they have no inventory to move, and by the time they actually get products back in stock, demand and excitement for their product or brand has died or shifted to
Top 10 Supply Chain Gaps to Consider
Now we know why planning is important, and some of the worst consequences of not properly planning your China supply chain for Q4. Now it’s time to take a look at common gaps to consider during your planning that will help your Q4 be a success!
You should note that if you are an established business that has already scaled in Q4 before and are looking for more detailed information, we recommend reading this blog that provides more in-depth information.
Tip 1: Be Aware of Important Dates
While most businesses are familiar with when Q4 begins and ends, we have found that many businesses aren’t aware of key dates within Q4 that can impact planning. Let’s take a look at the dates businesses should keep in mind:
First Week of October – China’s “Golden Week” Holiday
In the first week of October, factories, fulfillment partners, and general logistics will be on holiday for 4-7 days to celebrate the Golden Week. This is the last China holiday before the major sales season, so it usually doesn’t cause a lot of disruption. However, it is worth keeping in mind for planning (so, don’t plan on making big moves the first week in October).
Early October to Mid November – Factories Ramp Up Q4 Production (and You Should Start Scaling)
After Golden Week, factories start to ramp up Q4 production to accommodate for unexpected demand spikes for products. After all, factories don’t want to unintentionally sell out and miss the demand for what they make, either. If you are planning Q4 scaling, this is the time in Q4 to start communicating with factories to let them know about your potential product needs.
Fourth Thursday of November Through the Following Monday – Thanksgiving and Black Friday / Cyber Monday Sales
This time period is the biggest sales period of the holidays. Businesses should expect to see (and plan for) sales spikes during this period. If you planned your stock correctly and are using reliable shipping methods, then sales during this period should get to your customers in key countries by Christmas with no problem.
Early December – Final Date for Before-Christmas Fulfillment
Early December is typically the last ship date for fulfilling orders from China to customers in order to arrive by Christmas. What the specific dates are will be determined by what shipping service you use and what your destination country is.
Mid-December Through Christmas – Continued Sales
It’s a common misconception that holiday sales plummet after the last ship date for orders to arrive by Christmas. While sales may slow, EcommOps regularly sees very strong sales through Christmas Eve. Customers are still in a shopping mood, they may be shopping for gifts they forgot, or they may even be shopping for themselves.)
Businesses should plan inventory and fulfillment well through December, not just for the big shopping rush of Black Friday and Cyber Monday.
Tip 2: Test and Select Your Winning Q4 Products Early
You should have a solid idea of what your winning products are (or what products you plan to push during Q4) as soon as possible. That means early testing (especially if you are testing with AliExpress), and having a firm plan in place before Black Friday and Cyber Monday approach.
Even if you don’t have specific holiday products or products that you plan to push, businesses should be prepared for a higher volume of sales in general. For example, if you sell children’s toys, you should expect higher holiday demand and an expectation that products can be delivered before Christmas.
Some products may not experience a holiday push (for example, evergreen functional products). However, businesses still need to plan and determine which products they expect to have higher demand and plan accordingly.
Tip 3: Scale to Consistent Volume Even Before Black Friday or Cyber Monday
We encourage our clients to try to gain confidence in marketing to scale before the spikes of demand brought on by Black Friday and Cyber Monday. That confidence and experience handling large volume orders is crucial for a successful Q4, and it will be much easier to plan for stock projections if you’ve attempted to scale beforehand.
Scaling up gradually has other benefits, too. Consistent growth will make it easier to scale ads on Facebook and to have ready access to funds on payment accounts like PayPal and Stripe. Going from a trickle to a huge spike in orders can trigger those accounts to lock or freeze due to fraud prevention measures.
Tip 4: Find a Great Supplier/Factory (and Establish Solid Communication) Before November
If you plan on making a hard sales push in Q4, you must have an excellent factory and established communication with that factory before November. Factories will begin production with their clients (or plan production) well before November and waiting for the last second to try to find a supplier can leave you empty handed until Q1.
If you already have a supplier you love, don’t surprise them with large volume orders for scaling! Let them know what your production plans are, confirm their capacity, and include them when you are formulating a Q4 strategy. This will allow factories to prepare for demand, and it serves to help maintain relationships with factories for long-term business partnerships.
Tip 5: Start Branding and Product Customizations Before November
Even if you have a factory and 3PL partner you love, it takes time to customize products. Even if it’s as simple as adding your branding to existing products, there’s still a number of steps you have to go through in order for that to happen. You absolutely do not want to start customization deep into your sales period.
Your business should be laser-focused on marketing and sales during November, not on tweaking or testing new designs.
Tip 6: Keep Cash Reserves Available to Buy More Stock During Q4
It’s a good idea to keep a small reserve of cash available to buy more stock during the Q4 shopping season. You may have a product that unexpectedly sells well, or you may have overwhelming demand for a product you’re pushing. Extra cash reserves means you’re positioned to order more stock to take advantage of consumer demand.
Tip 7:Make Sure You Have Plenty of Margin
Your costs are going to increase during the shopping season, so if you don’t have an appropriate amount of margin, you could end up losing money on the inventory you sell. A few common cost factors that businesses often fail to account for include:
- Faster shipping lines: Most businesses will offer some kind of faster shipping during Q4, especially closer to Christmas.
- General increased shipping: Even if you don’t have the added expense of faster shipping, general shipping costs usually increase deep into the sales season. The sheer volume of demand will outpace availability, which causes the price of all shipping to go up. Making sure you have enough margin to cover increased shipping is crucial for a successful Q4.
Tip 8: Consider China Fulfillment for a Flexible Supply Chain
Q4 is going to be hectic for supply chain with even the most solid planning, so businesses should consider making their supply chain as flexible as possible. One of the best way an ecommerce store can make their supply chain flexible is by incorporating China fulfillment into their overall fulfillment/shipping strategy.
With China fulfillment, products aren’t shipped to local warehouses via sea freight. Instead, inventory goes straight from a China factory to a China fulfillment warehouse, where products are then shipped directly to customers world-wide. There are a number of benefits to this fulfillment strategy that appeals specifically to ecommerce businesses, like:
- Extremely short lead times: Since products are made by nearby factories in Shenzhen, lead times between suppliers and fulfillment centers is usually between 1-2 days (sometimes less)
- Fast international shipping: International shipping is much faster with China fulfillment, with EcommOps usually fulfilling around 5-8 days. During Q4, these times will be longer (but this is true of all shipping methods).
- Low inventory risk: Since lead times between your fulfillment centers and factories are so short, businesses don’t have to buy a large volume of product at a time. Instead of buying 3-6 months of inventory, China fulfillment allows businesses to order just a few weeks worth of inventory at a time, greatly reducing your inventory risk.
Freight shipping was designed for traditional retail, not ecommerce, which is why we encourage our clients to consider China fulfillment. During Q4, freight shipping is a nightmare and often isn’t a real option for businesses at all, especially once the busy sales period picks up.
Tip 9: Consider FBA, FBM, or Both
Building an independent web presence takes time, which is why we often encourage clients to consider using Amazon to get started. Using Amazon is a good way for new businesses to legitimize themselves, and it’s a fast, easy way to get in front of a lot new customers quickly.
When businesses look to sell on Amazon, they’ll have two fulfillment options: Fulfilled by Amazon (FBA) and Fulfilled by Merchant (FBM). Each of these services have their own pros and cons (and EcommOps has talked at length about the differences between FBA and FBM and how to choose between the two). Businesses may also decide that a combination of both services is appropriate.
It can be tricky to get started selling on Amazon for the first time, so EcommOps makes it a point to offer businesses help, including by being an FBM fulfillment partner.
Tip 10: Consider Partnering with a 3PL
Working with a 3PL (or third-party logistics provider) can relieve a lot of stress during Q4. A 3PL handles pick, pack, and shipping operations, warehouse management, order fulfillment, return processing, and even factory management. If you expect high order volume and don’t want to handle the minutiae of fulfillment, then partnering with a 3PL (like EcommOps), could be a great solution.
EcommOps: DTC China Fulfillment Experts
Navigating Q4 as a new business can be a huge challenge, which is why so many businesses look to EcommOps to help avoid gaps in their supply chains. We’ve helped businesses have successful Q4 and general-selling seasons for years, and our unique advantages as a China 3PL gives us a number of unique benefits, including:
- Bilingual Mandarin/English support
- Shenzhen-based fulfillment center
- Physical offices in the U.S. and in China
- Complete 3PL service offerings
If you’re interested in partnering with an experienced, China-based 3PL, we’d love to hear from you. Fill out our webform, and our experts will examine your business and confirm whether or not our services are a good match for you. If so, EcommOps will start on crafting a Q4 strategy that will be perfect for your business.
FAQs
1. Does EcommOps offer Q4 planning services?
Yes! EcommOps offers support throughout the year for clients in need, including Q4 planning. If you’re interested in how EcommOps can offer Q4 support unique to your business, fill out our contact form to get started with creating a plan for a successful Q4 season.
For Q4 support we recommend getting in touch with us in October. That said, we are located in Shenzhen near the factories, so we have very short product lead times. This location allows us to be flexible even in the height of the busy season. We will accept new clients in need of Q4 support until the end of November.
2. How can I get in touch with EcommOps?
You can contact us through our website. You can also reach us through our social media pages, such as LinkedIn and Facebook. We are always happy to speak with you!
3. Can I plan my Q4 with EcommOps providing warehousing fulfillment services?
Yes, you can plan your Q4 with EcommOps providing warehousing fulfillment services. Planning out your final quarter will help you avoid making errors that can have heavy costs both on the business and you personally, as well as your team members.
4. When is the deadline or latest time to start working with EcommOps for Q4?
There is no specific time, but to work as efficiently as possible, we accept new clients up until the end of November. Whether or not we’re able to partner with you will still depend on the specific service you need. If what you need is more complicated, we might not be able to provide support within that timeframe. We suggest starting your Q4 planning and conversation with us by at least October.
5. Is the MOQ for Q4 different from EcommOps’ general MOQ?
No, our MOQ is the same year-round. The difference is that Q4 is the busiest time of the year, so if you’re thinking of a particularly complicated enterprise, contact us as soon as possible so we can begin to create a Q4 plan.
6. Where is EcommOps’ fulfillment warehouse located?
Our fulfillment warehouses are located in Shenzhen, which is an enormous ecommerce hub in China. It’s an ideal location both for finding ideal suppliers and having access to the best shipping routes.
7. Does EcommOps offer dropshipping fulfillment?
No. While this is a service we have offered in the past, the focus of our services have changed. We providing warehousing services for direct-fulfillment, but we require clients to operate in a more traditional supply chain, like maintaining inventory in a China warehouse.
8. What countries does your order fulfillment service ship to?
We fulfill orders to more than 30 countries worldwide. If you’d like to know more about the services we provide to a specific country, we encourage you to reach out to use through our contact form.
9. What shipping companies does EcommOps work with?
We work with most major shipping companies when fulfilling orders. Our expertise allows us to choose the specific shipping company and shipping lines that is best for your product and customer base.
10. If I use EcommOps’ China fulfillment center, can I still use Shopify or my preferred Ecommerce platform?
Yes! We can integrate with your existing platform, provide a ready-made integration with Shopify, WooCommerce, or other major ecommerce platforms, or we can create a customized tech solution that is catered to the needs of your specific business.
