Experienced ecommerce businesses know how important Q4 sales are, which is why it’s so crucial that businesses are able to create a plan to effectively scale during Q4. However, unlike simply surviving Q4, scaling through Q4 brings unique challenges that even experienced businesses can struggle to overcome.
This module will cover the challenges that scaling during Q4 brings. If you’re a new business or brand and haven’t ever experienced a Q4 selling season, we recommend taking a look at our resource guide for beginners.
What We Are Going to Cover
- Why Q4 China supply chain planning is different if you are scaling
- Key considerations and decisions for you to make first
- Our framework for planning through Q4 for 7+ figure clients
Why Q4 China Supply Chain Planning Is Different if You are Scaling
As we said, this module is geared towards more experienced businesses. In particular, the information present will be a pivotal resource if you:
- Have a winning product with consistent orders (50 to 1000s of orders per day), OR have plans to scale to that level through Q4
- Have the marketing ability to push for a big Q4
- Want to maximize your Q4 sales / profits through supply chain optimization
Your business has also moved away from less efficient supply chains, like dropshipping, and has moved to establishing a genuine supply chain. You also have achieved success with a product or a brand, allowing your business to grow. However, that success and growth makes the stakes higher for Q4, since you likely have most, if not all, of the following:
- A brand that you worked hard to get to profitability
- Ad accounts and payment accounts that have gotten through initial hurdles of scaling (but you really need to preserve)
- A team that depends on you for their livelihood
- A TON of potential to CRUSH it during Q4
You don’t want all of this to implode during the most important sales period of the year, and risk wasting all of your hard work. However, businesses face a two-fold risk in this kind of Q4 planning:
- If you fail to meet customer expectations in product quality or shipping times, the damage to your brand could be very long lasting, even after Q4 is over. We’ve seen many shut down due to Q4 supply chain issues.
- Running out of stock is a major concern. If you had to pause marketing because you simply could not get stock in time, that could be a difference between a 6 figure vs 7+ figure Q4.
There are other supply chain issues to consider as your order volume rises. Any of these could cause shipping delays, which will impact your customer experiencer:
- At a certain point factories might literally run out of available capacity, especially with peak holidays demand
- Make sure to check out module on inventory planning for scaling
- Your fulfillment agent might run out of warehousing space and/or labor and lead to delays
- We always ramp way up on labor for Q4, and plan for flexible space as needed (at our cost)
- Depending on the size of your product it’s possible that courier trucks can’t fit them all in one trip and have to push to the next day
- We plan for multiple trucks from our couriers in anticipation of increasing order volume
Remember, logistics tends to slow down during peak Q4 for everyone, and as order volume increases, the slowdown gets more severe. Shipping price begin to change, too:
- You’ll have a ton more unhappy customers if you don’t get the right shipping options correct, and missing expected Christmas delivery
- Shipping prices tend to increase during peak Q4, sometimes with just days notice
- Especially if your product is on the heavier side, the difference can be significant and cut into your margins…if you run out of stock with thousands of orders that need to be fulfilled right after a price increase vs prior, that could mean a huge difference in margins for you.
Advanced Q4 Considerations and Key Decisions
Now that you know the stakes of Q4 scaling and the special complications of the holiday shopping season, it’s time to start taking a look at advanced considerations and key decisions in order to cement your Q4 scaling plans:
- Establish what your marketing plans actually are
- Are you planning BFCM sales, and how hard you plan to push
- Does your marketing angle necessitate Christmas delivery as gifts
- How hard to you plan to scale in terms of order volume trends
- Unfortunately the exact numbers will be difficult to predict, but you should at least get a ballpark
- E.g. you’re running at 100 orders per day in October, and you want to try to peak at 5-10x that
- Unfortunately the exact numbers will be difficult to predict, but you should at least get a ballpark
- Are you guaranteeing Christmas delivery and how aggressive do you want to push that
- Shipping cutoff dates can only be a close estimate…the closer you push it, the more risk a higher % of orders will not make it in time
Next, think about inventory planning and target products you plan to push:
- What your risk profile is in terms of inventory planning
- Do you want to take more risk with inventory to support your scaling
- Do you want to take less risk with inventory and risk selling out (remember that opportunity cost is also a cost)
- If your product is likely to only be a seasonal product (e.g. Christmas ornaments) then you probably want to take less risk…if it is an evergreen product and just taking advantage of Q4 then not as big of a deal to have stock leftover for Q1
- What product(s), sku(s) are you actually planning to scale
- Every additional SKU will make inventory planning more difficult / risky…decide if you really need to scale up everything or just focus on the top seller(s) and get that as optimal as possible
Finally, consider what scaling into December looks like, as well as considering a supply chain partner:
- How much margin do you want to cut into opting for faster shipping options as Christmas comes closer to
- E.g. many of our clients start upgrading their shipping line services to more reliable, but more costly options to potentially squeeze out 1 week+ of sales at the peak sales period
- What supply chain partner you work with to support your goals
- You need to be pretty much 100% confident that your supplier can support your scaling, and work with you to navigate the details
- Note: no supplier is going to be 100% perfect…unexpected issues always arrive in the supply chain, especially during busy periods. But you need to trust them to act as your partner in the process.
- You need to be pretty much 100% confident that your supplier can support your scaling, and work with you to navigate the details
EcommOps's Framework for Advanced Q4 Planning
We cater our services to each specific client, but for 7+ figure businesses, we start with the same general framework as a foundation. If you don’t work with us directly, this is a great framework to start from when creating your own advanced Q4 plan:
Our framework is divided according to key dates in Q4:
- First week of October – China’s “golden week” holiday
- For existing clients with consistent products we start to reach out to factories to get details on their production plans and any potential concerns through Q4
- We usually start these communications prior to the break (in late Sept) and continue conversations after
- If there are any concerns we start reaching out to clients to give them a heads up, and check what their own scaling plans might be
- Some data points we make sure we get from the factories:
- Lead times, and how that might change with higher volume
- What capacity constraints might be, and how much competition do they expect we’d face as demand goes up
- Are there ways they can scale up if needed, and how fast might that take
- Are there viable backups we can use in case
- Don’t worry if you haven’t started planning this early, it’s not really necessary, but we always like to plan early
- However at this point you should try to have a supplier who is already communicating with factories and getting on their radars
- For existing clients with consistent products we start to reach out to factories to get details on their production plans and any potential concerns through Q4
- Early October to Mid November – Factories ramp up their Q4 production (and clients start scaling hard)
- We communicate with clients to get information on them on their Q4 plans
- Again, you won’t know exactly, but at least try to communicate with your supplier your overall ambition, and also if you plan on running big sales on BFCM etc.
- We work on inventory planning and considerations with the clients depending on their goals and the data points we get from the factories
- This starts to occur on an almost daily basis, as order volume goes up – we constantly adjust our purchasing plans based on client order volume and lead times depending on the client’s risk profile
- We also constantly check in with the factory to confirm if lead time / capacity has changed or if any other issues have arised so we can adjust accordingly
- Regular and clear communications with your supplier / factories is incredibly important at this point…as this scaling phase will set the baseline for BFCM and December sales
- Make sure you communicate your marketing plans (up or down) so they can have a heads up to adjust accordingly
- Be honest if you were too aggressive in planning for your marketing performance projections and plan to slow down, so your supplier doesn’t project out too much stock
- Make sure you communicate your marketing plans (up or down) so they can have a heads up to adjust accordingly
- This is also when we start updating on potential changes in shipping…we will do this regularly throughout the remainder of the sales season
- Costs are likely going to go up around this period, potentially multiple times through Nov / December
- Logistics tend to slow down and we will provide updates on if and when you should start considering swapping to faster (and more expensive shipping options)
- We communicate with clients to get information on them on their Q4 plans
From here, it’s time to focus on the heavy sales periods: Thanksgiving, Black Friday, and Cyber Monday:
- Fourth Thursday of November through the following Monday – Thanksgiving and Black Friday / Cyber Monday Sales
- THE biggest sales period of the holidays…you will likely see (and plan for) a significant sales spike during this period
- Prior to BFCM we check with clients on their sales plans, and how much stock we need to stock in advance
You should consider BFCM planning on two sides: marketing and fulfillment.
- On the marketing side:
- You want to have as close of an idea as reasonable of how much volume you plan to push, based on:
- Your order volume and ROAS prior to BFCM, and how aggressively you want to push sales…this is why the more you can scale profitably prior to BFCM, the more confidence you will have
- Btw, keep in mind that even if you don’t plan for a hard sales push during BFCM, sales naturally tend to spike up as everyone is in the buying mood, particularly in the US but also around the world
- You want to have as close of an idea as reasonable of how much volume you plan to push, based on:
- On the fulfillment side:
- You want to decide if you want to prestock, and how much, which are factors of:
- If you are targeting fast fulfillment and are willing to take more risk to potentially over stock
- If you are targeting / guaranteeing Christmas delivery, and what the shipping cutoff might be for different countries
- What the lead time looks like for re-ordering stock
- You want to decide if you want to prestock, and how much, which are factors of:
- Early December
- After the BFCM spike, you will still have high order volume as customers make their Christmas gift purchases
- Similar to earlier this is when you need to be communicating regularly with your supplier, and your supplier with your factory to check in on stock purchasing to support your volume
- If you are targeting or guaranteeing Christmas delivery, this will be when the shipping cutoff will be crucial
- By this point, IF you are targeting Christmas delivery you should already be opting for the faster shipping lines
- Depending on country, we will start announcing cut off dates for shipping in order to have your packages delivered by country
- Keep in mind:
- Expected shipping cutoffs are only estimates, and not guarantees
- The cutoffs are when packages are fulfilled and shipped from China, NOT when your orders are made
- If you run out of stock, it doesn’t matter if the order was made by a certain point
- Inventory management becomes extremely crucial at this point, because if you run out, you will likely miss the shipping cutoffs
- After the BFCM spike, you will still have high order volume as customers make their Christmas gift purchases
- Mid December through Christmas
- Past the shipping cutoffs, DEFINITELY do not promise Christmas delivery, you are running too high of a risk
- Sales performance tends to continue to be relatively strong all the way through Christmas eve, so this is a good opportunity to still try to push as late as you can, which is a great thing as you can use this period to sell through any stock you might have over ordered
