Q4 planning is paramount to any ecommerce business, but proper planning is crucial to the critical success of the holiday shopping season. If you’re new to preparing for Q4 shopping, then this guide will serve as an excellent introduction to the challenges you’ll need to navigate.
If you’re more experienced in Q4 planning and are ready for more advanced advice, consider looking at our other planning guide catered to businesses looking for more in-depth advice.
What We Are Going to Cover
- Why is Q4 China supply chain planning so important
- Key dates to be aware of
- Tips for planning
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.
First, consider the kind of demand you’ll can expect during Q4:
- Q4 (4th Quarter) are the months of October to December, i.e. the holidays sales season
- Most Ecommerce businesses tend to have a significant portion of their sales during this period and/or it tends to be the most profitable period
- The obvious reason: everyone is looking to purchase holiday gifts, whether it’s for others or just for themselves, and many retailers push for sales events during this period to attract more buyers
- Also: customers tend to be in a “shopping mood” due to the holidays shopping and are much more willing to purchase products even if they are not for gifts, or not actually discounted
- Particularly if your product is a holidays product / you market it with a gifting angle…there will be extremely high pressure to deliver your products by Christmas or you WILL face a ton of customer issues
On the supply chain side, there are some unfortunate realities to consider, like:
- Factories become extremely busy, and lead times may become longer
- Logistics tend to slow down / become less reliable as all shipping channels get overloaded by holidays shopping demand
- Shipping prices tend to increase during peak holidays shipping season around the world as demand outpaces availability
If you do NOT plan ahead, you face a high risk of not having enough stock to fulfill your Q4 sales demand in time for Christmas. This is an enormous issue, since:
- You won’t be able to ship orders in time for Christmas when customers were expecting it by then
- You WILL get chargeback / refund requests…every year we’ve seen many examples of dropshippers particularly have their profits almost wiped out due to chargebacks
- You’ll have to pre-maturely ramp down on marketing because you simply could not stock in time (and didn’t want to risk the issue above)
- Note that doing this is STILL a cost on your business, because you are literally leaving potential $$ on the table during one of the best sales seasons of the year
Finally, there are a few other issues that ecommerce businesses will need to consider, especially if they are new brands or entirely new businesses:
- FB ad accounts tend to have limits on how fast you can scale your ad spend
- Paypal, Stripe, etc. tend to hold funds for accounts that have significantly increased payment activity over a short period of time (e.g. what will happen during Q4 if you are successful)
Be Aware of Key Dates in Q4
Q4 can be broken down into smaller key dates that will help with planning. You should make a plan for the entire duration of Q4, not just the short period around Black Friday and Cyber Monday:
- First week of October – China’s “Golden Week” holiday
- Factories, suppliers, and China logistics will be on holiday between 4 to 7 days
- Good news is that this will be the final China holidays going into the sales season, so typically not a big deal…but good to be aware of in terms of planning
- Early October to Mid November – Factories ramp up their Q4 production (and you probably start scaling)
- Factories do plan for Q4 spikes as well, and they usually plan some additional room as they do not want to miss out on the sales season as well
- If you are planning for Q4 scaling, THIS is the period that you need to have your supplier communicating with your factories to plan ahead and get on their radar
From here, you’ll start to consider planning for the heavy sales periods:
- 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
- Good news is that if you use reliable shipping methods AND have stock planned, BFCM sales should get to your customers in the key countries no problem by Christmas
- Early December
- Depending on your shipping service and country, this is when your last ship date will be fulfilling from China to arrive by Christmas
- Mid December through Christmas
- It’s a common misconception that your holiday sales will plummet after the last ship date if customers can no longer expect delivery by Christmas (make sure you are clear on their expectations!)
- In fact, we see very strong sales from client stores even through Christmas Eve (most customers are still in the holidays shopping mood, and purchase for themselves / their family without planning for gifts)
Having a solid idea of what to do and when during Q4 will make creating a cohesive, effective plan far easier.
Beginner Tips for Planning During Q4
There are some great beginner tips businesses can follow that will make creating a new Q4 plan much easier. Again, if you plan on scaling through Q4, you’ll want to take a look at our more advanced module.
- Test and select your Q4 winner(s) ASAP so you can start planning for them early
- Determine if you will be planning on a holidays push for your winners and/or how important they are for Christmas delivery
- Some products might get a boost from Q4 sales, but Christmas delivery might not actually matter much – e.g. evergreen functional products
- On the flipside, some products ARE going to have customers expecting Christmas delivery even if you don’t push it as such – e.g. kids toys
- Determine if you will be planning on a holidays push for your winners and/or how important they are for Christmas delivery
- Try to scale to a consistent volume even before Black Friday and Cyber Monday sales
- Critical both for you to get more confidence in the ability for the marketing to scale, and also for it to be a lot easier to plan for stock projections
- Also, scaling up gradually vs a sudden spike on Black Friday and Cyber Monday will help your FB and payment accounts
- If you are not using one already, find a 3PL or fulfillment partner before November.
- If you are thinking about branding or customizations, start on it before November (ideally ASAP)
- Will take time to get started, not to mention additional lead times…you do NOT want to start with customizations deep into the sales period
- Have some cash saved up in case you need to invest in any stock through Q4
- Make sure you have plenty of margin, as you’ll want to prepare for:
- Potentially opting for faster shipping lines (e.g. Yun Express Express) closer to Christmas
- Be prepared for increasing shipping costs deep into the sales season
These tips will help set the foundation for a successful Q4. Once you’ve been through Q4 with a business or brand, and you have hands-on experience navigating the unique challenges of the holiday shopping season, then you’re ready to start making scaling plans. Scaling during Q4 is covered in the following module.
