Selling on Amazon during the holiday season is one of the best and scariest times to be in the business. As you might expect, sales tend to spike around the holidays. And they sometimes account for the majority of a seller’s profit for the whole year. While this is great, it creates additional stress since you only have a small window to nail this opportunity.
Amazon changes its scheduling and some of its policies to meet the growing demand during the holiday season. This can be confusing for new sellers who aren’t even familiar with the original rules. Take a look below to see how the holidays affect your Amazon FBA business and what changes you should make to your business model.
Self-fulfilled sellers lose out
One of the most important things Amazon can communicate during the holiday season is whether or not they can fulfill an order by December 25. This is the tidbit of information that every buyer is looking for. They may even pay double or triple for an item that can promise a delivery by Christmas. If you aren’t using Amazon FBA, this is when you’ll really be missing out.
According to Practical Ecommerce, Amazon communicates to customers that FBA products purchased up to 2 or 3 days before Christmas will arrive in time for the holiday. This only applies to sellers using FBA, as Amazon doesn’t communicate the same information for sellers who fulfill their own products. Consequently, this could result in loss of sales the closer it gets to Christmas. Customers won’t want to risk buying something that might arrive December 26 or later.
Amazon is allowed to discount your items
During the holiday season, Amazon can mark down its prices on certain products. This allows them to compete with big box stores and other e-commerce sites. What many sellers don’t know is that Amazon can do the same to your items. In November, the Wall Street Journal reported that Amazon “has quietly started lowering prices by as much as 9% in recent weeks on goods offered by independent merchants on its site.” This sounds like a crazy move, but it could actually be beneficial to your business if you see it coming and prepare accordingly.
The good news is, this strategy doesn’t hurt sellers financially. Amazon promises to pay back the money lost due to discounts. So if you’ve listed a pair of shoes for $60 and Amazon knocks that down to $50, they’ll still end up paying you the $10 difference. The downside to this move is that some sellers won’t have enough inventory to fulfill all of their sales. It isn’t possible to tell you how much you should stock up on. But understand that you will definitely see more sales with Christmas just around the corner. Some Amazon sellers admit to making over 50% of their profits in the year’s fourth quarter alone!
Discounted items can stir up legal issues for FBA sellers who sell private label products outside of Amazon. A seller may have to sign a minimum advertised pricing (MAP) contract with a retailer in order to sell their products. Listing the same item at a discount on Amazon could prove to be a breach of contract.
Deliveries from China will take longer
Anyone importing items from China needs to keep the country’s national holidays in mind. China’s New Year celebration, in particular, can create major roadblocks. Chinese offices and factories close for about three weeks to honor this festival. Many workers migrate around the country to visit family and friends. The suspension in business will put a temporary hold on all of your products and could result in a huge loss in profits.
The next CNY falls on Friday, February 16 in 2018. Conduct all necessary business at least a month in advance of this date to ensure your business runs smoothly. While February 16 is nearly two months past Christmas, keep in mind that the retail holiday season typically lasts all the way through January. It might be worth doubling up on your inventory so you can continue all the way through the celebration without interruptions.
Inventory fees on the rise
Amazon bumps up its inventory storage fees for a three-month period beginning in October and ending in December. While this fee isn’t specific to Christmas, it does reflect the growing number of sales seen in the fourth quarter of every year.
Amazon’s Inventory Storage Fees page says standard-size products cost $0.64 per cubic foot between January and September. The same sized product is bumped up to $2.35 per cubic foot from October to December. While you’re almost guaranteed to sell more around the holidays, it’s also possible to overstock and pay three times as much to store an item you never sell.
In addition to increased inventory fees, Amazon places deadlines on when you need to send in your inventory for the holiday season. This year sellers had to send in inventory by December 1 for Christmas shopping and by December 17 for 2018.
Amazon’s holiday return policy states that items shipped by Amazon between November 1 and December 31 of this year may be returned until January 31 of the following year for a full refund. The policy adds that while most sellers offer a return policy the same as Amazon’s, “some seller return policies may vary.” Make sure you check your own return policy to see if it’s in line with Amazon’s. Amazon may restrict some sellers from editing their return policies.
You should also note that any seller who lists an item eligible for Amazon prime “will be subject to the same return policies as items fulfilled by Amazon.com.” If this is you, take a closer look at Amazon’s return policies, so you know what you’re getting yourself into!
Use the holidays to your advantage and increase your FBA business!
We know that was probably a lot of information to take in, especially for someone who’s new to the game. Don’t stress! This can be a confusing time for even the most experienced sellers. Take a look at our article on selling during Q4 so you can get a leg up on the competition next year!