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6 Effective Tips to Manage Your Seasonal Inventory over the Holidays

Nov 27, 2020 | 13 minutes

Eggnog, fruit cake, candy canes: it’s that time of the year again, and no hopes are higher than those of running ecommerce stores.

The holiday season tends to be the most profitable part of the year for ecommerce owners, and more often than not, the most stressful one as well. 

Dealing with seasonality can be particularly challenging: there are many tasks to complete and little time to do so. This is why we are bringing you the following 6 tips to improve your seasonal inventory management:

  1. Use data to forecast seasonal sales and demand

  2. Keep close track of inventory dips

  3. Take advantage of seasonal demand to get rid of old inventory

  4. Get everyone on the order fulfillment boat

  5. Automate sales reports and enjoy your time off

  6. Schedule discounts for the day after

But before we get into these, let’s do a quick recap of the basics of inventory management. 

Basic concepts of seasonal inventory management

Seasonality is a fascinating concept that occurs for a number of reasons, including: 

  • Weather / environmental conditions

  • Customs and traditions

  • Recurring shifts in population levels

  • Income availability

Weather seasonality refers to items that rely on particular weather conditions to become available. Prime examples include most fruits and vegetables, which only reach maturity if a series of weather conditions are attained (either naturally, or artificially). 

In addition to this, cyclic weather conditions can also explain the seasonality of a number of products. Cold drinks and ice-cream during the summer season are a good example of this phenomenon.

Customs and traditions are a key seasonality factor, driving demand for certain products during specific times. Eggnog on Christmas, pumpkins on Halloween, and avocados on Cinco de Mayo are examples of custom-driven seasonal items.

Recurring shifts in population levels are a seasonality factor. For example, rental homes in resort towns are seasonal items, as demand for these is tied to the holiday season that brings in tourists year after year. 

Income availability is a more subtle form of seasonality, but nonetheless important for business analysts and strategists. For example, it is a well-known fact that consumers are more likely to spend money on their payday, thus giving way to the seasonality factor.

In short, seasonal items are products that only become available during certain periods of the year, or products whose availability and consumption is heavily influenced by seasonal factors. 

What is seasonal inventory?

Seasonal inventory refers to the stock that is purchased, gathered, or held to answer the growing demand of any particular season, such as Christmas, Thanksgiving, or summer vacations. 

This is what makes seasonal inventory different from cycle stock (regular working stock), and also from safety stock, which represents the extra stock that is kept to minimize the risk of stockouts due to unexpected shifts in supply and demand. And yes, a business can keep both seasonal and safety inventories at the same time.

Now, let’s get down to our list of tips to improve seasonal inventory management in the upcoming holiday season. 

6 tips for seasonal inventory management

It has been said that two things are certain in life: death and taxes. Let us add one more to the list - seasonal inventory must go. 

With this in mind, here are six tips to help you achieve this before Boxing Day finally arrives. 

1. Use data to forecast seasonal sales and demand

Improving your seasonal inventory management begins with demand forecasting analysis. Data will be instrumental in helping you know what and how much inventory to buy for the holiday season. 

To keep things uncomplicated, we will be looking at three different data sources to forecast sales and demand:

  • Historical sales data of your ecommerce shop

  • Online search trends of the products you sell

  • Contextual economic data of the states/counties demand comes from

Establish minimum stock levels with historical data

This data will help you adjust inventory purchases for seasonal products that you offered in previous years, and that you also plan to sell this holiday season as well. 

Why is it data useful? 

First, it will allow you to establish minimum stock levels of the seasonal products you offer. 

For example, let’s say that you’ve been selling organic Christmas cookies for the past three years. Based on this, you can look at the year with fewer sales and use that number as the minimum stock level for the current holiday season.

Credit: Unsplash

In addition, historical data can help you avoid overstocking issues when combined with online search trends, which is our next key data source. 

Avoid overstocking bias with online search trends

By looking at search trends, you will be able to identify seasonal demand trends from momentary fads, a key data point to avoid overstocking. To get this data, we recommend using Google Trends

Now, let us show you the difference between a clear seasonal trend and a passing trend with two real-life examples.

The screenshot below shows a good example of a strong seasonal trend: scooters for kids.

As you can observe, the search “scooter for kids” peaks during the last week of November and the first week of December on a yearly basis. 

This data tells us that scooters are a strong seasonal product whose demand is very likely to grow right before the holidays.

Momentary trends, on the other hand, show a different demand profile. A good example are Harry Potter’s books.

As you can see, the first book in the Harry Potter series (“Harry Potter and the Philosopher’s Stone”) was in high demand during the so-called “Pottermania” - that is, the first decade of the millennium.

While still popular, data shows that the book isn’t as popular as it once was, and that there is no clear seasonal trend. 

Products like these pose a higher overstocking risk for the holiday season. The advice here is pretty straightforward: look at the search trends data before stocking your inventory!

Adjust your forecasting with contextual economic data

Contextual data is useful to make final adjustments to your demand forecasting analysis, and it can be found in public repositories. 

Here, we’ll be looking for economic indicators related to your customers’ demographic profile. 

One good example of this type of data is the “Personal income by county and metropolitan area” stats, which can be found on the US Bureau of Economic Analysis site.

By using this data, you can see how the income levels in the areas where your buyers hail from have changed in recent times, and thus adjust your sales forecasts and marketing efforts for those regions. 

For example, let’s suppose that you sell high-end items and that you note that the counties where most of your customers reside have experienced high economic growth in the past couple of years. 

Wouldn’t this be a data-backed reason to grow your inventory to cater to those specific areas?

2. Keep close track of inventory dips

There’s nothing wrong with maintaining low inventory levels; as long as you have a plan to replenish it and satisfy incoming customers, this is a valid and cost-effective approach towards inventory management.

It is also normal to feel uneasy around low inventory levels during the holiday season, because demand can shoot up from one moment to another and put you in a hard spot with your customers.

Nevertheless, there are two approaches that can help you here.

The first one is as old as commerce itself and requires you to be disciplined and attentive towards your inventory. In other words, you will need to monitor inventory levels on a daily basis, and manually check its status for sudden dips. 

On top of this, it is useful to contrast your current daily sales data to historical sales data. 

This will allow you to prepare for surges in demand, and eventually, to be able to re-stock in time and avoid losing customers while running operations on a thin inventory. 

The second approach is definitely more contemporary, and less time-consuming: it’s automation.

If you are using any of the most popular ecommerce platforms to run your store (such as Shopify or WooCommerce), chances are that you can automatically monitor inventory dips, and get notified every time a certain level is hit. 

Automating the task of monitoring inventory usually works on a simple principle: it’s about matching order data from the ecommerce platform with inventory data on a spreadsheet.

Whenever the selected threshold is reached, an action can be triggered (for example, an email notification telling you to order more of a product before you run out of it).

Automating this task will:

  • Save you valuable time and resources

  • Notify you of inventory dips whenever and wherever they happen

  • Set the bar for further automations, such as automatic purchase orders for suppliers 

Use this template to update inventory values in QuickBooks and Google Sheets for new WooCommerce orders.

3. Take advantage of seasonal demand to get rid of old inventory

Riding the seasonal demand wave can help you reduce the costs to store and hold your inventory

But before deciding on how to proceed, you will need to ask the following question: what are the optimal uses for your old inventory?

The answer will be instrumental in defining the following steps.

For example, there are cases where old inventory can be dealt as complimentary items for your newest or best-selling products. 

This represents an excellent opportunity to offer heavy discounts on these items and make a quick profit on them. 

If that is not the case, you can always count on your old inventory to reward and fidelize your customers, and also to launch lead generation campaigns. We’d like to stop here for a minute. 

Taking into account that the average cost per lead in retail stands at $34, it wouldn’t be far-fetched to use your old inventory as a vehicle to collect leads and key contact information

This is a win-win situation for ecommerce store owners, as it allows for:

  • Reducing the cost of holding inventory

  • Gathering new leads

  • Getting rid of “dead stock”

Now, if you are wondering what’s the best course of action here, there are a few, including:

  • Launching Facebook Lead Ads campaigns

  • Implementing Poptin popups on your site 

  • Deploying email marketing campaigns

The mechanics may vary; some will prefer to offer free products in exchange for contact details, while others may opt for offering heavy discounts on the products and maybe even make a profit out of dead stock.

In disregard of the course of action you take, it’s also good to know that the most important tasks related to collecting leads can be automated as well. 

This way, you will be able to liquidate old inventory and gather new leads (or reward existing customers) without losing valuable time in the process. 

Some useful Make templates you can implement to automate are:

Needless to say, there are other tools and methods you can use, but these are incredibly fast and easy to implement. 

4. Get everyone on the order fulfilment boat

To say that order fulfilment is crucial for every ecommerce business in disregard of the season is an understatement. 

However, the holiday season brings a new dimension to the task of fulfilling orders, as: 

  • Customer expectations are higher than usual 

  • Orders come in larger quantities

  • Time runs out quickly

With this in mind, you might want to consider new strategies to improve the order fulfilment process. 

This can be done the old-fashioned way, by pushing information related to orders to all the involved parties whenever it arrives.

Needless to say, it’s easier when everyone gets the right information coming to them by default, as following up on piling orders can get tricky. 

To achieve this, all you need to do is set up an automated workflow that shares key order information across different areas and departments. 

For example, if you are using task and project management tools like Trello, Slack, ClickUp, Teamwork, or Monday (among others), you can benefit from integrations between these and ecommerce platforms to automatically create tasks, cards, or messages whenever a new order arrives.

What’s most, you can also set up automatic notifications targeting the people involved in the fulfilment process, so everyone knows what needs to be done from the minute an order is placed

To set this up, you can follow two paths. 

The first one requires you to see if the project or task management tool you use features native integrations with your ecommerce platform. Some platforms (like offer integrations, while others (like Trello), don’t.

The second option is to rely on an automation platform like Make to connect the apps that you work with. Considering that time is a factor, this is perhaps the fastest and most flexible way to get everyone on the same page for the holidays. 

Use this template to automatically send Slack messages for new Shopify paid orders 

Sharing order information to accelerate the fulfilment process may sound like a marginal benefit, but it’s not. 

For any business processing dozens of orders per day, this can translate into an interesting amount of saved hours and increased productivity - exactly what the holiday season calls for.

5. Streamline inventory and sales reporting

Inventory and sales reporting is one of the key tasks for the day after the holiday season is over. In the end, everyone wants to know how they did, right?

Now, we are aware that many ecommerce businesses deal with “dirty” datasets and clogged spreadsheets, and that is why we believe the holiday season represents a prime opportunity to try something new. 

Maybe you can pick your favorite seasonal items and track those separately, or perhaps you can create a dedicated reporting pipeline for the duration of the holiday season. 

Both of these strategies are useful to separate the wheat from the chaff and provide you with a clear view of how your business did during the holiday season. 

So, how to do this?

To streamline your reporting, you will need to integrate your ecommerce and/or payment platforms with a suitable reporting app.

There are many viable options to do this. You can build simple integrations between your ecommerce platform and a spreadsheet, which collect your sales data by default, as it is produced.

This is practical for getting all the information in one place, and have it ready for when reporting day comes.

Another option is to adopt an analytics dashboard and pull all the data you need into one screen.

There are a few products that can do this; our personal favorite is Databox, which also happens to feature a native Shopify integration.

By streamlining your inventory and sales reporting, you will be gaining time in a moment where most ecommerce managers and owners feel drained by all the holiday season activity. 

In the end, we all deserve some calm after the storm!

6. Schedule discounts for the day after

Most people expect to see heavy discounts on seasonal items the moment the holidays are over, and ecommerce managers know about this.

However, the catch lies with determining the right discount levels for selling whatever is left from your inventory. 

Discount levels can be influenced by a number of variables, including cost of shipping, seasonality of the items, cost of holding inventory, and profit margins. These will be instrumental to outline different discount levels and the corresponding outcomes.   

Now, how to use data to determine your postseason discount levels?

A good strategy is to create different email marketing campaigns promoting a number of discount levels to different segments. In other words, an A/B test for postseason discounts

The mechanics of this is fairly simple: email campaigns ought to be identical, albeit for the discount level that is offered in each one of them.

After you determine the three discount levels, you will need to create three separate control groups (and the more demographically similar they are, the better), and send an email with a different discount to each group. 

Create the messages, determine the discount levels, create the control groups, and send. Once this is done, it’s all about checking the open and conversion rates of the three campaigns. 

With the results in your hands, you will be able to see which discount level generates the most engagement and sales. 

The final step will be to create a final email campaign targeting the bulk of your audience with the best offer. 

And remember: keep it promotional! Your goal is to sell all your seasonal inventory, not to educate your audience about anything. 

Conclusion: Don't Let the Magic Escape You

Managing seasonal inventory can be challenging, as there are many elements and tasks involved, and little time before the holiday season goes in full swing. 

It is entirely possible that you are already familiarized with some of the processes mentioned above, but as activity peaks, so do the number of tasks to solve. 

Our final advice is to keep the list of tips close to you before moving onto the tasks. These will work magic for you, and in one way or another, this is what the holiday season is about.


Martin Etchegaray

Content Manager and Senior Editor at Make. I enjoy writing and reading about history, science, and tech.

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