Some products have a generally steady demand over the course of a year, while others are seasonal, having unusually high peaks during particular months.
Let’s look into the pros and cons of selling seasonal products and whether the rewards outweigh the risks.
What Are Seasonal Products?
Seasonal products are of two types: strongly seasonal and weakly seasonal.
Strongly seasonal products are those that are generally not available in the marketplace during certain periods of the year while weakly seasonal products are available throughout the year, although their prices and quantities fluctuate, depending on the season.
When talking about seasons in terms of product seasonality, we don’t always mean climates. There are two main sources of seasonal fluctuations in products’ prices and quantities: climate and custom.
For example, coats sell more during the winter, so their demand is affected by climate. On the other hand, more turkeys are sold during Thanksgiving, their demand being affected by custom.
It has to be noted, however, that all products have a certain level of seasonality in them, although some may not be as extreme as others. Furniture, for example, is available throughout the year, but there are certain months when they sell better.
To be considered a seasonal product, there has to be a significant increase or decrease in the demand during certain periods, and this fluctuation is usually attributed to either climate or custom.
Pros and Cons of Selling Seasonal Products Online
Pros of Selling Seasonal Products
- More Time to Plan and Prepare
- Products Are Easier to Market
- Faster turnover
- Well-defined markets
Cons of Selling Seasonal Products
- It Does Not Allow Much Room for Mistakes
- Reduced Profit Margins
- Greater stress
Let’s discuss some of these further.
Advantages of Selling Seasonal Products Online
Although there are a lot of risks involved in selling seasonal products, a lot of sellers still take their chances with it because it has its own unique pros.
More Time to Plan and Prepare
Selling strongly seasonal products allows you to have breaks in your business. Operations are halted during the off-season, so business owners have more time to plan for the next one.
You can consider your cash flow, the amount of inventory you need to order next, and update operational procedures. This is the perfect time to consider new marketing techniques and think about what worked and what didn’t. You can also use this time to talk to your suppliers about possible product changes.
Products Are Easier to Market
People don’t need much convincing to buy sweaters during the fall or more candy during Halloween. When it’s peak season, people will seek your products out. You will have no shortage of potential customers during this time, but you have to get creative with your marketing to gain more of them.
Disadvantages of Selling Seasonal Products Online
The unique pros of selling seasonal products online have their corresponding disadvantages. This is why many entrepreneurs don’t want to deal with them and instead stick to ones that have generally steady demands.
It Does Not Allow Much Room for Mistakes
When you only have a short period to market and sell your product, there is much more pressure involved in doing it well.
This means you have to have your products ready and in the proper number when peak season begins. If your shipment arrives late, for example, you’re going to miss the one opportunity that year to earn the most profit.
This is why it’s important to take time to plan and prepare during the off-season because it’s critical that everything is ready to go when the customers start lining up (or in the case of ecommerce, logging in).
Reduced Profit Margins
Businesses that deal with seasonal products can reasonably expect to have more units sold during peak season. However, although the demand is high, the supply tends to increase too. This is why business owners are forced to offer discounted prices, which further reduce profit margins.
Thus, while sales increase, it will take more units sold to reach a certain profit level. You have to remember that revenue is not always accurate in determining a business’ success. It’s always the profit that makes a difference.
Dealing with Seasonal Products: A Seller’s Experience
My company imports many outdoor recreation products which are extremely seasonal- most of our demand is in the summer months. Subsequently, I like to place orders and time them to arrive sometime in spring. I would place our orders early in January to allow more than enough time to receive the orders. I was noticing, however, that many of our suppliers would not end up shipping our products until June, July, or even August – critically late for the seasonality of our company.
Eventually, I clued in: nearly all my supplier’s clients were placing orders with the goal of receiving them sometime in April or May. Subsequently, our suppliers would get extremely backed up around this time.
There was a simple solution to all of this: I had to order a month earlier with the hope of receiving our order in March. Amazingly, our lead time went from well over 100 days to just around 45 days.
Set clear expectations with your supplier of when your goods must ship by. And, as always, whatever date you want your goods to ship by, insist to your supplier that they must ship 30 days prior to that!
The Stress of Finding Employees
In general, more transactions mean more employees are needed. Conversely, less manpower is required when you are not operating at your usual level.
When your business closes during the off-season, it’s not a wise financial move to keep your employees on the payroll. This often means that you have to deal with a new set of people the next time you’re back in operation, and this is not always easy.
You need to be able to learn to adapt to new personalities very quickly and to train people efficiently so they can do their jobs properly and represent your company well. This takes a lot of trial and error as well as luck in finding people who are able to deliver at the level you want.
How to Deal with Seasonal Products
It’s not easy to deal with seasonal products simply because you don’t get a lot of chances to fix your mistakes. You generally have to wait for the next peak season to try again, and this can take a lot of patience to execute.
Luckily, there are some best practices you can follow to make your next operation successful.
Reach out to your suppliers and customers during off-season.
Use your time off wisely by talking to your customers. Improve your online presence and build connections with your target audience so they will remember to look for you during the next peak season. This is the time to create more content, be it videos, social media posts, and blogs.
It’s also important to talk to your suppliers early on about your plans so they too can prepare and consider lead times in advance. When you inform them how many units you’ll be ordering next time, they’ll likely prioritize your order over other business owners who didn’t.
Sell other seasonal products.
Even if you choose to sell only strongly seasonal commodities, you can still operate year-round without worrying too much about not having enough sales. You can do this by selling products whose peak seasons are different from one another.
You can sell Christmas items in December, gym-related products in January (because becoming fitter is on everybody’s New Year’s resolutions), and summer clothing in June.
There are lots of different seasonal products out there, and you can choose them according to their peak seasons so you always have something that’s hot for a specific month.
Learn how to forecast.
You don’t need a magical crystal ball to know what your customers will need during a certain period. You will be required, however, to have superb research skills and the discipline to plan ahead.
You can use the off-season to analyze your customers’ behavior and to look at trends. Make informed decisions by studying the numbers.
A good place to start is by analyzing the changes in Google’s search volume and by following your target audience on social media to be updated with their preferences. The more a product is talked about in their Facebook groups and subreddits, the more likely it is that they will look for it in the future.
For our brands, we track our progress using a spreadsheet just like this:
Here, Purchase means how many units we order for that particular month. Received means the number of units we’ll receive from the supplier and what month our 3PL or Amazon will receive them. Sales/Fct means sales for that month, and M/S means the calculated months of supply based on our inventory and forecast. We don’t follow any particular formulas for when we’re going to place more orders with suppliers, but the goal is to maintain at least 2.5 M/S per month.
Know your products.
This tip applies not only to seasonal products. By knowing your products well, you can reduce the amount of stress you will be facing in the future.
Consider lead and transit times when ordering your products, especially when you’re sourcing them overseas. Always think that there’s going to be something wrong that will happen along the process, and you will need some buffer. Think about the things that can go wrong and prepare for them accordingly.
Another thing you can consider is alternative uses of your products. While products are designed to be used in a specific way and under certain circumstances, it doesn’t mean that they can’t be used for other purposes.
For example, cat litter sees an increase in sales both during the summer and winter because they’re used not only for cats but also to absorb spilled motor oil and to help in traction when you’re driving in the snow. (This last one should be familiar to you if you’re a fan of that ‘70s Show.)
Is Selling Seasonal Products for You?
Entrepreneurs, by definition, are people who take greater financial risks in exchange for the possibility of greater profits. But while each business has a corresponding risk, this is magnified when you venture into selling seasonal products. When it comes to these types of products, both the risk and reward are higher than average.
Before you decide to take the leap, you should consider your knowledge of the products you’re going to sell and the overall process. There’s going to be a lot of trial and error involved, so you better prepare yourself for what’s ahead.
In general, you have to be risk tolerant to survive in this field. If you’re easily stressed out about unpredictability and high risks of failure, maybe you should stick to products that have a steady demand.
Choosing a product to sell is one of the most critical business decisions you’ll ever make as an entrepreneur. Before investing in a product, you should consider all factors that go into its production, marketing, storage, and shipment.
Selling seasonal products is not for everybody. While some enjoy the fact that it brings in a lot of money in a given period, some prefer not to put their eggs in one basket and choose a steady source of income throughout the year.
Do you think you’re fit to sell seasonal products? If not, what makes you say so?
We’d love to hear your thoughts in the comments section below.