It’s that time of year again. Family, parties, gifts, time off work…what could be better? I hope your Holiday Season is everything you want it to be and more, and I hope your relatives don’t drive you crazy!
The Holidays don’t work that way for everybody, though. As a former owner of a wholesale distribution company, I can tell you that this time of year is just as crazy for wholesalers as it is for UPS and FedEx drivers, retail employees, newspaper publishers and a whole host of other industries for which the Holidays mean MORE work instead of LESS.
As a business owner, it’s important to understand what Drop Ship Wholesalers are doing this time of year, and what they’re going to be doing VERY SOON in the New Year.
To talk about that, we have to take a step back for a minute. Let’s go back to June and July of this past year.
During the early Summer months, wholesale companies are estimating and finalizing their orders for the Holiday Season. That’s right…finalizing. They need to know by mid to late Summer exactly what they’re going to be selling through the Holidays, and how much of it they need to have on hand to make it right to the end of the year. Why do they need to understand all that?
A few reasons:
- Retail marketing always runs way ahead of the changes in seasons. Product manufacturers and advertising agencies were looking at the 2016 Holiday Season at the BEGINNING of 2016. They have to do that in order to bring new products to market and do all the work involved in creating highly detailed advertising campaigns for TV, magazines, radio, internet, newspapers and more. By the middle of the year, most end-of-year Holiday marketing is prepared and ready to go.
- The Holiday retail season actually starts in September. That’s when early Holiday shoppers start to buy, and that’s when retail stores start to push early sales. Wholesalers have to be ready to fill retail stores’ initial orders by the end of Summer at the latest.
- Once a Wholesaler places its major orders from manufacturers during the Summer, generally they are NOT going to place any more LARGE orders from those manufacturers for the rest of the year. A Wholesale company plans to SELL OUT its warehouses by the middle of December. (That’s called a ‘sell-through’). They want those warehouses virtually EMPTY by then. Why is that? Because Wholesalers have to pay taxes on any products left in their warehouses past the end of the year! Like any other company, they don’t want to drag a tax liability from one year into the next.
All of this is one of the reasons you start to see many backordered products appearing in mid to late November. The Wholesaler has sold out of the product, and for the most part won’t risk ordering more product that they might not sell by year end.
WHY do you need to know this as a business owner? Because you need to know what comes NEXT.
During the Holiday Season, wholesalers are generally not buying more products for their warehouses, as I said. However, they’re PLANNING for and placing early order reservations for the products they’ll start to sell in JANUARY and through the first quarter of the year.
As soon as the clock ticks past midnight on New Year’s Eve, Wholesalers are ready to spring into action to refill those warehouses. They spend the first couple of weeks restocking to the rafters for the coming year.
Smart wholesalers who offer online services like Drop Shipping will also be weeding through their retailer accounts and getting rid of those account holders who didn’t make any real sales through the Holiday. They don’t want to carry that baggage into the New Year either; their sales teams can only handle so many retail ECommerce accounts.
So, at the beginning of 2017, Wholesalers will have fully stocked warehouses ready to go and will be looking to make good first-quarter sales.