This online holiday season is set to be bigger than ever, but will you have the inventory on-hand to meet demand?
Image source: Adobe Stock / Mavoimages.
There are many factors that determine a retailer’s success or failure during the holidays, but none more than having enough inventory on-hand to meet demand. Out-of-stock messaging continues to be higher than normal — according to the latest data from the Adobe Digital Economy Index, categories such as baby and toddler products are out-of-stock in e-commerce storefronts 3.2 times more than the average out-of-stock messaging.
While the uncertainty of the pandemic caused some retailers to take a cautious approach to inventory planning in 2020, the situation in 2021 is drastically different. Vaccinated populations, a workforce back at work, record savings and the euphoria of “back to normal” are set to drive frivolity and excess this holiday season. In fact, data from Adobe’s Digital Economy Index showed when the American Rescue Plan Act of 2021 became law on March 11, e-commerce activity saw a large spike with an extra $8B spent online from March 11 through the end of the month, representing roughly 2 percent of the overall $410 billion of direct stimulus that went to the US population during the pandemic.
With inventory planning for the holiday season now in full swing, many retailers are upping their bets and shrugging off any excess stock anxieties they may have had in 2020. But the global supply chain looms as a new and credible threat to holiday success.
A compounding set of factors continue to impact supply chains worldwide and are unlikely to ease until after this year’s holiday season. Ranging from shipping container shortages, port congestion, ever-changing COVID safety protocols and staff shortages and Brexit implications, these issues are all coming together to drive up shipping costs and adding significant delays and volatility to normal inventory lead time schedules.
The unfortunate truth is that global supply chains are extremely fragile. The fear of missing out on what is set to be a huge online holiday shopping season is forcing retailers to accelerate their inventory planning and pull forward their orders for the holidays. While large retailers with deep pockets can afford to do this, for many online businesses, July and August are low periods where free cash flow can be tight. With most suppliers demanding 30 percent payment upfront and the remainder on shipment, finding the funding to pull forward the biggest investment of the year is a major challenge.
So, what are your options?
1. Fully leverage the cash you have on hand to make the orders.
The downside is that it puts a big strain on your cashflow and limits your ability to make other important technology, marketing and headcount investments needed to make the holidays a success. A lack of available cash on hand may create a reality that you simply cannot commit to the orders your planning scenarios are forecasting.
2. Wait a few months before making your orders.
This is risky - because of the shipping times and supply chain threats, if you wait until September or later to order, it’s going to be too late, and you could end up in the worst possible situation of missing the demand and being left with excess inventory after the holiday peak.
3. Leverage short term funding to give you the capital you need.
Get the funding you need to buy the inventory your need for the holidays now. You can get peace of mind that all the stock you need is paid for and that it will be here in time for Black Friday.
Finance your holiday inventory with Adobe and Wayflyer
Getting access to funding is the single best way to get the inventory you need while keeping your cash flow healthy and now, Adobe has made getting financing for your holiday inventory easier via our partnership with Wayflyer to provide fast, revenue-based funding when you need it most.
Hundreds of eCommerce companies are using Wayflyer to make their inventory orders for Black Friday. If you would like to learn more about how you can do the same, get started here.