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Managing Seasonal Fluctuations in the Universe of eCommerce
February 15, 2018
It’s normal for eCommerce businesses to experience fluctuations throughout the year as the seasonal demand for their products and services expands and diminishes. For example: A store that sells camping equipment can expect to see more business during the summertime. Shops that sell gift items are nearly guaranteed to see a boost in sales during the holiday season. However, many businesses find their numbers go down in January, when people are reviewing their finances and tightening their belts after the holiday season. A good eCommerce business strategy studies these fluctuations and makes sure to account for them, instead of expecting sales to remain consistent throughout the year.
But, the first thing you want to do is differentiate between seasonal economic fluctuations, which follow a consistent pattern from year to year, and fluctuations that might be more accurately attributed to other causes. What other types of fluctuations exist?
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Cyclical Fluctuations are less dependent on seasonal factors and more based upon the normal patterns of an emerging business. These short-term fluctuations can occur when setbacks occur, staff is hired or let go, processes and policies evolve and emerge, technology grows, industry trends fluctuate, momentum shifts, customer preferences change, and operating expenses develop. The normal fluctuations businesses experience have been separated out into the following cycles: recession, recovery, growth, and decline. While these stages can last for different lengths of time, they have a tendency to occur in this order.
Irregular Fluctuations tend to be impacted by outside forces, such as natural disasters or national economic uncertainty. Strikes, terrorism and civil strife can also be factors that impact the sales of an eCommerce business. These are difficult to predict and happen outside the normal life cycle of a store.
Once you’ve identified that a fluctuation can be attributed to recurring seasonal factors, there are a number of strategies you can put in place to help minimize any negative effects and allowing you to prepare for low sales months.
Don’t just ride the waves. Study sales trends within your industry to get a sense of what you can expect, as well as utilizing your own business’s previous sales data to prepare for the future. That way you have the ability to save up cash reserves for the leaner months and make more informed decisions about the best times to hire new staff and seasonal help, or launch new programs.
Seasonal sales fluctuations are one of the reasons subscription programs have become so popular with eCommerce business owners. They take un uneven, cyclical revenue stream and standardize it to a greater degree. While cancellations and signups still can follow seasonal patterns (for example, some subscriptions are given as gifts at the holidays), the incoming revenue is more predictable, making it easier to count on from month to month.
If you have a product that could fit within a subscription format, it’s worth considering. The costs of getting that program launched could be outweighed by the ultimate benefits.
We did a series of articles on launching a subscription program that are worth checking out for those curious about dabbling in this arena. The first one is: Define The Product: Starting a Subscription Program.
If you run a service-based eCommerce business, it might be worth offering your clients prepaid options. This gives you access to greater funds in advance, allowing you to use them for leaner months and create a commitment to future work. For customers, this can also be a handy way to manage their finances, allowing them to pay when they have funds and approval.
While relying too heavily on lines of credit can be a dangerous move, they can be helpful for keeping operations from suffering too heavily during anticipated seasons of lower sales. Just make sure you’re keeping your eye on sales data so your plans incorporate that information and your business doesn’t fall too far into debt.
Would you like some help launching a subscription program or designing a seasonal marketing campaign? Send us a note at [email protected]. We’d love to help!
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