Today is October 1st – Q4 has officially begun!
I’ve personally endured over a decade of Q4 excitement (and suffering) in the world of e-commerce. Although sales don’t historically show a significant pickup until the week of Black Friday, now is the time to begin preparing. For those who utilize dropshipping as a core component of their e-commerce strategy, it’s time to batten down the hatches and prepare for the storm of your life. Hopefully in the end, you’ve safely made it through and you’re enjoying the profits of your season.
- For those who are selling Toys & Games on Amazon, this month is a critical month for you. Amazon will be watching your performance metrics and will disqualify you for the entire holiday season if your metrics aren’t meeting their standards below.
Effective on 17th November, 2016, only sellers who meet the criteria listed below will be eligible to sell in the Toys & Games category from 17th November, 2016 through 5th January, 2016.
• Your first sale on Amazon.com must occur prior to 19th September, 2016. The sale does not need to be specific to the Toys & Games store.
• You must process and ship at least 25 orders from 1st September, 2016 through 31st October, 2016. The orders do not need to be specific to the Toys & Games store.
• Your pre-fulfillment cancel rate for the period from 1st October through 31st October, 2016 must be no greater than 1.75%.
• Your late shipment rate for the period from 1st October through 31st October, 2016 must be no greater than 4%.
• Your order defect rate must be no greater than 1% short term as of 1st November, 2016.
Orders that use Fulfillment by Amazon will not be subject to the above criteria provided your account is in good standing.
- Monitor your “late ship” and “pre-fulfillment” metrics daily. These two metrics are the biggest metrics that are at risk in the dropshipping scenario. As you are most likely purchasing items from the same distributors and suppliers that many of your competitors are, inventory will begin to fly off the shelves at record speed. This causes backorders and cancelations. Either of these metrics that slip into poor standing can cause your seller account to be suspended at the worst possible time.
- One of the best ways to prevent pre-fulfillment cancelations is to increase buffers on your inventory. In other words, if your distributor’s inventory feed shows a quantity of 15 units, you may wish to implement a buffer of 10. Depending on which tools you use to build buffers, this can be treated in two different ways. You can subtract 10 showing an inventory of 5. Or you can have logic in place that shows the actual quantity until it reaches your buffer, then it shows zero. So, in this case, you’d be showing 15 units available; however, once the distributor’s feed dropped to 9 units, you’d be showing a zero. Either way works effectively. Dropshippers should always have ample buffers in place but these should be increased prior to the holiday sales.
- Analyze your previous years’ sales or begin picking up on trends early and purchase inventory in bulk for Amazon FBA. This is a risky move as it can load you down with inventory that you can’t sell. Because of this, don’t be over eager and purchase more inventory than you can stand to hold. This is especially true for seasonal video games, toys, games, and things that won’t sell after Christmas. One great example: scooters. A few years ago, we were selling 10-12 scooters per day from one distributor. There was no Amazon retail offer so we decided to buy hundreds of them for FBA. As you may suspect, before our shipment was checked-in to Amazon and made available for sale, Amazon retail’s offer appeared at a selling price that was less than our wholesale price. We liquidated them for at least a 75% loss later in the Spring.
- Over-communicate with your buyers when there is an issue. If an item sold out and is on backorder, give them notice quickly and let them know the restock date. Whenever possible, purchase the item elsewhere, even at a loss, so you can fulfill the order. The positive metrics and seller feedback will more than pay for this expense.
- In the coming weeks, spend time in error resolution. If you are listing en-masse, you likely have hundreds of listings that are not active, or are suppressed, due to missing fields, such as Amazon’s item-type, or attribute-required fields like color, genre, department, ESRB rating, missing images, etc. Most sellers who are listing en-masse are using the same data from the same suppliers so they likely have the same errors. The seller who works on error resolution will enjoy the fruit of having these items listed and selling.
- Create a night shift. In the wonderful world of dropshipping there is this event that we call a “product run” – where one product hits the Buy Box and sells over and over, very quickly. If the price and availability on the product is accurate, this is a fantastic event. If the item is sold out and you wake up to 100 orders that you can’t fulfill, it’s a potential business-killer. Dropship distributors tend to update their systems late at night, usually after midnight. At this time, their systems often batch out all the previous day’s orders, invoice them, and update their internal quantities. New inbound inventory in their warehouses is getting scanned in and lots of data is updating internally. When a “product run” starts during your normal business hours you can stop the bleeding quickly but if your entire staff is asleep and you wake up to this disaster, it’s very difficult to recover from. (can you tell we have lived through this multiple times). It’s worthwhile to hire an hourly person to watch your system for runs during the night and train them on how to make sure that everything is OK and if not, how to correct the listing. If you are not dropshipping, or if your products are dropshipped from a niche vendor who is not selling to hundreds of competitors, this probably is not an issue for you.
These are a few helpful tips to get you ready to push through Q4 with great success. Questions or comments? Share below or join our free seller support community on Facebook.