The holiday season brings a surge in online shopping, leaving ecommerce brands scrambling to meet demand. Stockouts and shipping delays can frustrate customers and hurt sales. Forecast retail sales during this year's holiday season will increase 2.3% and 3.3% from last year. 

Effective inventory planning helps prevent issues and ensures you've got the right SKUs in stock. Let's explore how to prepare your ecommerce brand for the holiday rush, balance inventory levels, and keep customers happy without overstocking or missing out on sales opportunities.

The article will explore various inventory planning methods, practices, and solutions to help businesses optimize their stock control and reduce costs.

Holiday Sales Projections & Changing Consumer Behavior

Marketing teams race to craft festive campaigns, but logistics need attention too. Clearing excess stock accumulated throughout the year ensures a fresh start for the holiday season.

Excess inventory challenges ecommerce businesses more than traditional stores. Online shopping's rapid growth amplifies this issue.

Deloitte predicts holiday sales to reach $1.58 trillion to $1.59 trillion from November to January. ecommerce could grow 7% to 9%, totaling $289 billion to $294 billion.

Adobe forecasts U.S. online sales at $240.8 billion, marking an 8.4% increase. Mobile shopping might hit $128.1 billion, capturing 53.2% of online spending.

Even with rising holiday budgets, 33% of consumers plan to spend less due to inflation concerns. Average holiday budgets have increased by 31.7%, reaching $1,261 for gifts, food, and experiences.

A shift towards experiences and self-gifting reflects changing consumer behavior. Shoppers aim for a joyful holiday season, balancing spending with personal enjoyment.

Key Challenges in ecommerce Holiday Inventory Management

Inventory planning for the holiday season, including Black Friday and Cyber Monday, can stress retailers. Managing each SKU requires precise demand estimation and sales preparation.

48% of businesses reevaluate warehouse locations due to shifting trade patterns from economic changes: taxes, tariffs, and manufacturing shifts. Here are the challenges ecommerce brands face when planning inventory for the holiday rush:

Cash Flow Challenges for Holiday Inventory

Fulfillment costs, including warehousing, account for 20% of inventory expenses. Optimizing storage and distribution strategies can help manage these costs.

Extra inventory is needed to prevent stockouts during the holiday surge. Failing to align inventory with demand can lead customers to competitors, resulting in lost sales.

If stockouts occur, negative reviews and word-of-mouth can damage your reputation. Investing in inventory without a plan risks financial loss and increases carrying costs for unsold items.

Accurate demand predictions rely on historical data and inventory management software. Without these tools, forecasting seasonal demand becomes challenging. Retailers often miscalculate holiday needs, leading to stockouts or excess SKUs. Both scenarios affect cash flow and profitability.

Holiday stockouts can drive customers to other retailers. About 70% of consumers facing a stockout will switch due to time constraints. Addressing these inventory challenges ensures better cash flow management during peak seasons.

Managing Overstock and Stockouts

Retailers often have excess inventory after the holidays due to overordering SKUs or handling returns. Mismanagement of this stock leads to aging inventory, increasing holding costs, and tying up cash.

As businesses grow, they may add warehouses to handle more goods, complicating inventory planning. 

Implement smart storage solutions like vertical stacking and adjustable shelving. Use warehouse-focused inventory systems to streamline order picking, packing, and shipping processes. ‍

Why Accurate Inventory Tracking is Essential

Many businesses struggle with accurate inventory tracking. Surprisingly, 7% of small businesses don't track inventory at all.

Manual tracking methods, like spreadsheets or paper records, often lead to errors and inaccuracies. These outdated approaches make monitoring current stock levels and sales difficult across multiple platforms.

Effective inventory planning requires real-time visibility of each SKU. Without proper tracking, businesses may face:

• Missing or stolen goods
• Unexplained inventory losses
• Difficulty managing stock across different sales channels

Upgrading to automated inventory management systems can solve these issues. Modern tools offer centralized stock tracking with accounting features, allowing businesses to:

• Monitor inventory movement throughout the supply chain
• Maintain accurate stock levels
• Reduce human error in data entry
• Improve forecasting and planning for future inventory needs

Embracing technology for inventory tracking helps ecommerce brands stay competitive and prepared for seasonal demand fluctuations.

Inventory Planning Solutions for ecommerce Brands

ecommerce stores often face surplus inventory during the holiday season. Effective inventory planning helps manage each SKU, prevent errors, and maintain customer satisfaction. Proper strategies can save money and time and boost brand reputation.

Here are solutions to optimize your inventory management for the holiday rush:

Start Early to Avoid Holiday Stockouts

Holiday shopping starts earlier each year. About 40% of consumers begin before Black Friday, with 86% shopping by Thanksgiving weekend. High-income earners tend to start before Halloween, while moderate and modest earners wait for Black Friday deals.

Major retailers have adapted to this trend. Amazon Prime Big Deal Days, Target, and Walmart now offer early sales to capture eager shoppers. Gen Z shoppers are turning to new platforms, with 54% finding gifts on TikTok Shop.

Effective inventory planning requires placing orders with suppliers well in advance. Communicate your expected quantities and reorder points. Discuss delivery schedules and address potential supply chain issues before peak season.

When ordering, consider product lead times. Stock up on items with longer replenishment cycles to avoid stockouts of popular SKUs. An inventory management system can help track stock levels and automate replenishment notifications, ensuring you're ready for the seasonal rush.

Tackling Overstock: Strategies to Clear Excess Inventory

Overstocking during the holiday season is common, even with careful inventory planning. Flash sales can help clear excess stock and boost revenue. Some retailers are adjusting their strategies. Party City has cut prices on over 2,000 items, averaging 20% savings across affected products. 

Product bundles with discounts can quickly move surplus inventory. Selling out shows demand, but swift restocking is required to avoid losing sales.

Contact suppliers early for additional inventory. If they can't fulfill orders, mark items as "out of stock" on your site to prevent overselling. Inform customers when items will be available again.

Use back-in-stock notifications to capture potential sales. Allowing backorders gives you time to restock while keeping customers engaged. These strategies ensure you manage SKUs effectively and capitalize on holiday demand without missing opportunities.

Flexible Funding for Holiday Inventory Needs

Inventory planning for the holiday season often requires additional capital. Clearco's receipt funding program offers a solution for ecommerce businesses needing quick liquidity.

Unlike traditional invoice funding, receipt funding reimburses expenses already paid. It covers costs for inventory, digital and traditional marketing, events, shipping, logistics, packaging, and legal services.

The program works as follows:

• Submit receipts for eligible expenses from the past 60 days
• Receive funds within 1-2 business days after approval
• Choose from 4, 5, or 6-month repayment terms with capped weekly payments

The funding option allows businesses to manage cash flow effectively during peak seasons. It frees up capital for reinvestment in high-performing SKUs or marketing campaigns with strong Return on Ad Spend (ROAS).

Receipt funding enables ecommerce brands to focus on holiday sales without cash flow constraints. It provides flexibility to adapt inventory levels and marketing strategies during the busy season.

Prepare Your ecommerce Store for a Successful Holiday Season

Holiday sales projections show growth potential for ecommerce brands. Effective inventory planning and SKU management can maximize your seasonal success. Prepare for the rush by implementing smart strategies like early ordering and data-driven forecasting.

Don't let funding limit your growth. Get funded with Clearco to fuel your holiday sales today.