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Forbes – Ho-ho-holiday woes: The scary (and complicated) reality of the holiday supply chain

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Forbes – Ho-ho-holiday woes: The scary (and complicated) reality of the holiday supply chain

December 5, 2022   ·   By Rob Garrison

December 5, 2022
By Rob Garrison

We know the feeling of walking into stores as September rolls in: pumpkins with faces, Thanksgiving platters, holiday lights, menorahs on shelves or toys stacked high.
However, nothing says “happy holidays” like the sense of tension in the air as staff begins getting ready for the inevitable rush of the season.

The same could be said for the supply chain industry. The holiday season is the most important time of the year for many importers. However, for gifts to be given, they must first be received; shockingly, all these decorations and products don’t magically appear on the shelf. Each product will have taken almost a year to plan, order, manufacture and travel to grace the rows of stores across the country. Countless jobs and untold hours will have been spent to ensure the timely, safe arrival of products.

But sadly, every year, there are those that don’t get it right—the stores you walk into mid-November and notice the lack of holiday decor or goods on shelves. Even the biggest holiday grinches can spot them a mile off. The truth is, these stores likely started planning far too late for the season—and have paid for it heavily.

Does the Holiday Season need to be stressful?

In the first half of the year, there are few holidays that drive surges in demand and require special attention. We refer to this as the “slack” season: a time when it is usually easier to get space on a ship and take advantage of lower tariffs and pricing. It's a stark contrast to the latter half of the year.

The major holidays for most importers include the usual suspects: Back To School, Halloween, Thanksgiving and Christmas, all of which collectively represent billions of dollars in sales every year. In turn, that means the busiest shipping period from Asia to the U.S. falls between June and September. Sounds early, right? Yet there’s a lot to be done before a product lands on a shelf, and as the months tick by, it becomes increasingly difficult to secure containers, get space on vessels or find adequate warehouse space.

Take Back To School, for example. Getting orders in as early as January 1 is key due to the three- to four-month-long production period ahead. From there, orders have to be shipped by May 1 (at the latest) to arrive at port. June will be spent distributing everything to warehouses and stores so importers can have the required products appearing on their shelves no later than July 1 to get ready for the back-to-school rush.

If products don’t sell during Back To School time, however, stores can still stock the excess pens and notebooks that are needed year-round for students.

Post-holiday blues

On the flip side, if the products are intended for a very specific event, importers risk losing out on sales if they cannot get them to market in a timely fashion.

Let’s use Halloween masks as an example: Starting November 1, costume mask sales are going to be nearly nonexistent due to a lack of demand. For consumers, the “after holiday” sales are a great opportunity to get their desired goods at a discounted price. But it’s quite the opposite for importers.

When products aren’t sold in-season, importers really only have three choices: offer steep discounts (for some products, this could be as high as 90% off), store them for the following year at the high cost of precious warehouse inventory space or dump the stock entirely at a complete loss.

All three scenarios take their toll on a business’s bottom line, meaning significantly less profit than anticipated and, most likely, missed targets.

My advice to importers this year

The implications of not staying ahead of the calendar when it comes to the holiday season can make or break a company’s forecast and sales. With that in mind, here are my three main recommendations for importers when it comes to planning and how you can get ahead for 2023.

Here are my three main recommendations for importers when it comes to planning and how they can get ahead for 2023:

  1. Start planning for the 2023 holiday season now.
    Production of the volume and specificity the holiday season requires means a lot of forecasting and planning. Coupled with the changing flux of consumer demand, it can be tough to get it right, but getting conversations rolling is key. By working closely with suppliers and prepping them for what to expect, you can ensure you aren’t left in your own personal holiday rush (and we’re not talking about waiting until Dec. 24 to buy Christmas presents). The risk of lost sales—and a whole lot of leftover inventory—is too great to ignore.

  2. Learn from the last holiday season.
    Fool me once; shame on you. Fool me twice . . . well, that’s a lot of Halloween masks left over. Look at what’s on track to be a bestseller and what is likely to be a dud. Do your research and gather insights from your suppliers on which products take the longest to manufacture—chances are, they’re the ones that you really want to sell, and that could be a big hit.

  3. Bring your import supply chain network together on a centralized digital platform.
    Emails and spreadsheets are less and less able to cut it in an $843 billion-a-year industry. You no doubt have thousands, if not millions, of dollars worth of products on your shelves during the holidays, so why put so much faith in outdated methods to get them in-store? Consider investing in digital tools that can help you plan, manage and deliver your own orders exactly as you do for your customers.

Modernization is becoming a necessity for the supply chain industry. After the turbulent past few years, the global supply chain has faced, the upcoming holiday season looks to be a defining period that will show who has really thought ahead and built resilience and planning into their import supply chain.

About the author

Rob Garrison, Mercado CEO
A highly accomplished Global Supply Chain executive with 25 years of experience, Rob Garrison has provided strategic vision and leadership to Fortune 500 companies. Rob has an impressive history of building agile, technology-enabled supply chains, and he has an established track record of forging high-growth partnerships, positioning organizations for success and launching innovative technology solutions that significantly improve end-to-end supply chain efficiencies.

Rob is currently CEO and founder of Mercado Labs.
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