Tips for Efficiently Managing Your Inventory During Peak Season

Being well-prepared to continuously meet peak season sales spikes gives you the opportunity to deliver more of your most popular products to more customers with more speed, driving better end-to-end fulfillment experiences and — ultimately — stronger loyalty.

Proactively evaluating and managing inventory ebbs and flows throughout this season will allow you to efficiently address increases in sales and avoid becoming overwhelmed during the Black Friday Cyber Monday (BFCM) rush. While supply chain disruptions and delays aren’t as commonplace as in years past, it’s still crucial to stay on top of purchasing trends to avoid selling out of in-demand products too quickly and missing out on potential holiday revenue.

It’s important to look back at how your business performed throughout the entirety of last year’s holiday season to better understand where you succeeded and where you can improve order volume and inventory management. Some questions you should be asking yourself at this point in the year are:

• How many orders did you fulfill throughout the 2022 holiday season?
• How much did order volume fluctuate through the end of the year?
• Which months, days, and times of last year's holiday season did you see the biggest spikes or lulls in sales?
• How did the promotions and discounts you offered last season affect your sales?

In addition to reviewing last year’s order and inventory data, you should also regularly check in on various current factors to determine what particular products are poised to be more in demand as we move deeper into this year’s holiday season.

What are your most popular SKUs?

You can identify your most popular SKUs by reviewing performance through your inventory management system, or even just looking at which item bins have run out more quickly over the past several months. Understanding which of your products regularly sell at the highest volume will keep you on top of the holiday selling game by helping you avoid potential stockouts.

On the flip side, if you’ve already purchased items you anticipate not selling well, consider how you can drive additional sales through various sales promotions. For instance, you might bundle low-selling items with popular SKUs at a discount, or offer free shipping as an incentive for purchasing products that aren’t selling as well as you’d hoped.

One key factor to consider when looking at your most popular SKUs beyond just highest number of sales is the actual profit margin per SKU. For example, a product might be flying off the shelf all year, but when you factor in the costs of shipping, fulfillment, and returns, the net revenue of each sale might be less than that of and item that has been sitting idle in your warehouse.

You can learn more about SKU-Level margins, what they mean for stocking up this peak season, and how they'll affect your inventory management strategy year-round by listening to our latest Peak Prep Fireside Chat.

Which product categories are trending?

Research product categories that are trending on social media channels such as TikTok and Instagram, or featured as hot items on marketplaces and in publications like Forbes, Buzzfeed, etc. (don’t ignore those holiday gift guides!). 

Determine where your ideal customers spend their time online, then subscribe to those channels, follow those influencers, and peruse that content. Doing your due diligence here will help inform how your own product lines align with what your buyers are looking for this year so you can manage your own inventory levels accordingly.

Can You Distribute Inventory Strategically?

During the holiday season, customers want their orders faster than any point of the year. But in order to meet that demand, you need to limit the distance your packages have to travel to meet their final destination. As we've found in our 2023 Benchmarks Report, 90% of the U.S. population can be reached within 2 days or less by using just 3 distribution centers.

For those outsourcing fulfillment operations with a 3PL which have warehouses and multiple fulfillment centers at their disposal, you'll need to inform them which inventory and how much of it should go where. This will involve a deep understanding of your audience which can be found through the use of tools such as Shippo or more extensively through an ERP software.

How are inventory levels fluctuating?

Trends can ebb and flow throughout the tight holiday window – while some consumers are already shopping for the holidays, others take full advantage of BFCM sales, and still others find themselves scrambling at the very last minute. Because of the inherent variation in buyer behavior and industry norms, it’s crucial to keep a constant eye on how your inventory levels spike and lull throughout peak so you can make adjustments where necessary.

For more tips to help you stay on top of peak season operations – including how to ship packages at peak efficiency, delight holiday shoppers, and get ahead of returns – be sure to download our full How to Prep for Peak Season Shipping Guide & Checklist.