Seasoning is a data analysis tool which helps you to understand the sales performance of your seasonal inventory by calculating the sell through rate for your products.
Seasoning can be used to track the sales performance of any products which are sold within a defined time period. Apparel is a common use case, but other seasonal items such as party products, gifts etc. can also be managed in Seasoning.
For example, apparel or fashion retailers often have seasons for Spring, Summer etc. which represent the period for which a set of products are sold. It’s worth noting that a season may not map exactly to a calendar season - a season could be used for any fixed time period.
Selling seasonal products is a balancing act. For example, in apparel:
- Before a season, retailers can find it difficult to predict which products will sell e.g. those styles, sizes or colors which are likely to sell well during a season.
- Products may only be relevant for a limited time. For example, swimsuits may be less popular at the end of the summer season. In that case, you may have to either:
- Sell them at a discount or dispose of them at a loss.
- If the products will still be saleable then; keep them in your warehouse until, for example, next summer - taking up space which you could be using for other products.
Merchants selling seasonal products generally need to:
- Ensure they have enough stock of the best selling products to meet demand to maximize sales and profit. Re-purchasing fast selling products during a season maximizes the return of investment on inventory.
- Minimize the amount of stock that is left at end of season which needs to be sold at a discount or, if appropriate, takes up space in the warehouse until it can be sold at full price again.
Large retailers often use sell through reporting to help them understand what proportion of products have “sold through” during the season. In this example chart you can see the target for the proportion of sales to be sold at each date in a season, and whether sales for a vendor are running ahead or behind that target.
For example, in the following chart mockup, you can see products from Adidas are selling faster than expected but products from Nike are selling below the target rate:
Seasoning brings you the ability to understand sell through - it’s shown as the SellThru rate. Understanding this rate for your products helps you to make effective pricing, buying and merchandising decisions. However it can be complex to calculate and this is where Seasoning can help you.
Seasoning can be useful for merchants who sell seasonal inventory. For example:
- James is the buyer for an independent chain of apparel boutiques which sells products from a range of vendors. He has recently set up an online store.
- He wants to understand which vendors, styles, colours and sizes were popular last season when buying for next season.
- He wants to be able to adjust the price of products mid season based on up to date sales data and to raise Purchase Orders (POs) to restock popular products.
By re-stocking fast moving products James turns his inventory more rapidly. This effectively increases his budget and maximises his investment in inventory.
- Jana sells a range of seasonal homeware and gifts on Shopify and has seasons corresponding to events such as Easter, Thanksgiving and Christmas each year.
- She has an option to buy more stock from her manufacturer during a season (also known as a “call off”) since the manufacturer has a lead time to produce new stock.
- She wants to understand which products are selling well each season so that she can call off stock for those products from her manufacturer.
- She also needs to understand which products aren’t popular in a season so that she can cancel the call off for those products, and adjust their price to a level where they’ll sell.
By understanding SellThru Jana can ensure that she only needs to discount those products that wouldn’t sell at full price.
- Imani works for a merchant who sell Business to Business (B2B).
- Imani has been tasked with running an experiment to sell a subset of the product catalog Direct to Consumer (D2C) for a limited time period and budget.
- She needs to provide her management team with clear data on how the products are selling to determine whether to scale up the experiment.
- She wants to maximize the average product selling price to increase the profit from the experiment.
Using Seasoning gives Imani the data she needs to validate her experiment as quickly as possible.
Seasoning will help you understand what proportion of your inventory has sold in a specified time period. You can use this at each stage of your seasonal cycle.
- When making buying decisions for next season, you should review the sales performance from previous seasons.
- This will help you understand which products sold well by vendor, size, colour or style, so that you can:
- Order more inventory in frequently purchased sizes or colours.
- Order less from vendors which were less popular last season.
- You’ll find that your buying decisions will improve the more historical data you build up.
- Seasoning will help you monitor whether products are selling more quickly or slowly than the target.
- For fast selling products you may want to order more of that product to capitalize on it's popularity and so that you have an opportunity to sell more of that product.
- For slow selling products you may want to consider running a marketing campaign to increase their visibility or discount those products to free up space in the warehouse for faster selling products.
- If you have remaining stock you may like to consider:
- Selling the inventory at a discount immediately.
- Holding the inventory back for a future sale event.
- Keeping the inventory in stock for the same season next year, if the inventory will be saleable at that point.
- If you sell across different regional markets, you may choose to sell different products for seasons by region. For example, products sold in summer in Northern US states could be sold into fall in Southern states.