Make no mistake about it: the holiday shopping season is the most important time of year for ecommerce stores. If you rise to the challenge, you’re rewarded with profits double or triple that of other financial quarters. If you fail, however, not only do you miss out on the biggest opportunity of the year, you also make a bad impression for a lot of new customers.
Before you plan your marketing, advertising, and promotional campaigns, you need to make sure to cover the bases. Fundamentals like inventory preparation and setting prices are the foundations for good sales; if they’re not solid, they won’t support your more ambitious outreach efforts.
So we’ve compiled our list of the 7 best tips about pricing and inventory preparation for the holiday shopping season. Handle these early so you can focus on more proactive techniques once the sales season has started.
1. Apply Weber’s Law to Holiday Price Increases
What can a German physiologist in the 1800s teach us about ecommerce? A lot, if you apply his work to modern times. Weber’s Law identifies how noticeable a change is to the general public. Although his science looked at perception as a whole, his findings can be applied to nearly any field — including ecommerce pricing.
Basically, Weber’s Law for ecommerce amounts to this: consumers are less likely to notice a price increase if it’s under 10% of the original price.
Because the holiday season is all about optimal pricing and strategic mark-ups, keep Weber’s Law in mind at all times. If you have a product you’re sure will sell, chances are you can raise the price up to 10% without deterring sales. The question is, how can you predict which products will sell during the next holiday season…
2. Check Last Year’s Sales Analytics
The first place to start with this year’s holiday campaigns is to look at last year’s holiday campaign. Check your sales analytics from Q4 last year to see…
- Which products sold well and which didn’t
- How many products sold (to stock up on inventory)
- What prices customers were comfortable with
- Temporal trends (biggest/smallest shopping days, popular/unpopular days of the week, etc.)
Customers’ behavior during holiday shopping is different from the rest of the year, so the only reliable way to predict which products to promote and how much inventory to stock up on is to look at last year’s holiday season. Of course, plenty can change in a year — including new hot items and trends — but last year’s data should be good enough to base your initial estimates on.
3. Plan for Overflow
An “out of stock” message during peak holiday shopping is a kiss of death. Not only do you miss a sale, but you also risk getting a bad reputation.
For starters, use your data from last year to adequately stock up on all products you think will sell well during the holidays. That’s always a smart move, but it still doesn’t safeguard against unexpected sales rushes. In that case, it’s always good to have a backup plan.
If you do run out of stock, try to partner with another merchant who can help you. For example, you could have a friendly competitor ship the product to your customer for a cut of commission. In some cases, you can find the same item from a dropshipper — so you can still feature the product online, but don’t need to worry about inventory storage.
4. End Your Price with “9”
Every conversation about pricing should mention the magic number “9”. An MIT-University of Chicago study verified what merchants have known for years: prices ending in 9 are more attractive to shoppers.
There are a few different explanations as to why. One suggests that, because we read left-to-right, we put more significance on the left-most numbers, so $19.99 seems cheaper than $20.00. Another theory is that people ignore cents altogether, arriving at the same conclusion. Regardless of why, the theory holds true in practice, so don’t forget it when adjusting your holiday prices.
5. Use Automated Software to Update Stock Levels on All Your Channels
If you’re selling on multiple channels, every time you make a sale, you have to manually update the stock levels for that product on every product page, on all your channels. Otherwise, you risk overselling — if you think an “out of stock” message is bad, wait until you have to tell an ex-customer that the order they thought was finished is now canceled.
Monitoring and updating stock levels is tedious and time-consuming all year round, but during the holidays it’s especially gruesome — more sales mean more updates, and frankly, you can use your time in better ways during the holidays.
Rather, elicit help from automated inventory management software like ours. Ecomdash updates all your listings on all your channels automatically as soon as a sale is made, preventing overselling from happening. You can rest easy knowing your listings are up-to-date at any given time, without any extra effort from you or your team.
6. Use Irregular and/or Odd Numbers in Prices
There are more psychological tricks to pricing than just ending prices in “9.” Another of our favorites is called “precision pricing.” As a University of Florida study explains, prices that use irregular or odd numbers seem more “precise” to the true cost of a product, whereas even or rounded numbers seem more like inventions of the merchant.
Let’s say you saw two TVs for sale: one $800 and the other $817.99. Statistically speaking, you’d be more likely to buy the $817.99 one because it seems more accurately priced. The nice and round “$800” tag seems like the merchant changed the factory price to make it more rounded.
7. Mark Down Slow-Moving Inventory Early
Last but not least, expect the unexpected. No amount of preplanning can guarantee your holiday season without any problems, so prepare to reevaluate your strategy later and change course if need be.
Most crucial, you want to identify the slow sellers early. If you stocked up extra on a product that isn’t selling as well as you thought, you’ll need to mark it down sooner rather than later to unload it. Early November is a good time to reexamine your sales strategy and modify the duds — while everyone’s preparing for Thanksgiving, you’ll also be hunting turkeys as well!
Even without a savvy marketing strategy or drastic discounts, an online retailer can still make the most out of the holiday season as long as they have their inventory in order and their prices on point. We’ll talk more about other ways to improve your holiday sales in the future, but for now, let’s start from the ground up — have enough products to offer and sell them at the ideal price.
Editor’s Note: This blog post was originally published September 2014 and was updated in September 2019 to reflect more accurate and relevant information.