Sell Earlier

Flipping the Script: The New Retail Calendar

Flipping the Script: The New Retail Calendar

For decades, the retail industry has operated on a well-established calendar driven by predictable consumer shopping patterns. Major retail events like Black Friday / Cyber Monday, summer clearance events, and back-to-school campaigns have dictated production timelines and inventory management strategies. This traditional retail calendar controls *when* brands start selling their products – and in the world of eCommerce, with merchandising and operational teams anxiously awaiting stock to arrive at the warehouse. And once it arrives, it’s a GO.  

However, this approach is causing existential issues for the industry. Supply chain delays cause missed launch dates, impacting overall sales. Stockouts lead to missed sales while leaving consumers frustrated. And a too-long feedback loop on consumer demand vs. placing purchase orders causes missed sell-through targets.

For eCommerce, trying to perfectly line-up everything in the retail calendar around what we call “T” – when stock arrives at the warehouse – is failing: the industry is sitting on $732b of unsold inventory and growing as of last year.

In good news, eCommerce is in a unique position to flip the script on the traditional retail calendar from the ground up to tackle this unsold inventory problem. And early adopters are already leading outfront so that their sell-through is less about relying on a hope and a prayer, and more about leveraging the flexibility of online selling.

Reshaping the Retail Calendar

When the pandemic hit in 2020, supply chains around the world were severely disrupted. This created delays in stock arriving at the warehouse, as well as demand outpacing forecasts in unpredictable ways. As a result, merchandisers and operators were faced with a fundamental question: Do we wait until stock arrives to sell, or do we sell now?

The most forward-thinking brands quickly reacted with a definitive answer – sell now.

These brands were able to quickly react to the headwinds and successfully land a pre-order strategy with consumers  – and as a result, smashed sales targets on the topline and the bottom line, while others struggled.

With this adoption, pre-orders surged in popularity, growing by almost 50% in 2020 and prompted a significant shift in retail industry norms. The pandemic was a force accelerator for eCommerce to rethink a core component of the traditional retail calendar: waiting to have stock “on-hand” to sell it.

And unlike other industry pandemic fads, like egregious container costs or a rush to upgrade 3PL providers, pre-orders have continued to grow despite that specific supply chain crisis behind us.

Why? Because brands realized that a core advantage of pre-orders is the ability to fully control their retail calendar. Instead of being handcuffed to the previously ominous “T” – when stock arrives at the warehouse – they open up a whole new window to sell in “T-1” – before stock arrives at the warehouse.

And by opening up this window to sell earlier, the entire retail calendar can be executed in a new way to increase sell-through – unique to eCommerce:

Not just forecasting demand, but converting it:

For years, retailers have obsessed over forecasting demand through a combination of last year’s sales, fancy reports about this year's trends, as well as analytical tools that use things like site traffic or # of emails left on “Notify me when back in stock”.

From a timing perspective, unfortunately all of these strategies are simply too reactive and too late. They rely on the traditional retail calendar that waits until stock arrives to start selling.

Instead, selling earlier brings a whole new meaning to the phrase “forecasting demand”: With pre-orders, consumers have put their money down as true demand. Sales always trumps a forecast because it’s *real*. And the tighter the data feedback loop of that demand into production, the more accurate your forecast model will be.  

When forecasting a restock, waiting to convert sales until stock arrives pushes sales back at best or completely misses them at worst. For example, trendy sneaker brand LØCI tested Pre-orders vs Notify me for their out-of-stock styles, and the pre-order approach led to a 89% increase in sales vs waiting to convert demand until the restock arrived.

And for brands that have the flexibility to react quickly to demand, the impact is even more palpable. Based on the demand during “T-1”, brands make dynamic adjustments using real sales data to forecast and finalize a PO. For example, extraordinary womenswear brand Sachin & Babi, uses pre-orders to achieve 0% overstock of some of their seasonal lines.

By pushing their retail calendar earlier, these brands are not only understanding demand earlier – but converting it, which increases overall sell-through.

Not reacting to supply chain risk, but controlling it:

Even with the pandemic behind us, brands are continually juggling countless factors in their supply chain that, despite best efforts, can still lead to delay.  With nearly 90% of businesses experiencing supply chain disruptions in 2022, uncertainties are almost guaranteed.

Traditionally, merchandisers and operators treated these delays as business as usual, and would adjust sales forecasts *down* accordingly.

But with a sell-earlier strategy, these brands now have a full risk mitigation plan in the event of a delay: instead of adjusting sales forecasts down, they start selling anyways. This puts the control back in their hands vs. their supply chain, and gives them the peace of mind against these risks.

For example, Handful, a thriving comfort and confidence athleisure brand was able to sell their summer collection against the same marketing calendar they planned despite a supply chain disruption upstream. This enabled them to sell 30% of their stock before it arrived, and they were able to meet the same sales targets they forecasted without any downwards adjustments.

By knowing they always have the flexibility to sell earlier, these brands can stick to their original timeline: instead of pushing sales later (or missing them completely), they sell in “T-1” with a pre-order strategy and are able to meet their original sales forecasts.

Not thinking of the warehouse as storage, but as staging:

This is where the smartest, most forward thinking brands are radically re-thinking the traditional retail calendar. They’ve realized that purposefully planning to sell stock before it arrives moves their entire sales cycle forward, enabling them to sell more and store less.

Traditionally, the sell-through tracker started once stock arrived and was stored at the warehouse. Warehouse storage costs accelerate as time goes on. The pressure to sell is real.

But, by moving forward the timeframe that stock is available for consumers to start buying, brands are simply selling more because they are selling longer.

These brands “get” that waiting until stock arrives is just a flat-out risky business practice. Having 100% of stock unsold when it reaches the warehouse seems like madness in hindsight – but having 10%, 20% or even 50% or more of the stock sold ahead of time? That sounds smart.

To achieve this, brands are leaning into fresh marketing strategies that are converting – ones that focus on scarcity vs abundance, FOMO that commands full-price vs discounts, “be the first” loyalty programs, and sustainability – the list goes on.

Baking a sell-earlier strategy into their new retail calendar, optimized for an online selling world, gives these brands earlier data on which SKUs will sell-through faster vs slower, helping them mitigate sell-through risk earlier. And across all their products, they’re storing less once the stock gets there because a real % is already sold, reducing storage costs.

For example, affordable trendsetting sunglasses brand Knockaround, has leaned into pre-orders for its pro-sports collaborations selling 60% of their stock before it arrives. Rapidly growing DTC brand Azio Beauty has saved 80% in their warehouse storage and pick & pack fees with a well-thought through sell-earlier strategy.

These brands see a world where they their warehouse becomes more of a staging environment where stock arrives and is immediately shipped out vs a place where *everything* gets stored and then sold.  By selling earlier anywhere from 6 weeks to 3 days out, these brands are not only raising the bar for their sell-through targets but are also lowering the amount of stock that’s sitting in their warehouse at any given time.

Future Predictions: A New Retail Calendar

This dynamic and fresh take on inventory management is driving a complete flip of the script on the traditional retail calendar when applied to eCommerce – and one that has a real chance at radically tackling the unsold inventory problem at large. A whole new category of tools and systems will emerge to give eCommerce the flexibility to break out of their “T: stock arrives at the warehouse” retail calendar of today.

For example, fast-moving consumer goods have both a shorter manufacturing cycle as well as a shorter time that consumers are willing to wait. For these brands, selling as much as possible when stock is 1 or 2 days out is the goal. On the other hand, for exclusive or luxury items where customers are more willing to wait, brands can use a longer pre-order cycle to optimize for sell-through. This intelligence can be driven by the platform shift within "T-1: selling earlier" vs "T+1: waiting to sell".

For seasonal new arrivals, merchandisers will always have full control of their launch date that’s independent of where that stock is in the world. And for more evergreen products, “arrival at the warehouse” is just a matter of when the products can be shipped – but not when they can be sold. The optimization of the entire retail calendar will be driven by selling as much as possible before stock arrives so brands can sell more and store less.

And in this world, sell-earlier becomes less about the word “pre-order” and more about communicating to the consumer when it’s going to arrive – and building trust in that experience. Afterall, that’s what the consumer cares about to decide whether to purchase.

And for that traditional retail calendar? Well, when you have the flexibility to always be selling, brands can easily flip the script to create a new retail calendar optimized for eCommerce – and one that can be a lot more successful at driving to a 0 unsold inventory world than the rigid one that’s been used to date.

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