Just like elves in Santa’s workshop, e-commerce teams everywhere are busy planning for an explosive omnichannel Cyber5 on Amazon, Walmart and other online retail sites. While the holiday shopping season technically starts in October we all know Cyber5 is when the real action happens. Starting on Thanksgiving Day we usually observe a 2x lift in sales, spiking even higher over the weekend by 3x. This year, we expect a similar pattern. And, we predict the winners of Cyber5 will be determined by brands that successfully do two things: avoid running out of stock and manage higher than average shipping costs.
Our master e-commerce elf, Tod Harrick, summed it up best with his pro tip:
“This holiday season, what brands really need to do is to learn how to manage their e-commerce flywheel – link ad spend closely to inventory levels to avoid creating and exacerbating out of stock issues.”
Unlike Prime Day, the strategy for Cyber5 doesn’t need to focus heavily on discounting. Overwhelming demand makes customers less price-sensitive and products less elastic. This means it makes more sense for brands to plan lots of small-discount promotions. We also know that CPGs won’t be as affected as sellers of hot ticket items like toys, skin care, home and kitchen appliances, holiday products, pets, furniture and power tools. These categories will be huge.
In terms of advertising, our analysis shows us that ad spend usually begins to increase in mid-October, so it behooves marketers to lock things in now. These investments usually double over the Q3 baseline before Cyber5, and increase again by 2.5x during Cyber5.
For more tips on advertising across multiple e-commerce marketplaces and online retailers, read our blog CommerceIQ Doubles Down on Omnichannel Retail Media.
So, what do all of these Cyber5 insights tell us about 2021?
5 Pro Tips for a Prosperous Holiday Selling Season:
- Increase ad spend by 50% starting in October. Further increase to 2x normal spend during Cyber5. Maintain at 1.5x normal spend through the shipping cutoff date.
- It’s actually okay to be OOS in the lead-up to Cyber5 as long as inventory is in by Thanksgiving Day, BUT it’s important to get FC space reserved early because retailer warehouses fill up. This is the year Direct Import (DI) can be useful, so brands should negotiate with Amazon NOW to set up DI on key ASINs.
- Use a consumer-demand-based long-term forecast to set allocations, to be able to container ship directly to Amazon FCs and cut costs and take advantage of the long lead time DI provides to get inventory in just before Cyber5.
- Monitor in-stock levels closely through Cyber5 and have a streamlined (preferably automated) process to create Born To Run orders. Take advantage of the week-long post-Cyber5 lull to ship in that replacement inventory.
- Automate, automate, automate! E-commerce teams that figure out how to automate as much of the supply chain as possible will win. Brands will either crush or be crushed by algorithms that penalize OOS (or, near OOS) products by dropping their search rankings. Remember, shoppers are the #1 customer for Amazon, Walmart and other online marketplaces, not brands.
During Cyber5, even the savviest digital brands need the help of automation and a technology-driven approach to optimize the scale and volume of orders on e-commerce. Our parting words of advice: avoid the danger of running out of stock, don’t get burned by shipping costs and automate as much of the process as possible because speed and timing are everything.
Stay tuned for more holiday insights over the coming weeks and months. In the meantime, for more information about how to automate your brand’s e-commerce operations and supply chain and what you need to get ready for the 2021 holiday season, learn more about CommerceIQ’s technology-led machine learning approach or request a demo today.