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A Small Business Guide to Holiday Season Inventory Management

Holiday Season Inventory Management | Moula Good Business

The holiday season can be one of the busiest and most unpredictable times of year for small businesses, so ensuring you have proper stock inventory management is crucial.

Consumers are starting their holiday shopping earlier than ever before and with the holiday season fast approaching, it’s important for small businesses to start planning ahead. If you haven’t already, you should start organising your existing stock, planning merchandise selections and managing future orders and replenishments.

However, inventory management can be testing at the best of times and, with the holiday season being one of the busiest times of year for small businesses (retailers in particular), all this is a lot easier said than done. That’s why we’ve put together this guide to give you everything you need to make this holiday season as painless and profitable as possible.

Forecast & Calculate

First things first: forecasting. You probably already have a pretty good idea of which items are your best sellers and odds are that those that perform strongly in August, September and October will carry over into the holiday period. However, it’s still really valuable to look at historical sales data and current trends to try and predict what will sell, how much stock you will need and what your sales targets should be.

A great place to start would be to dig out sales reports from the last few years. This should give you good insights into selling trends from previous holiday periods and an idea of what to expect this year. Identifying your most popular products from last year and which ones weren’t performing will help you determine your stock orders.

If you use POS software or automated inventory management software, then you will be able to pull reports from any date range you want to analyze.

If you don’t have much historical data to look back on then make sure you take notes this year! Be thorough: your future self will thank you next holiday season.

Select Your Merchandise Carefully

Merchandise selection is just as important product quantity management. There’s no point in getting more of everything is you know only one or two products are going to sell out. It’s better to have the bulk of your inventory be dedicated to the product you know is going to sell well and only have a small portion allotted to more niche products – the last thing you want is to run out of your top sellers in the middle of the season!

It could also be worth removing unpopular products and freeing up shelf space before the season starts. You might have to discount these items pretty heavily but it could lead to significantly more profits later on in the season.

Look at Current Trends

Identifying any external factors that may have influenced your past sales, as well as any current relevant trends, could be invaluable to your holiday stock orders. Using tools like Google Trends to track interest in your products can help indicate how popular different items will be.

It’s also valuable to see if you had any skewed data and try and attribute a cause. This could be as simple as major events (like a political election or celebrity and entertainment events) or could be harder to identify, like competitor activity. However, taking these factors into account could make a big difference to your projections.

Be Proactive With Your Orders

Vendor management is just as important as inventory management. Just as consumers are starting their shopping earlier, so too should you be placing your stock orders earlier. Planning your inventory orders to ensure you have the right amount of stock throughout the holiday season can be a tricky balancing act and can depend pretty heavily on the reliability of your vendor.

When it comes to your vendor, make sure you:

  • Order early and keep reliable communication with your vendor.
  • Get delivery dates as well as quantities for every product order you place.
  • Set Stock Re-Order Points (ROP’s) and communicate these with your vendor.
  • Ask about substitute items if an item is unavailable.
  • Enquire about delivery acceleration if you need it, even at additional cost (if they can’t, it might be worth switching vendors).

A vendor’s punctuality can mean the difference between selling steadily through the holiday season and having to mark-down stock because it was received late, which can seriously diminish your profits.

Time Your Marketing

This one applies to all businesses and can really boost sales if timed right. Your business might not have the budget for running massive media campaigns and TV ads, but you can still run effective and creative marketing campaigns on a budget.

Online marketing (particularly on social media) is relatively inexpensive and can go a long way to boosting holiday sales. Timing you marketing just right and making sure your targeting is appropriate is key to keeping your costs down and exposure up.

Look for peaks in your own sales and try and mirror that with your digital marketing. Target groups you know are interested in your products and use remarketing to ensure constant communication with your current customers. Tools like Facebook’s lookalike audience builder can also help you reach new audiences that are interested in your business. Check out our Small Business Guide to Social Media for more.

Post-Holiday Season

If you’ve planned out your holiday inventory well then this part should be easy. One of the main things to be wary of is markdowns. No matter how well you forecast, you’re probably going to have at least some stock leftover (and that’s probably better than running out in the middle of the peak season).

If you can’t sell your excess stock at full price very quickly, then try marking down your products periodically. Employ creative sales (like a ‘buy two, get the third half price’) to encourage customers to not only buy old stock but newer, full price items as well. If you continue to have leftover stock you may need to get more aggressive with your markdowns (like flash sales).

Holiday Budgeting

The last thing to consider throughout the holiday season is budgeting. While this time of the year is very profitable for many businesses, it can also be very expensive.

The last thing a business wants is to be missing out on potential sales (and profits) during a peak sales period because it didn’t have the cash flow get for the inventory orders. A short-term business loan to boost cash flow during rapid, peak sales periods can really help manage inventory orders and ultimately lead to more profits.

Learn more about small business loans and get the business loan basics.


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