How to stop profit leaking from your seasonal business


Managing seasonal inventory is complex. Suppliers face challenges including a rise and fall in revenues, successfully managing their cash flow, marketing budgets, and their supply chain. There are many opportunities for precious profit to leak through the gaps in the chain. Warehousing is another chainlink that can cause headaches for companies that experience high peaks and low troughs in demand and sales.

Peak Season

Every seasonal business wants to ensure that it is capitalizing on its peak season. Not only is it an opportunity to boost profits, but also to gather information on target customer’s shopping behaviors. Moreover, it’s a period that if sufficiently tracked and evaluated will offer lessons that can be improved upon the following year.

Correct supply chain management is clearly crucial at this time. Just like businesses, vendors and suppliers experience seasonal changes. Planning ahead in order to secure required materials is fundamental in avoiding price premiums or disruption to the business.

Warehousing space also requires planning. While some warehouses are equipped to manage spikes in demand for inventory space and fulfillment, it’s not always the case. Warehousing costs are likely to increase during peak times which can erode profits and in the worst-case scenario, force businesses to decrease their inventory, leading to slow delivery times and disgruntled customers.

Off-Peak Season

Excessive or deadstock is the biggest risk during the low season. When stock is left on the warehouse shelves for too long, cash flow becomes tied. Instead of holding on to excessive or deadstock, the best option is to apply discounts and recoup as many sales as possible.

With regards to warehousing, the urgency is to avoid paying for space that is simply not being used.

Taking a Flexible Approach to Inventory Management

The ideal scenario is for seasonal businesses is to maintain a flexible approach during both peak and off-peak seasons. There are many models that businesses can apply to help them better manage their inventory including First-in, First-Out (FIFO) which sees the product that has spent the most time in the warehouse shipped to the customer; Last-in, First-Out (LIFO), which takes the opposite approach, particularly during peak season when products which have most recently arrived at the warehouse are likely to be carrying a cost premium due to demand – this approach most suited to perishable items; Just-In-Time (JIT), when stock is only ordered as it is needed, and ABC analysis in which products are differently managed depending on their value. 

When it comes to warehousing, businesses also have options. The majority of warehouses request long-term contracts and inventory minimums. For businesses with high seasonality, it simply does not make sense to pay for unused space and maintain a minimum level of inventory when demand is not there. Unless space can be replenished with complementary products that support the business during the off-peak season, money is simply being wasted.

On-demand Warehousing Scales with Seasonality

On-demand warehousing, on the other hand, offers seasonal businesses the opportunity to scale up and down as demand fluctuates throughout the year, cutting unnecessary waste from cost and giving full control over how inventory is managed month-to-month in line without any punitive contractual obligations. As the peak season approaches, on-demand warehousing lets businesses ramp up in a cost-effective manner without having to sacrifice any inventory due to insufficient space. 

One Stop Spaces offers a portfolio of on-demand warehousing facilities in the New York and Tri-State that give seasonal businesses the flexibility to add and reduce space as and when they need it. Month-to-month rentals mean that expanding or downsizing in line with demand is simple and cost-effective. For more information, call us today at +1-718-786-8400.

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