Planning for Chinese New Year – FBA & Dropshipping Advice

Chinese New Year is the largest holiday in the modern world, and yet so few people in the Western world are fully aware of what it is and how it works.

This post is going to go over when the Chinese New Year happens, and what it means for your China-based suppliers when operating Amazon FBA/ Dropshipping businesses.

I will not be going into detail as to what actually happens during the holiday as that is not my area of expertise! I will simply be guiding you through how it can affect a western business using a Chinese supplier, and what you need to keep in mind so that your business during the start of the year isn’t heavily impacted.

Let’s begin!

 

 

When is Chinese New Year and how long does it last?

 

The quick answer, it varies! The first day is usually either the end of January or in the first half of February.


This year, the event will begin on 16th February.

For people looking for new suppliers during this time, it may prove a bit more difficult than usual as the Chinese suppliers are looking at getting their shipments out to their existing suppliers before the new year. In addition, they will slowly be winding down business up to the 16th February (in the case of 2018).

However, I can say from personal experience that the Chinese suppliers always try to be as helpful as possible, and I have personally found new suppliers at this time without too much of a problem.

The celebrations last 15 days. This year, that means until Friday 2nd March. However, in practice people take on average 7 days of holiday starting on the first day. This means suppliers should start getting back to work from around 27th February after accounting for weekends.

Read on to see how you should act around this time as a professional FBA/dropshipper.

 

How to Show Respect!

 

 

First and foremost, you should always keep respectful of the Chinese traditions. Not only because it is the morally right way to behave, but also because customer-supplier relationships are very important for the success of your businesses.

Suppliers will be appreciative if you make a large bulk order in early January to ensure you have enough stock for the period of celebrations. The last thing they will want to be doing is rushing to fulfill a massive order days before their celebrations start! This should be a period where they are winding down work and preparing for the break ahead.

Equally, you don’t want to run out of stock at the start of the year, so it would be good business practice to calculate how many items you are selling per day on average, and to buy enough produce to ensure you won’t run out.

Any seasoned FBA seller/dropshipper knows that running out of stock can be a minor disaster. For FBA, this is because the Amazon algorithm ranks you down if you run out of stock repeatedly, meaning you will no longer appear on the top pages and will therefore lose sales. For a dropshipper, customers may go to your competition, and not check your website in the future, if you develop a reputation for running out of stock.

 

 

What to do if you Forget to Restock?

 

 

This topic is not covered as often. People talk about how to behave around the new year, but no one suggests what to do if you forget to restock and run out of goods. Or if your supplier cannot provide a large stock just before Chinese New Year starts. Here are your options.

The first option is to find another supplier that is not from China just for the month. However, you are likely to be charged a lot more money as China is the cheapest market. Additionally, they might not be able to provide you with the exact same product, and there is a risk of quality being worse.

Another option, is to raise the price of your product. In fact, you could see it as an opportunity to test out different pricing strategies. If you know that you sell four wedding dresses a day when they are priced at $300 per dress, but this will mean you run out of dresses in 2 weeks, try increasing the price. Increasing the price to $450 per dress may result in only two dresses being sold a day. The first scenario results in a greater weekly profit, however you run out of stock twice as quickly. Your total revenue would be $16,800 but you would go two weeks without any products while you wait for the Chinese New Year to end so you can restock.

If you chose the second scenario, your weekly profit would go down as you sell half the dresses each month. However, this means you won’t run out of stock at all during the month, and make revenue of $25,200 – a lot more than in scenario one! Then once you can restock, in this scenario you would go back down to $300. However, if the rise in price of $150 only resulted in a tiny drop in sales, you might even decide to continue with the higher price and make a lot more money! Sometimes it really helps to experiment with pricing.

In terms of FBA, both reduced sales or going out of stock impact your ranking in the search algorithm. The best option is clearly to make sure you get a large shipment in before the Chinese New Year. If you are unable to, however, the best strategy is simply to make sure you don’t go out of stock. If that means finding a short term supplier from outside China and paying a lot more for the product, it may be worth it just to preserve your ranking so you can continue selling in future months.

 

Take Action – Check your Inventory Today!

 

if you’re currently running an FBA or dropshipping businesses, make sure you have enough inventory to last you until 1st March at least. If you do not, I’d suggest getting in touch with your supplier immediately and making a large order to ensure you can continue selling during this period.

If you are new to FBA or dropshipping and wondering whether you should wait until March to start your business. Don’t. Scope out suppliers now, do your numbers, set up your landing page and make all the necessary arrangements that need to be made. See if the supplier can send you a sample before Chinese New Year so you can take professional photos of the product for your landing page. You’ll want to go into March with everything ready so you can start making sales as soon as possible.

As always, if you’d like advice or just to chat, please comment below and I will get back to you!

 

 

 

 

 

 

Author: Alex

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