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Why You Should Plan For Chinese New Year Now

For most eCommerce vendors, there’s only a handful of dates you need to remember. Cyber Monday. Prime Day. And to a lesser extent, President’s Day. That doesn’t mean the likes of Valentine’s Day or Mother’s Day aren't at all irrelevant to your business. Far from it. But they’re just as important in brick and mortar retail as they are in digital sales. That means it’s rare you’ll find yourself planning ahead with the same forethought and necessity as you might with the three chief money makers.

But there’s one specific holiday that frequently gets overlooked by both online and brick and mortar retail. It’s not Labor Day. And it certainly isn’t Back-to-School weekend. It’s Chinese New Year.

Why Is Chinese New Year Important For Retailers?

Also referred to as Chunjie, or Spring Festival, Chinese New Year is a lunar holiday celebrated by East Asian families both in their native countries and abroad. While Chinese New Year is viewed as a propitious time to celebrate luck, aspirations for the coming year as well as honoring familial ancestors, it’s traditionally marked the first stirrings of warmer days—no matter how frigid the temperatures might seem.

It’s also as synonymous with gift giving in East Asian countries as the winter holidays are for the West. In China alone, sales revenues during the week-long New Year celebrations in February of 2019 were approximately 1.01 trillion yuan—or roughly $149 billion USD. By comparison, digital purchases during Black Friday reportedly totaled only $7.2 billion USD.

These weren't minor purchases. They included virtually anything from laptops to new cars. In fact, China represents approximately one-third of the entire global luxury goods market.

But despite its moniker, Chinese New Year isn’t exclusive to China alone. It’s celebrated by billions of East Asian families, including residents in Hong Kong, SIngapore, Malaysia, Vietnam and South Korea as well as globally in any city with a substantial expatriate community—a diaspora estimated at well over 200 million in 2012.

When Is Chinese New Year 2021?

According to the Chinese zodiacal calendar, the Year of the Ox (the animal representing Lunar New Year 2021) will officially begin on Friday, February 12th. Keep in mind that for the vast majority of many East Asian families, celebrations can last well over a week with preparations starting as early as two weeks prior.

Coincidentally, 2021’s President’s Day weekend scheduled to take place between the 13th and the 15th will also coincide with Chinese New Year; as will Valentine’s Day.

Why Should I Plan Ahead Early For Chinese New Year?

Chinese New Year is a far from casual affair, as anyone who may have witnessed international celebrations can attest to. But for retailers, there’s a much more significant concern: supply chain interruption.

Factory shutdowns are a given during Chinese New Year. And not just for a day or two, but for 40 days on end; prior, during and after celebrations. Not only will you be unable to order during Chinese New Year, you won’t be able to get any response whatsoever from a manufacturer or distributor.

One of the primary reasons for such a lengthy production cessation is purely practical. The vast majority of factory workers in China are migrant laborers separated long distances from their respective families. And Chinese New Year is unquestionably a family affair. In fact, there’s even a word for the extended travel period during the Lunar New Year: chunyun. It’s by and large considered to be the largest annual travel period in the world, with an estimated 2.99 billion trips being made in 2019.

It’s not just production which is affected by Chinese New Year. Distributors also pause operations during chunyun, with both manufacturers and suppliers sometimes taking as long as an entire month before resuming business at a normal speed. To add to the frustration for retailers, there’s two things which are virtually synonymous with New Year preparations:

  • Quality and product availability will be affected.

Production doesn’t just cease during Chinese New Year. It may sometimes never return again.

Much like Q4 in the US, Chinese New Year is a rush time when suppliers and manufacturers try to wrap up any loose ends as quickly as possible, with both quality, communication and inventory being affected adversely. But it’s also a propitious time for new beginnings, with up to 25 percent of laborers choosing not to return to their former jobs. And it’s not just assembly workers who choose better opportunities. Management and owners will frequently use Chinese New Year to shut down unprofitable business lines altogether.

  • Expect both delays in shipping and an increase in cost.

A given rule is that production orders will generally cease no later than ten days prior to the start of Chinese New Year. What this means is an inevitable backlog of shipments, often necessitating a drastic increase in costs due to both higher demand and decreased personnel.

Chinese New Year 2021 And Coronavirus

While the coronavirus pandemic has affected both vendors both on Amazon and elsewhere, the impact on eCommerce in China proved to be particularly significant with an increase in online sales of more than 100 percent compared to digital sales in the US reported in March.

But that wasn’t necessarily good news for the retail sector during Chinese New Year at all. Reports indicate that total retail sales of consumer items fell by over 20 percent during January and February 2020 in China, with eCommerce retail sales specifically plummeting by 3 percent. And while the dramatic spike in monthly sales revenue between February and March could be largely attributed to adaptive consumer habits as the pandemic developed, the unpredictability of sales presents a specific problem for Amazon sellers: inventory performance.

Your Inventory Performance Index (IPI) is a rating used by Amazon for FBA sellers to gauge sell-throughs, fulfillment, management and delivery performance over a 90 day period. In theory, it’s an incredibly useful metric which can point out blind spots in your order fulfillment methods. But what sellers don’t always take into consideration is that Amazon will actually limit your available storage if your IPI dips below 500. And if your item isn’t restocked regularly, don’t be surprised if your IPI dangles precariously below Amazon standards.

Tips For Vendors And Sellers During Chinese New Year

  • Plan marketing campaigns and order fulfillment solutions NOW. Allowing a week or two extra grace period for normal order and shipping times may not be enough for most domestic vendors. Think ahead and plan now to avoid any potential backlogs, shortages or delays.

  • Any expedited delivery options will affect your overall listing cost and shipping fees. Being cognizant of this and updating your listings accordingly will avoid any rude awakening for both you and your customers.

  • If you’re currently facing limited storage as a result of your IPI, use third party sellers for storage. While Amazon does permit both FBM and FBA services for the same product, make certain any third party solutions are properly vetted and meet Amazon standards (Note: Click here to review an updated list of countries Amazon will permit as registered sellers.)

  • Secure volume commitments from transportation providers and distributors early to ensure any large inflow of orders can be fulfilled seamlessly.

  • Increased sales mean increased returns. Free returns on any product may be the bane of any Amazon vendor’s existence, but it’s a necessary one. Especially if you’re tapping into a previously unexplored seasonal market. This is your chance to make a great first impression. And a satisfied first time customer is a return customer year-round.

  • Don’t neglect the power of social commerce. It’s been estimated that consumers in China spent $1.7 trillion yuan (approximately $242.4 billion USD) last year via social eCommerce. Calculating the revenue generated by East Asian customers living abroad may well be inestimable. If you’re not leveraging social marketing now, you’re missing out on one of the fastest growing global marketing solutions imaginable.

Color More Lines provides white glove, global account management of your eCommerce platforms so mission-driven companies can focus on new product development, branding and growth strategies. Find out more at Color More Lines.

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