Inventory Planning for Prime Day 2021 with Chinese New Year in Mind

Chinese New Year
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This year has been accompanied by many unprecedented challenges for brands. Most recently, brands that sell on Amazon have had to wrangle the unknown of when Prime Day will occur. As of now, it’s speculated that Prime Day will take place in October, and most brands’ planning is underway. However, in addition to planning for Prime Day 2020, brands need to look ahead even further. Prime Day 2021 will inevitably be impacted by the coronavirus, especially for those working with Chinese factories and manufacturers. Continue reading to learn more about why even now is not too soon to begin planning for  Prime Day 2021.

About Chinese New Year and Why it Matters

Brands that work with Chinese manufacturers understand how Chinese New Year can affect supply chains. During the holiday, factories close for at least two weeks. And, in 2021, the holiday will take place in February, putting Prime Day preparation on a tighter timeline. 

It’s also important for brands to consider the reality that many factory employees don’t return to their jobs after the break. This results in an added delay to production as new hires are trained. Finally, on top of China’s average 90-day lead time, we expect more production heading into 2021 to take longer due to the volatility of the coronavirus. Because of this, it’s crucial to secure purchase orders, sourcing, pricing, and more by the end of January. This way, brands can ensure inventory is delivered to warehouses before Prime Day.

How Timelines Will Look Different in 2021 

Because of the factors mentioned above, most brands will be rushing to submit purchase orders. Chinese factories are going to reach capacity faster than years prior because of the need to make up for lost sales during 2020. As a result, preparing for Prime Day could quickly become complicated for those that aren’t proactive.

Historically, brands would ensure purchase orders were submitted by the end of December or early January. This year, that deadline should be closer to mid-October to adapt to the shift in timelines in China. 

Other Strategic Considerations

Regardless of coronavirus or Prime Day, we suggest brands fully vet their suppliers. Because of the halt to production that happens each year in China, a fully vertical factory is ideal. This means finding a factory that doesn’t outsource and has the ability to manage all facets of production in-house. Since this can be challenging to find, we recommend looking for a supplier that has factories in countries in addition to China. This way, should the Chinese New Year’s slowdown get in the way of business, brands can more easily move to another factory. 

It’s also important to know what percentage of the factory’s production belongs to your brand when choosing a supplier. Knowing this can give brands an idea of how production for your products will be prioritized. For example, if your brand only makes up 5% of production at a factory, timelines will inevitably be longer. And, the inverse is also true. If your brand accounts for 85% of a factory’s production, the factory will be quicker to support your orders.

Planning for Prime Day this year and next will be unique for each brand. In any case, how brands navigate the coming months will be crucial to present-day and future success.  

If you could use the support of a strategic partner, schedule a free consultation. And, if you have any questions about inventory planning for Prime Day 2021, please contact us.

Chinese New Year

Hannah West

Hannah West