How seasonality influences your e-shop's revenue

in pricing strategies, price optimization, seasonality

As a CEO or a product manager of a company you want to understand how seasonal demand affects your business. There can be moments when you experience drop in sales and as a result your profit drops. Instead of running static campaigns to improve your sales, try predicting the market demands with seasonality in mind.

Difference between seasonality and economic trends

Before we dive into the ways how seasonality influences your e-shop's revenue, let's look at the basic terminology.

Seasonality is a predictable period lasting a similar time span that repeats after one calendar year period. Examples of seasonal demand factors: Christmas season, Back to school, Day of week.

Economic and external trends are different from seasonal cycles because they appear more randomly. The frequency of such events can also be longer or much shorter than one calendar year. Examples of economic and external trends: boosted sales due to low unemployment, global or country level economic events, elections, pop-culture short term trends, unexpected short term traffic increase due to being featured on popular websites or social media etc.

In this article we focus on seasonal trends. Looking at specific patterns that occur periodically can help you better prepare for future demand, optimize your inventory and costs and improve your sales.

How to find your e-shop's peak and low seasons?

Every business is different and seasonal demand depends on the popularity and size of your shop, industry, product, or a niche. It is important to understand your shoppers’ behavior and find out how seasonal demand in your industry affects your sales.

For a start, analyze your sale, pricing and conversion data from the past 2 years and identify seasonal trends. You may want to look at search volumes in Google, number of clicks, page views and visits on your website, number of conversions and most importantly, measure weekly and monthly sales and profits. Make sure you've considered and accounted for everything, from paid ad campaigns that you realized to a traditional e-commerce events, like Black Friday.

Talking about top e-Commerce events, we prepared a list of events that can significantly affect your business results during a one-year-period.

Top e-Commerce shopping events

Working with different mid-size to large e-Commerce companies, we came to an observation that there are several main groups of events when seasonality heavily influences revenue.

1. Special dates

Special dates happen on a single date during each year and they influence many retailers. Among these dates are e.g., Mother's day, Father's day or Valentine's day.

2. Special e-Commerce events

Black Friday dates back to 1952 since when it has been regarded as the beginning of the Christmas shopping season in the U.S. Black Friday has gained popularity across the whole globe and the original mission of increasing shopping sales in the physical stores has also been adopted by e-Commerce stores. Cyber Monday is another shopping event that is popular among e-tailers around the world to persuade people to shop online.

3. Holiday or life events

There is a huge chance that your retail business will get a peak season during Christmas or even Easter if you have particular products to offer. Try to increase stock levels to keep up with demand
especially before the Christmas season. Another interesting life event that can boost sales is a wedding season which attracts lot of gift shoppers.

4. Days of the week

If you represent or own a larger e-shop, monitor daily sales on a 7 day basis. You can spot a season or a trend inside one week as well. Define the strongest or the weakest day for sales and turn your promotions around it.

5. Time of day

Monitor your website traffic patterns during day hours. Depending on your niche and industry, you will find times when your traffic and sales are largest. When launching special discounts, campaigns or sending promotional emails, use this knowledge for best timing for your marketing activities.

6. Weather seasons

It has been known for many years among e-tailers that weather has a big effect on sales. Generally summer/rainy weather can increase/decrease demand for specific types of products.

EXTRA TIP

Are you in a specific industry with many specialities, e.g. sport events, food or gardening seasons? These types of industries are influenced by their own traditional events predictably increasing demand and sales. Use these special events to introduce special promotions, up-sells, increase prices during higher demand and launch smarter marketing campaigns.

How seasonality influences revenue

Does any of the mentioned events influence your business? Analyze your sales and revenue by looking at your product history, website visits, conversions and the revenues around particular events. When you spot a recurring pattern, include this knowledge into your marketing plan so you get ready next time the event occurs. Make your promotions smarter, better plan stock inventory and earn more.

FINAL WORDS

Seasonality in E-commerce sales affects most shops. Do the most before the particular season kicks in: Prepare marketing and communication campaigns, send out related emails, write content for your blog, run a countdown or social media promotions. Last but not least, consider the importance of seasonality in pricing. To easily find seasonal conversion patterns, use FutureMargin - a tool for more profitable product pricing and better conversion analysis. Available as API or as a Shopify app.

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