What is a seasonal product, and how to optimize pricing and profitability for the upcoming season?

We all know Christmas sales can be manic for retail and Ecommerce. The same goes for bikini sales in hot, long summer. But how do you prepare for seasonal product pricing, and more importantly, how can you optimize seasonal product pricing for the season’s best outcome and how to fine-tune the outcome with markdown pricing campaigns?

Product seasonality and seasonality of demand are a natural phenomenon in the retail and Ecommerce industry. Product demand fluctuates at regular intervals throughout the year. As a Retail and Ecommerce business owner, understanding and anticipating these patterns and understanding the benefits of demand forecasting are crucial for your success. Managing inventory to plan pricing & marketing efforts, and being aware of product seasonality helps you make better business decisions and increase your EBIT. In this blog post, we’ll explore how product seasonality can affect retail and Ecommerce businesses and offer clear strategies for making the most of this natural cycle of demand.

First, we will examine what a seasonal product is, what short- and long-season products are, and how they differ. To get there, let’s look first at product seasonality. 

What does product seasonality mean? 

Product seasonality refers to the tendency of certain products to experience fluctuations in demand at certain times of the year. Demand changes because external factors such as weather, holidays, and cultural events. There are a few key external factors that can make a product seasonal and we will still divide those into two distinctive classes. Longer seasonal products and shorter seasonal products. Longer seasonal products sell mostly against weather and seasons. 

Examples of short and long product seasonality

Let’s start with the long prominent product seasonal driver, the annual climate variation. One of the most common examples of product seasonality is the increased demand for warm-weather clothing during the summer and winter clothing during the colder months. Annual seasons like summer and winter, obviously affect consumer behavior. 

For the short seasonal drivers, Christmas is a perfect example. There is an increase in demand for Christmas-related products during the holiday season. Again, this is because of the cultural tendency to celebrate Christmas by eating good food, giving gifts, and decorating homes during the holiday season. 

Similarly, there is an increase in athletic clothing and equipment demand before and during significant cultural and sporting events such as the Olympics or the Football World Cup. Again, this is because people are more likely to engage in sports-related activities during these events and want to purchase appropriate clothing and equipment.

Some seasonal products also are between short and long, with more unclear seasons. Different trends often form them. When the season of a product is set by a trend, like a musical trend, the season and the demand might be harder to pinpoint exactly. 

In managing inventory for short seasonal products like Christmas decorations, accurate demand forecasting and building, reliable relationships with multiple suppliers are key. It is also vital to create inventory buffers, floor space or themed category landing page planning and implement effective inventory management systems to handle unexpected spikes in demand. 

For long seasonal products like winter clothing or garden furniture, it is more important to have a flexible logistics plan and build flexible relationships with logistics providers to ensure stock is easily replenished, as needed. 

Consider demand forecasts and competitive pricing for long seasonal products and emphasize value creation in shorter seasons. Supporting your pricing position should always be done with insightful, data-driven marketing for both short- and long-seasonal products. Additionally, having a clear strategy for end-of-season clearance and markdown promotions is the key to success.

What to consider when planning on using seasonal products?

As an Ecommerce business, there are opportunities to increase revenue and profitability by selling seasonal products. From Halloween costumes to Christmas decorations, seasonal products can generate high-margin sales during peak demand periods. They also offer cross-selling opportunities when consumers want to create a memorable Christmas for their families. Here are the five main benefits of seasonal products.

1. Seasonal products can have very high-margin seasonal sales

One of the most significant benefits of seasonal products is that they can generate high-margin sales during peak demand periods. For example, a company that sells Halloween related products may see a significant increase in sales during October, which can result in high profits.

2. Seasonal products often have high cross-demand with related items

Another benefit of seasonal products is that they often have high cross-demand with related products. For example, a company that sells Christmas trees may also see increased sales of ornaments, lights, and other decorations.

3. You don’t know if the season is going to be good or not

While seasonal products can generate high profits, they also come with specific challenges. One of the biggest challenges is, that it can take time or be impossible to predict how a season will perform in advance. For example, a company that sells winter coats may experience high demand if there is a freezing winter, but if the winter is mild, demand is lower.

4. How to manage seasonal product planning

So, now we know what seasonality is and how it affects products of a short time interval over a more extended period. Therefore, managing seasonal product planning can also be challenging. Naturally, it is vital to have the right amount of inventory in stock, to meet demand. But, on the other hand, having too much inventory will cut your margins and can result in markdowns and wasted resources.

A good thumb rule for effective season planning is to use demand forecasts, clear-cut pricing and swift end-of-season clearance and markdows. To effectively plan for seasons, you will benefit from having a crips understanding of your in-store and online promotional space and ensuring you have the right products in the right place at the right time. 

You will also notice, that handling on season sales spikes from the supply and pricing side plays a vital role. Sometimes on a daily or weekly basis. High-demand periods will strain your suppliers and logistics, that right pricing might elevate. To avoid having out-of-stock periods, consider building relationships with multiple suppliers, developing a flexible logistics plan, and building inventory buffers to manage unexpected spikes in demand. Sometimes the simplest tactic is to raise prices to lower the demand to meet you supply. 

In summary, while there are certainly challenges associated with seasonal products, the benefits are clear. By understanding the market, anticipating demand, and effectively managing pricing, inventory and logistics, you can capitalize on the high-margin sales and cross-demand opportunities that seasonal products offer. Let’s look at some key aspects in a bit more detail.

How to manage your inventory for seasonal products?

The inventory management principle with seasonal products is to ensure enough stock on hand to meet the expected demand during the peak season while minimizing the excess inventory at the end of the season. Develop accurate demand forecasts, build reliable relationships with suppliers, create inventory buffers, implement clear and effective inventory management systems, and continuously monitor and adjust supply and pricing to match demand. Additionally, implementing effective logistics and pricing strategies and using data and customer insights to drive targeted marketing campaigns will help you optimize inventory management for seasonal products. Here are five main points you should look at:

1. Develop accurate demand forecasts for your seasonal products
2. Build reliable relationships with multiple suppliers
3. Create inventory buffers to manage unexpected spikes in demand
4. Implement effective inventory management systems
5. Monitor daily the development, replan and optimize your supply for the spiking demand

How to optimize logistics for seasonal products?

The principle for optimizing logistics for seasonal products is to develop a flexible logistics plan that can adapt to the unique demands of the season. This involves building strong relationships with reliable logistics providers, implementing effective tracking and monitoring systems for seasonal products, and planning to manage unexpected spikes in demand. Additionally, it’s essential to clearly understand the lead times and delivery schedules for seasonal products to ensure that inventory arrives promptly and that you have enough stock to meet customer demand. Few tips for the logistics of a seasonal product planning.

1. Develop a flexible logistics plan

The plan should consider the unique logistics needs of your seasonal products, including shipping schedules, transportation methods, and potential delays or disruptions.

2. Build reliable relationships with strong logistics providers

By working with multiple logistics providers, you can ensure that your seasonal products are delivered on time and help you manage unexpected spikes in demand.

3. Implement effective tracking and monitoring 

Monitoring will help you track the whereabouts of your products as they are in transit and ensure they arrive at their destination on time and in good condition.

4. Anticipate the end of the season and plan for clearance and markdown

A plan for end-of-season clearance and markdown pricing campaigns of seasonal products will help you clear out your inventory and avoid waste/loss.

Planning ahead, communicating effectively with logistics providers, and implementing effective tracking and monitoring systems is vital. Doing so ensures that your products are delivered on time and in good condition, which is essential for meeting customer demand and maintaining positive customer relationships.

Developing marketing campaigns for seasonal products

For marketing campaigns for seasonal products, it is important to utilize data and customer insights to develop targeted campaigns, build a strong social media presence, create and implement effective direct marketing campaigns, utilize influencers and partnerships, and create a supportive strategy for end-of-season clearance and markdown promotions.

1. Utilize data and customer insights to develop targeted marketing campaigns 

Ensure your campaigns reach the right audience and generate maximum engagement and sales.

2. Tap into contemporary topics to boost interest. 

There is nothing more appealing than communicating things that people want to hear. So reach a wider audience and generate more buzz around your seasonal products.

3. Make direct marketing count

Create and implement effective direct marketing campaigns from your Customer Data Platform (CDP) with email, SMS, and SOME. Reach your most valuable customers and drive sales during the peak season.

4. Use influencers to support your brand

Utilize influencers and partnerships to drive interest and sales. Partnering with influencers or other companies can help you reach new audiences and generate more interest in your seasonal products.

5. Prepare the communication for markdown campaigns

Create a supportive strategy for end-of-season clearance communication and markdown promotions. Move any remaining inventory and make room for new products while generating additional sales with optimized margins.

Additionally, monitoring your campaigns and adjusting as needed is vital. Use metrics such as conversion rates, click-through rates, and sales data to understand the effectiveness of your campaigns and make adjustments accordingly. It’s also important to consider the timing of your movements and align them with the peak season and critical shopping dates, such as holidays, to maximize their impact.

Another key aspect to consider is creating a sense of urgency and scarcity. When promoting seasonal products, emphasize that they are only available for a limited time and create a sense of urgency among your customers to purchase before the season ends. 

Finally, consider leveraging data and analytics to identify trends and patterns in consumer behavior related to your seasonal products. Then, make data-driven decisions about pricing, inventory, and marketing strategies for future seasons, which can help you maximize your revenue and profitability for seasonal products.

How to do seasonal product pricing?

Pricing seasonal products can be challenging, as demand and supply fluctuate significantly throughout the year. However, here are a few strategies that you can adopt and use to price your seasonal products:

High-low pricing

This strategy involves setting a higher price during peak demand periods and a lower price during off-peak periods. You capitalize on high demand and move inventory during slower times.

Flexible pricing

This strategy involves adjusting prices based on changes in demand and supply. For example, if you anticipate high demand for a product, you may increase the price to take advantage of the market conditions. Conversely, if demand is low, they may lower the price to stimulate sales.

Bundle pricing 

This strategy involves offering a bundle of products at a discounted price. You can use this to move excess inventory during off-peak periods.

Early-bird pricing 

This strategy involves offering a lower price for customers who purchase the product before the peak demand period once you can anticipate demand and plan accordingly.

Dynamic pricing

Dynamic pricing uses technology to adjust prices based on real-time data, such as changes in demand, supply, and competition. As a result, you can stay competitive and respond quickly to changes in the market.

It’s important to note that you can use different pricing strategies at different product life cycle stages. Therefore, the most appropriate pricing strategy will depend on the specific product and market conditions. Additionally, It’s essential to comply with your region’s laws and regulations and ensure that the pricing strategy doesn’t mislead the customers.

How to optimize individual pricing for seasonal products?

When pricing seasonal products, it’s essential to consider the demand for them and how to use profit optimization for those. One effective strategy is to set prices based on demand forecasts, considering your overall seasonal experience and data from previous seasons. This way, you will help your product pricing to be competitive while maximizing your profits.

In cases where you are selling seasonal products like home and specialty goods or clothing, it can be beneficial to use demand forecasts based on previous seasons and competitive pricing data. This will help you to price your products in a way that is both profitable and attractive to customers.

Another critical aspect of optimizing pricing for seasonal products is using timely promotions and discounts to drive sales during the on-season period. For example, a discount campaign can include buy-one-get-one-free offers or discounts for bulk purchases. Planning these promotions will help you to make the most of the seasonal sales opportunities.

When the season ends and sales slow down, it is vital to have a clear and decisive pricing strategy for end-of-season clearance and markdown pricing of seasonal products. Ensure you move inventory and make room for new items while avoiding losses due to overstocking.

Finally, it is essential to monitor demand and adjust pricing as needed for seasonal products. This will help you to stay competitive and make the most of the seasonal sales opportunities. Additionally, consider the cross-elasticity of similar products to avoid loss in some sales while other sales soar. Here are still a few tips to bear in mind for optimizing pricing for seasonal products.

Understand the season demand

Set prices based on demand forecasts based on the whole seasonal experience you offer and previous seasons’ demand: By analyzing historical data on sales and demand for your seasonal products, you can make more informed decisions on how to price your products in the current season. 

Pre-plan promotions

Plan clearly on how to offer promotions and discounts to drive sales for seasonal products during the on-season period: By planning and executing effective promotional campaigns during the peak season for your products, you can drive increased sales and maximize your revenue potential.

Have a clear plan for markdown pricing 

Develop a clear and decisive pricing strategy for end-of-season clearance and markdown pricing of seasonal products: As the season ends, you will want to clear out your inventory. To do this, you should develop a clear pricing strategy for markdowns and clearance sales. This will help you to sell off your remaining inventory and minimize losses.

Monitor the demand

Monitor the demand and adjust pricing as needed for seasonal products: It is important to keep a close eye on demand for your products throughout the season. If demand is lower than expected, you may need to adjust your prices to boost sales. On the other hand, if demand is higher than expected, you can increase prices to maximize your revenue potential.

See what products affect each other

Control the cross-elasticity of similar items when pricing to avoid loss in some sales. By understanding this relationship, you can avoid pricing your products so that it drives customers to purchase similar products from your substitute products or even from your competitors.

Luckily there are pricing software that will easily help you to optimize your product pricing for the season and let you focus on your business.