11 minutes read

Black Friday and Cyber Monday Inventory Problems and How to Overcome Them

By: Jul Domingo

Black Friday and Cyber Monday have always been the highest-grossing and busiest shopping seasons. In fact, Black Friday ranks first on the list of the top 10 busiest shopping days of the year, generating approximately 40% of sales.

Most business owners get knee-deep in holiday season campaign planning because it boosts customer interest, which can bump up sales. But this also indicates a faster inventory turnover—something you should pay more attention to.

Preventing Black Friday inventory problems requires a lot of forethought. Good inventory management is the key, but it’s always tough for small to mid-size businesses to get it right from the get-go.

Check out the six most common Black Friday and Cyber Monday inventory challenges and discover how you can solve them.

How do Black Friday and Cyber Monday affect small to mid-size businesses?

Increased brand awareness and profits

Since smaller businesses do not have enough clout, they often struggle with setting marketing campaigns. However, a holiday shopping season like BFCM makes it easier to plan the promotional period (date, time, and duration) because most customers expect them to participate.

Additionally, there’s a greater opportunity to gain exposure during this time because Black Friday deals and offers can attract new and old customers. You can get your brand in front of the 93% of consumers in the United States that cite discounts and offers as factors influencing their purchase decisions.

Another reason to participate in BFCM flash sales season is that most holiday shoppers treat Black Friday as a pre-Christmas errand to buy holiday gifts. So the more they enjoy your Black Friday worthy deals, the higher your sales will be.

Profit loss and business operation challenges

Small to mid-size businesses can’t afford to cut prices as heavily as larger companies, but customers’ expectations push them to. Moreover, most shoppers get carried away by the madness, buying things on impulse only to return them later. This may result in losses, especially if the returned products don’t arrive in time for Christmas sales.

Additionally, business owners face challenges related to their existing operations. It can be difficult to cope with a spike in purchases and orders regardless of whether they are retailers, ecommerce merchants, or DTC brand owners.

The biggest BFCM challenge is most likely inventory planning and management since it can cause a wide array of problems if not handled properly. We’re talking about missed sales, warehouse overwhelm, and a lot more. That’s why SMBs need to learn how to confront these common issues head-on–and that’s where this blog post can help.

Black Friday/Cyber Monday during COVID-19

According to the National Retail Federation, 2020 holiday spending for online sales alone amounted to $209 billion despite the pandemic. Consumer spending may have increased, but so did business expenses. The positive contribution of online retailers did not solve disruption in the supply chain.

“As a small business owner, let me just say that finalizing inventory orders for the holidays this year is a terrifying shot in the dark.”

Aleana Young, Takeaway Gourmet Owner

And even as the economy slowly recovers from the pandemic, several supply chain issues still remain. These include shipping delays, inventory placement issues, higher transport costs, and supply shortages. The best way to overcome Black Friday inventory problems this year is to address them one by one.

6 Common Black Friday and Cyber Monday Inventory Problems and Solutions

Identify the common issues and pain points to solving Black Friday and Cyber Monday inventory problems, such as:

  1. Inventory shortages
  2. Poorly-trained employees
  3. Insufficient planning
  4. Irregular inventory monitoring
  5. Lack of performance measurement metrics
  6. Poor vendor selection

The earlier you address them, the better your chance of boosting your Black Friday sales.

1. Inventory shortages

Inventory shortages can happen anytime. But if it happens during the Black Friday sales, it can pose greater problems, especially if you spent a lot of time and money planning your Black Friday deals. It’s the biggest shopping day of the year, so a loss like that would be devastating.

The quantity of shortage is equal to the number of stocks that could have been sold. For instance, you only stocked up 10 quantities of your popular product (discounted at $250) to cater to both the physical shop and your website. So, if 8 store visitors and 9 online store customers want to buy the same item, you miss serving 7 people. That’s already a $1,750 loss for one product alone.

The pandemic has already caused a lot of delays prior to the 2021 BFCM sales. This can be a major blow for your brand, so avoid making promises you can’t keep—or, better yet, promotions you can’t deliver.

Source: Twitter

Solution: Automated forecasting

The only way to avoid inventory shortages is an accurate forecast with an allowance for possible variance. Pay attention to the inventory flow of all your items, and study new products and observe the demand for them. The previous BFCM sales will also help you evaluate the trend to make a sales forecast.

“Using automated inventory forecasting, you have a source of truth for orders and inventory, which means fewer errors, reduced expenditure, and less wastage. No more guesswork,”

– James Khoury, CEO of Zendbox, an eCommerce fulfillment solution

Consider using deep learning software like Inventoro, which can go back up to two years, and factor in potential revenue from previous stockouts. The system helps pinpoint the best sales forecasting method by layering predictive analytics with various mathematical algorithms. Using the generated data, demand forecasting becomes more accurate and real-time.

2. Poorly trained employees

Black Friday inventory problems can also result from poorly trained employees. Most small SMBs only have a handful of employees, but as a business owner, you need to vet each one of them before you toss them into the BFCM battle.

You can’t expect a new employee to perform well in a busy holiday season if they aren’t familiar with your inventory system, turnover, or even your platform. Incompetence in this department can cause a string of losses in sales and potential customers due to overstocking or stockouts.

Solution: Employee training

Teach your employees the tricks of your trade. Focus on behind-the-scenes tasks such as inventory recording and handling, not just customer service. It also helps to have a key person responsible for your inventory platform, and warehouse and shipping operations.

“Check your staff’s knowledge of your operations, especially inventory, on a regular basis to ensure they are always up to date,” suggests Pavel Liskin, Marketing Team Lead at QVALON, a mobile-based retail management solution.

3. Insufficient planning

Imagine launching a Black Friday and Cyber Monday sale just one week beforehand; there would be no time to prepare, putting your business at risk.

As early as March 2021, Amazon Private Label Consultant Jon Elder advised sellers to start filling their inventory for the holiday season:

Source: Twitter

Many unforeseen problems have arisen from the pandemic. But generally speaking, you should always be proactive to avoid Black Friday inventory problems. That includes understanding how your suppliers work and the timeframe required to get your products or materials in time.

Perfecting your Black Friday deals and marketing campaign is important, but you won’t generate revenue unless you have products that your customers want.

On the other hand, overestimating your Black Friday order volume because you neglected to forecast your inventory may result in inadequate warehouse space. This can cause problems, such as damaged goods and misplaced products.

Solution: Strategic planning calendar and automated inventory replenishment

When you don’t plan, you automatically embrace risk and reject opportunities. Prepare a calendar year for all sales promo and holiday season activities for the company. When you have an idea of what to expect ahead of time, it won’t bother you if your suppliers take time to complete your order.

It’s also wise to track your inventory flow. The best way to do it—especially to avoid Black Friday inventory problems—is to use inventory management software that gives you a heads up when it’s time to reorder. Inventoro has a replenishment feature which sends you an automated order list on a daily basis, giving you enough headspace to deal with other tasks during this busy season.

4. Irregular inventory monitoring

Infrequent inventory counts lead to inaccurate financial reporting, making it hard to identify if you’re making money. Moreover, if you don’t follow a regular physical count, your stocks are susceptible to both employee and customer theft.

Is there a way to tell if there’s any missing stock when you rely solely on invoices to calculate your sales and don’t know your inventory balance before and after the sales period? The answer: No. Among the Black Friday inventory problems, this one is a nightmare.

Solution: Regular audits and product segmentation

Regular auditing can help track inventory and help save you headaches from worrying about possible inventory-related fraud. Unfortunately, it’s time-consuming for SMB owners with limited resources.

Using a platform that can segment your product offers is easier and cheaper than assigning staff to monitor the best-sellers and slow-moving inventory. And just because an item sells like hotcakes doesn’t mean you’re profiting well from it. This option classifies your products into three groups: A (most profitable), B (less profitable), and C (least profitable) stocks.

At Inventoro, we don’t believe it’s possible to “guesstimate” your way to success. Data should always drive your decisions. That’s why we want to give you a full picture of your product portfolio so you can assess its true value.

5. Lack of performance measurement metrics

Without a proper assessment, you won’t be able to learn from your previous Black Friday sales. It’s necessary to see them and understand your consumer’s perspective, so you can anticipate their future demands.

Counting cash and inventory isn’t enough to measure your performance. Without proper parameters, you can only see the quantitative, but not the qualitative output of your Black Friday deals.

Solution: Performance metrics definition

As far as metrics are concerned, sales income is a good starting point, but you need to dig deeper and consider other factors such as working capital to evaluate your Black Friday and Cyber Monday performance.

According to Gerrit Smith, Property Tax Loan Pros CEO & Founder, “Accounting is so vital that it may make or break your company. For example, a seller having record sales may misunderstand their cash flow. If you don’t know your customer acquisition and operations costs, your business may fail.”

Therefore, your inventory platform should integrate seamlessly with your accounting software, as this will allow you to track both your inventory and profits.

In terms of customer satisfaction, you need to tick both service and product satisfaction. Service satisfaction depends on your relationship with your customers, so learn how to nurture them—even during busy seasons such as BFCM.

To improve product satisfaction, you can expand your portfolio and determine the most suitable amount and pricing per product. By taking these factors into account, you can increase your brand’s appeal and profitability.

6. Poor vendor selection

Working with the right vendor is a smart way to prevent Black Friday and Cyber Monday inventory problems. If you don’t take your time to choose the right supplier, it will have a long-term unfavorable effect on your business. This can be a huge drawback, especially during the holiday shopping season when you have to restock more often and can’t be bothered by delayed shipments.

Low-grade suppliers affect your brand image and customer relationships. It will also influence your position in the market competition.

Solution: Proper vendor selection process

If you’re currently working with a vendor that doesn’t meet your quality or service standards, it’s time to move on and find a better one. Pick vendors with the least supply chain cost, the fastest delivery, and top-notch service.

Set your standards and conduct your due-diligence before you sign up with a new supplier. Remember you’re entrusting your business to them, so it’s okay to be fastidious when choosing your partners.

Be ready for the upcoming Black Friday and Cyber Monday

It’s time to get your ducks in a row. This coming holiday season will be challenging for business owners. Solve your Black Friday and Cyber Monday inventory issues with a free trial of Inventoro or visit our blog for more insightful tips.

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