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May 20, 2024

Seasonality – the art of the year in your e-commerce business

Intro

Let’s talk about rhythm, shall we? In your life. Now my background is a musician, and so I naturally think of rhythm. When I was teaching people and still conducting choirs evenings and weekends, I’m always banging on about rhythm. And what does that mean? Well, it’s really about having a shape to time, if you will.

And that is something that’s very, very important for productivity in life and in business. So today, now that I’m surrounded by a beautiful garden here and talking about seasons and seasonality is very much on my mind. Let’s discuss rhythm and how that affects your use of time as an organic way of using and managing your time. Stay tuned.

Seasonality in Nature and E-commerce

Hi, this is Michael Veazey, and today I’m coming to you from our lovely garden. I think it’s lovely anyway in Hertfordshire. So about a year ago, in May 2023, I was sent up by my wife to go find ourselves somewhere more peaceful to live. We were in a flat in London, a bit noisy, very urban, not really relaxing. We wanted a house and a garden, and we’ve got them.

The garden, of course, is a thing that really makes you think about seasonality. And today, I want to talk about rhythms in your business. We can start with seasonality and the overall shape of each year as a very, very good start.

Now, it’s not rocket science to say that quite a few businesses or ways of making a living have strong seasonality. So the two that I’m most familiar with, my old profession of teaching and making music (I still conduct choirs in the evenings and weekends and love doing so), and e-commerce both have very strong seasonality.

Some jobs, I guess, you just grind along same old same old week to week and then have your couple of weeks off in the summer, and that’s it. That is not the case for education. In education, my wife’s still working very, very hard in the summer because lots of institutions have exams. So A-level students are having exams. My wife’s off playing the piano for music colleges in London where people are playing very difficult music for their end-of-year exams. E-commerce is no different.

Embracing Seasonal Rhythms

In e-commerce, if you sell something that’s giftable, you will find that it becomes crazy in Q4. In other words, November and December, just before Christmas or the holiday season if you wish to call it that. And of course, that changes everything about your year. The rhythm of your year, your week, and your day is really to some extent dictated by others.

To the extent that you recognize that, you get in tune with your market and the way things operate in your industry, then you will find that things work better. If you try and fight it or just ignore it, that’s one of the signs that things are wrong. One of the things that is really important is if you do have a strong Q4-centric business.

By the way, a lot of people who are at an early stage or even pre-revenue entrepreneurs (I don’t tend to work with those anymore) are obsessed with the idea that they can even out the sales, cash flow, and inventory and have a non-seasonal type business. But the truth is that the businesses that I know that do really well embrace the seasonality and roll with it. They understand that that is the nature of the market they’re in.

Planning for Seasonality

Rather than trying to go in three and four different markets that magically balance each other out in theory (one could have that but in practice I don’t see that), I see people who successfully manage the seasonality. So, I think you have to roll with the rhythms of your industry, your marketplace, and the category you’re selling on if you’re on Amazon.

That’s the first thing: accept seasonality and things get easier. Then you have to really accept all the implications of that. If you sell a lot in Q4, you will be working really hard in Q4. So you won’t be available for much else. I’ve stopped trying to run mastermind meetings in December because Amazon sellers are not available in December.

Equally, you need time for yourself. What’s the point of working hard to build a business if your personal lifestyle sucks forever? At a certain point, you work very, very hard for minimal income or none, but at some point, you’ve got to have a payoff, and your family will expect it. August is also a terrible time to try and have meetings for the 10k collective because everyone’s on holiday quite rightly and understandably. January is a time when people need to recover from the excesses of Christmas or Q4 if you want to call it that.

Strategic Stock Planning

There’s also a rhythm to ordering stock. If you sell physical goods, you have to order them. You need to look a great deal further back than most people do. Most think about Christmas in September or October, and that is way too late. Serious players in the industry, those who’ve gone on to eight figures or high seven-figure sellers, generally order in March or April for Q4 stock. So, to sell in October, November, December, you need to plan your stock orders well in advance.

There’s an annual planning rhythm: thinking about where you’re going to sell in Christmas 2025, for example, probably by the end of 2024.

The Rhythms of Cash Flow and Business Planning

So, let’s review. We’ve got an activity rhythm for you and your team. You’ve got the selling rhythm that dictates that. The selling rhythm dictates your activity rhythm. Then the selling rhythm also dictates the ordering rhythm. The ordering rhythm dictates the planning. When you buy stock, you’re exchanging your cash for inventory. When you sell it, you’re exchanging inventory for cash, hopefully more cash—that’s profit. So, you have to think about the cash flow rhythm as well.

This is all big-picture thinking. There’s nothing clever or scientific about it, but it’s just reminding you that there is a rhythm to your year. It’s quite organic and dictated from outside. Don’t get too clever. When you plan, create spreadsheets, precise marketing calendars, ordering calendars, or communicate with your suppliers, start from the commonsensical and from the data.

After a while, you develop an intuitive understanding of the rhythm of your business year as well as a data-driven one. If you see data showing money flowing out of your account in August because you’ve ordered a lot of stock to sell in November, try to internalize that into a model of your business so you understand and prepare for that downward spike in cash flow.

Conclusion: Embrace the Rhythm

So, that’s it. It’s a simple but powerful concept. Rhythm exists in the world. The seasonal rhythm is one rhythm. You can either ignore it and fall victim to it, or you can understand it and work with it. Successful businesses embrace rhythms.

Starting with your year is not a bad unit. It’s a biological and astronomical unit dictated by the earth going around the sun. It’s a given by the universe, and it shows up in the markets and your business. Embrace it and make your plans based on the rhythms of your marketplace, and you will be on a firm foundation. Thanks for listening.

Amazon Business Acquisition Audit

If you are considering acquiring an e-commerce business and are not familiar with the e-commerce markets, you could get some help from me. I’ve done this for a couple of my clients recently. It’s a growing part of my consulting business, where I look at an e-commerce business for you from two perspectives to see if it would make sense for you to buy it before you get to the point of putting in a Letter of Intent (LOI) or Heads of Terms, depending on which side of the pond you’re on.

That would be the commercial due diligence and some basic financial areas. Now, the legal side I don’t cover myself. I’m not an accountant, but the basic financials can still tell you a tale. I can also look at the market you’re considering, check the demand, look at the competition, and evaluate if it’s a growing market. Is the competition manageable? Does the business have a solid grasp on the market or even dominance that makes it more attractive?

How to book an Amazon audit

If you want some help with that, just go to myamazonaudit.com, and I’ll be happy to give you half an hour of my time for free to look at that. If you send me some documents, I’ll put in a bit of time having a quick look at the financials and the market on Amazon to give you an early steer on whether you should consider buying the business or not.

If you own a business on Amazon, I can give you similar feedback, potentially with a view to selling it. I tend to act on behalf of buyers, not sellers, but the same insights apply in both cases. Thank you so much for listening. Speak to you soon.

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Michael Veazey


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