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In this issue of the FBMIU, we will present some of the numbers we have seen so far from this holiday season. We will also share a few ideas you can use to successfully boost your late-season sales this year.
A review of more than a dozen of 5th Food Group’s clients showed the following results through the first nine weeks (Sep and Oct) of the 18-week holiday season:
Overall bookings (i.e., the dollar value of orders received) are up 8.8%. At this time last year, bookings were down 2.7%, and the season ended up 3%. Therefore, we are currently in a much more favorable position than we were at this time last year. Of the companies we track, their bookings are running from +25% to -31% comparing to the same period last year. Since there is such a wide variation in results, comparing median averages gives a better picture of how the “typical” specialty-food company is performing this season.
The median growth rate is running 3.8%. During the same period last year, these same companies were down 4.8%.
The take away from all of this is that the holiday 2010 season is tracking to be up 12%-15% compared to holiday 2009.
Given these conditions, where will your sales be at the end of December? If you keep historical order curves, it’s easy to plug in your results to date, make modifications to your curve based on internal and expected external factors, and get a reasonably accurate forecast of where your season will end.
If you are new to the specialty-food-by-mail industry or you have not kept historical order curve data, you can use the table below as a guide and get a reasonable accurate forecast of where your season will end based on what’s already “in the door.”
The following table shows the two-year average percent of orders and bookings that came in weekly and cumulatively for the September-December holiday season for over a dozen specialty-food direct marketers.
Forecasting Your Results Using Historical Order Curves
Calculate the orders and dollar bookings (i.e., the dollar value of the orders you have received, which is different from sales. Sales is the dollar value of orders you have shipped.) you have received from the beginning of September to the end of any given week in the holiday season. Divide your orders and bookings numbers by the corresponding “percent complete” from the table above.
For example, if you have generated 1,000 orders and $80,000 in bookings as of week 9, your forecasted total # of orders for the season will be 1,000 divided by 18.1% = 5,524 orders and your forecasted bookings will be $414,508 (80,000 divided by 19.3%. Make any needed adjustments to the forecasted numbers based on your individual situation and circumstances. Compare your revised forecast to your original plan/budget for orders and bookings in the holiday season. Hopefully, you are spot on, and no adjustments are needed to your marketing, merchandising, operating, or financial plans.
However, if your revised forecast is coming in short of your plan, you may need to take several steps to try and get back on track and make the best of a difficult situation.
Action Plan to Boost Late-Season Sales and Order Flow
The trend of late ordering will continue this season. In fact, if it’s at all like holiday 2008, the third and fourth weeks of Dec will dictate the success of your entire season and year. Therefore, be ready to take orders up to the final hour! Christmas falls on a Saturday this year, so you can heavily promote “there’s still time to order” on your homepage and emails up to Thursday, Dec 23. Review your historical ROAS (return on advertising spend) and rank each program’s December results from best to worst. Are there any opportunities to shift funds from a lower ROAS program to a higher one? For example, if an additional $5K or $10K spent on paid search marketing will generate a higher return than a late-season mailing you have planned, you may be better off to cancel the mailing, and shift the money to your paid search program. Even if the mailing is printed, you may be better off not mailing it, saving the postage money, and redeploying the funds to another channel. Run the numbers to see. Start an outbound calling program to existing customers.
Pull a list of all buyers who had purchased by this time last holiday season but have yet to order this season. Sort them by the dollar volume of their holiday 2009 purchases. Start calling from the top of the list and work your way down. Let the customer know you are here to help them take care of their gifting needs. Have their prior year gift list handy and offer to email or fax it to them. Alert them to your best specials and discounts. Create a few exclusive offers just for this group of customers. Pull a list of your top buyers and call them with exclusive offers and specials. Call all new buyers one week after they place their first order. Thank them for their business, ask if they were satisfied with the service and give them a great deal to place a second order. Pull a list of all of your vendors, and let them know you can help them with their corporate gifting needs.
Extend employee discounts to family and friends. If you don’t have a local retail store, block off a small area in your warehouse by an outside entrance for customers to walk in and pick up and/or order gifts. Promote your “warehouse pickup service” with a post card mailings, outbound calls to customers in local zip codes, and using local paid search on Google and Bing. Customers are looking for lower-priced gifts these days. Create a page on your website of gifts under $X. Send an email featuring X gifts for under $X (the amount will vary depending on your product line and price points). Offer these items as add-on’s or up-sells for phone orders. Test “gourmet gifts under $X” as one of your paid search ad groups. Review your inventory position. If you based inventory levels on your original sales plan, you may be sitting on more stock than you will need. It’s far easier to sell off inventory in the season than afterward.
Get aggressive now with markdowns and use the web-specials section of your site to promote them. Use highly targeted promotional emails to lower inventory. Don’t send all emails to all customers. You will have much better success generating additional sales, lowering overstocks and not being branded as a spammer if you target your emails to specific groups of customers. For example, if you are overstocked on olive oil, send an email to past olive oil buyers with a great deal on olive oil. Offer extra discounts on overstocks to your top customers, and position it as an “exclusive best-customer sale.” If you have any self-purchasers who are ordering at this time of year, insert clearance flyers inside their boxes. Note: do not put sale flyers or clearance inserts inside gift-recipients’ boxes!
Use the revised bookings forecast we discussed earlier to rerun pro forma income statements and cash-flow projections for the season and for the year. Take a hard look at your projected cash position. Will you have enough cash on hand and from other sources to make it through the spring-summer 2011 seasons? If not, start working now to line up additional financing.
Remember to keep pitching, promoting, mailing, emailing and marketing. Consumers will be ordering later this season than ever. Be in their mail box, in box and on their search engine results page when they are ready to buy.
Warmest regards and happy holidays,
Tony Cox
President
5th Food Group
ABOUT 5TH FOOD GROUP
5th Food Group helps specialty-food companies grow and make more money by developing, managing, implementing and analyzing their online and catalog marketing programs. We are the only catalog/Internet marketing firm that works exclusively in the specialty-food industry. Helping smaller companies or large companies with small mail-order or online divisions is what we do best.
While on our site, make sure to download a copy of our free booklet, The Seven Habits of Highly Ineffective Catalogers, and check out our fully guaranteed introductory Jump Start program.
If you will be attending the Fancy Food Show in San Francisco in January, please plan to attend our half-day workshop on Saturday, January 15th, from 1pm - 5pm on using e-commerce to grow specialty-food companies sponsored by the NASFT. Get deailed course descriptions and information on the Winter Fancy Food Show. |
5th Food Group