When a product is flying off the shelves in peak season, the usual instinct is to put more marketing spend behind it to make the most of the demand.
But what seems like a smart move could be the very thing that derails your peak season performance.
Using up budget promoting a product that’s already selling fast can mean paying to sell stock you would have shifted anyway. It also increases the risk of running out of your most popular products while other lines sit untouched in the warehouse.
A new guide from Heur and Brightpearl, The Great Q4 Escape, suggests a strategy that I think more retailers should take seriously this peak: ‘trade to stock, not targets’. It’s about putting your marketing budget behind the stock you can actually fulfil profitably, rather than simply what’s selling best.
Why backing a winner can backfire
During peak, marketing teams are under enormous pressure to deliver results, often with ambitious sales targets and little room for error. With so much riding on a few weeks of trading, it’s understandable that more budget typically goes behind campaigns that are already performing well.
But the figures that suggest a campaign is performing well don’t necessarily tell you whether it’s the best move for your bottom line during the busiest, most high-stakes trading period of the year.
Think about return on ad spend (ROAS). A campaign generating $5 in revenue for every $1 spent looks like a winner. But that figure tells you nothing about how much profit you’re making on those sales, how quickly stock is running down or whether your warehouse can cope with the extra orders.
Marketing decisions are often based on one set of figures, while stock and fulfilment decisions are based on another. Each separate team can be hitting their targets, yet the business can still end up worse off.
Marketing and inventory need to work together
The problem often comes down to a lack of joined-up information. Marketing teams know which campaigns are performing well, but don’t always have a clear picture of stock availability.
Meanwhile, inventory teams might have no idea which products are about to get a big promotional push.
Let’s say you have a jacket with 500 units in stock. That might sound like plenty to support a campaign, until you realise most are in XS and XXL, while the more popular sizes are running dangerously low.
Without that detail, you risk paying to attract shoppers who can’t find their size (and end up annoyed), while missing opportunities to promote products you’ve got plenty of.
This is where a modern retail ERP with built-in demand forecasting tools should earn its keep. By bringing stock, sales and demand forecasts into one place, it gives teams across the business access to the same up-to-date information.
Put your money where your stock is
Having a clear view of your stock is a good start. The next step is making sure that information actually influences where your marketing budget goes.
The Great Q4 Escape recommends reviewing your best sellers, strongest vendors and slower-moving lines every week during peak. As part of that review, I’d make sure stock availability, profitability and fulfilment capacity are factored into every decision to increase campaign spend.
Before putting more budget behind a product, ask yourself:
- Which sizes or variants are running low?
- How quickly will the remaining stock sell through if demand increases?
- Is more stock coming, and will it arrive in time?
- Will the margin justify the additional advertising spend?
- Can the warehouse handle the extra orders?
If the numbers don’t stack up, be prepared to pull back on a campaign that’s performing brilliantly and redirect that budget towards products with healthier margins and more stock to sell.
Don’t forget about fulfilment
Of course, having enough stock to meet demand isn’t the only factor. You also need to be confident you can get those orders out of the door on time.
The Great Q4 Escape cites research from Retail by Sage showing that only one in 10 retailers say their warehouses run efficiently and reliably. That’s a worry during the busy season, when a successful campaign can send order volumes soaring almost overnight.
It’s another reason why marketing decisions need to be informed by what’s happening across the business. If the warehouse is already stretched or delivery cut-offs are approaching, pouring more money into generating orders could leave you with a backlog of unhappy customers and a damaged reputation.
Better decisions start with the full picture
If there’s one thing I’d encourage retailers to do differently this peak, it’s to stop treating marketing, inventory and fulfilment as separate functions.
Every decision to drive more demand has consequences elsewhere in the business, and Teams need to be working from the same information in order to make the right calls.
The right technology can make those joined-up decisions much easier. Brightpearl by Sage brings stock, orders, purchasing, fulfilment and finance together in one retail ERP, with built-in demand forecasting to help teams match their marketing activity to real demand.
With up-to-date information available across the business, retailers can make better decisions about where marketing budget will work hardest.
Ultimately, the best peak season campaign is one that helps you sell the right stock at the right margin, without overwhelming your teams or letting your customers down.
If that means switching off ads for your bestsellers until the new year, so be it.
Want more ways to protect your peak season profits?
The Great Q4 Escape is packed with practical advice to help you make smarter decisions and get more from your busiest trading period.
