Hi Everyone,
So, you’re probably caught up thinking about Q4 sales right now, right? That’s great, but one of the biggest slip-ups businesses make is not keeping an eye on their sourcing and supply chain heading into the new year.
And when you’re sourcing from China, then planning for Q1 (Jan-Mar) and Q2 (Apr-June) of the next year becomes crucial. The Chinese New Year (CNY) can make things super tricky. Here’s why it matters and what you can do about it.
**Why’s CNY Such a Big Deal?**
Think of CNY as Thanksgiving, Christmas, and New Year’s all at once. Workers flock home to be with families. It’s so significant that nearly 340 million workers travel – the world’s largest migration.
340 million people travel during CNY. In fact many leave their factory jobs well before the official holiday and return much later, or not at all.
**Effects on Business**
When they’re gone, factories can close for weeks. Not just factories – the entire supply chain feels it. Post-CNY, factories often face a hiring spree, training newcomers, further adding to delays.
This means a disruption of about ONE MONTH.
I made this mistake in not properly planning for the CNY disruption when my former business partner and I launched my first Amazon FBA private label product in 2015. our product was an Apple Watch Band which generated 6 figures in sales in the first year.
During the Chinese New Year of 2016, it was featured on 9 to 5 Mac, a major news site for Apple products. Immediately our sales spiked from 6-7 per day to 30-50 per day. We were ecstatic until we realized that we didn’t have enough products in our inventory. Soon afterward we ran out of stock.
This was in late January so it was in the middle of Chinese New Year. We contacted the factory but they were closed for several weeks until mid-February.
Once they got back to work they didn’t have the raw materials nor enough workers to assemble the watch straps.
We ended up being out of stock for nearly TWO MONTHS and it really hurt our sales and ranking on Amazon.
Learn from my mistakes! Here’s what to do:
**Your Game Plan**
You’ve got two main choices right now:
1) Plan Your Orders Early
Don’t just focus on the current quarter.
Think about how Q1 and Q2 will look.
Depending on your lead times, you need to get those orders in by late October if your lead time is 60 days.
If your lead time is 30 days, then you should get your orders in by late November.
This way factories have time to produce and finish by the end of December and get them on the boat before the CNY chaos begins.
After that when your products are finished, you must make sure they are shipped 1-2 weeks prior to CNY to avoid being stuck in the middle of shipping mayhem.
Chinese New Year 2024 is from Feb 9-15, 2024. It will be the Year of the Dragon!
2. **Delegate to a Sourcing Agent**
If this feels overwhelming, or you want to focus on growing your business you can delegate this task to a specialized sourcing agent.
But you need to make sure you find someone who is qualified and trustworthy.
Alibaba, Global sources, and even sites like Upwork can yield sourcing agents but make sure you vet them as you would a supplier.
In my opinion, referrals are a great way to find trusted sourcing agents. Through my network, I can connect you with a sourcing agent who knows the ins and outs of handling the CNY disruption as well as finding a 5-star product for your business.
If you’d like me to review your sourcing request and see if I can connect you with a sourcing agent who may be a good fit please fill out the form below:
https://www.8020sourcing.com/sourcing-request/
80/20 Summary:
– Stocking up just before CNY can cushion you during the shutdown period. Remember to place your orders by the end of October (Halloween) for a 60-day lead time.
As a rule of thumb I recommend that you place your orders by end-Nov (Thanksgiving) for a 30-day factory lead time – check with your factory.
But balance is key – holding too much stock ties up capital.
**Watch Out**
If you’re running behind, don’t push suppliers to their limits. The pre-CNY period is stressful, and undue pressure might compromise product quality.
**Wrapping Up**
While the CNY can seem like a curveball, with proper planning or the right help, you can navigate it with ease. Remember, as others grapple with delays, your proactive approach will kickstart your 2024 business on the right foot.
Gary
PS: If you need help sourcing, please fill out my sourcing request form so I can see if I can connect you with a sourcing agent that I trust: https://www.8020sourcing.com/sourcing-request/
