Examples of seasonal items
- Holiday decorations
- Recreational equipment
- Weather-specific apparel
How Demand Works—In Brief
- Both supply and demand reach peak before the season in question—for natural seasons, generally in the preceeding quarter; for holiday seasons, generally in the leading two months.
- Demand begins to decline in advance of supply once the season is reached, gradually driving prices downward and leading into eventual liqudiation.
- Liquidation occurs during the period immediately following the season and demand is low, limited primarily to those looking for good deals in anticipation of the season's return next year. If the goods aren't time-limited, liquidation stops once the overhead of maintaining the goods until next seson becomes less than the losses incurred by liquidating them now in the face of waning demand.
Understanding the Market and Pitfalls to AvoidIt's no shock that Christmas items don't sell well in March, or that bikinis have a limited sales appeal in January in the United States. In short, the best way to source seasonal goods is to buy those that will retain their value across annual cycles so that overstock doesn't become worthless if you can't move it all in time. It's also clear that the best time to buy is on the opposite ebb of the annual cycle, essentially two quarters ahead, when prices are at liquidation levels.
If you buy later to get "this year's" goods, keep your eyes open about whether or not you're buying limited-life goods that will have to be sold this year. Beware, too, that you'll face direct competition from competitors still selling last year's goods, picked up at liquidation prices in anticipation of this year's season.
Timing the Seasonal Goods MarketThe demand curve for seasonal goods is similar to the one for limited-life goods, but there is by and large no early adopter premium. Except in very specific cases, there is little benefit to buying goods high early in hopes of being able to sell them to irrationally hungry early adopters.
If the value of your sourcing deals is primarily in product quality, brand, or other non-price metrics, the best time to hit the market is just before the listing glut that will drive prices down. If you can be the one to convince buyers to shop for an upcoming season before the other sellers begin to list, you'll stay ahead of the demand curve and your stock will enjoy some of the best pricing of the season.
If the value of your sourcing deals is primarily in low price, the best time to hit the market is during the seasonal buying boom, when your low buy-ins mean that you can undersell your competitors just when consumers are doing seasonal shopping in the greatest numbers.