Aron Hsiao is deep into holiday mode. It’s an August affliction for those in retail. By summer they see the coming holiday shopping season bearing down on them like a 10-ton truck that is swerving a wee bit out of control.
Hsiao doesn’t run a store. He works for a company that tries to help small retailers — eBay and Amazon merchants, mom-and-pop shops — get a handle on what products will and won’t be big sellers in any given period. A given period, including say, October through December.
I was talking to Hsiao recently, after his company, Terapeak, asked if I wanted a rundown on what would likely be the hot gifts this holiday season. And who doesn’t like those stories, with their memories of Tickle Me Elmo, the Nook e-reader, the iPod Touch, the X-box 360, Razor scooters, Beanie Babies and Teddy Ruxpin?
But what struck me about our conversation was that Hsiao’s advice for small retailers — businesses generally of one to 10 people — holds equally true, if not more so, for major retailers that are every bit as focused on the holiday shopping season.
The key to success, as Hsiao talks about in this video, is having immediate and actionable insights available as the holiday season approaches and unfolds.
The scale of the two kinds of retailers is vastly different, meaning the resources and methods they use are different, but the imperative that Hsiao is talking about is the same.
“People really need current research and not just last year’s numbers or analysts’ projections,” says Hsiao, whose Silicon Valley-based company provides a searchable database of eBay transactions and sells its services on a “freemium” model.
The idea is that sellers can spot trends — what products are on the rise and fall, how many sellers are offering the products, the numbers of units that have sold and at what prices. The data provides some guidance and the ability to increase or reduce inventory, adjust prices, push into new product lines.
It’s a modest tool, but it serves as another sign that the days of building this year’s holiday strategy based on last year’s trends and results (plus a dash of intuition) are long gone — whether you’re a mom and pop shop or an IR 500 retailer.
“Sometimes last holiday season’s sales numbers are indicative of a product that is going to be hot again this holiday season, but at least as often, after a holiday season is done, what we see is a product sort of falls off the radar,” says Hsiao, Terapeak’s marketing communication manager. “Very often the holiday season is the last hurrah for a product that has been hot.”
For instance, take “Frozen” related gear, which took off after the Disney movie about a kingdom that goes into a big chill. Very hot (sorry) seller last holiday season, nearing about $2 million a week in sales on eBay, Hsiao says. This season?
“Our data, going into the summer and through late summer, tells the opposite story,” he says. “The plateau of this summer is probably about a fourth of what it was last summer. There was a steep fall off after last holiday season and sales continue to decline. Our best guess is that “Frozen” is kind of done.”
What’s hot? Drones. Last holiday season and this year.
“The numbers tell us that this is probably not an overblown thing,” Hsiao says of the constant drone of buzz. “Drone sales are continuing to increase rather dramatically. The plateau for sales this summer is about a million dollars in drone sales weekly, which is a lot. That’s about double what last summer’s plateau was. And it’s actually not that far away from last year’s holiday peaks.”
And so if you’re selling drones or “Frozen” goods on eBay (or elsewhere) you know what you should do: More drones, less “Frozen.”
On a small scale, it’s a good example of having readily available data that is easily understandable and can be used to boost profits or cut losses. Now think of the bigger scale: Retailers with hundreds of employees, many thousands of customers and a product catalog in the millions.
Their key to holiday success relies on knowing what sold and what didn’t; what e-commerce customers searched for; what they found and what they couldn’t find. It relies on understanding the digital path they took to ultimately find what they purchased; gaining insight into the relationship between products searched for and items actually purchased.
And it’s all about having the data on buyers’ Black Friday behavior in time to put it to use on Cyber Monday. The data is there. It’s a matter of marshaling it in the right way.
Having that kind of predictive merchandising system in place probably won’t wipe out retailers’ August anxiety. (That’s an occupational hazard.) But it does mean that retailers can shift their worries away from having actionable insights and focus on their next important challenge.
Mike Cassidy is BloomReach’s storyteller. Contact him at email@example.com; follow him on Twitter at @mikecassidy.