While last year’s holiday season was a profitable one for online retail, this year is slated to break even more records, as online shoppers hit the web for holiday gifts, deeply discounted items, and one-day sales. From Black Friday to Cyber Monday and clear through the new year, the weeks surrounding the holidays are some of the busiest—and most rewarding—for online retailers. But like most things that come with hard work, the challenges solo online retailers face can be both personal and business-related.
New survey reveals challenges, opportunities
For example, 1 in 3 solo online retailers makes 50% or more of their profits during the holiday season, and more than half say Thanksgiving, Christmas Eve, and Christmas Day shopping are good for business. Self-employed online business owners can increase their bottom lines by working through the busiest shopping days of the year and making sure their ducks are in a row before the rush.
But what impact does the holiday rush have on the personal lives of these online retailers who are going it alone this holiday season? QuickBooks Self-Employed decided to find out.*
What percentage of your annual profit do you make during the Thanksgiving/winter holiday season?
Quality personal time takes a backseat during the holidays
The personal impact of working your retail off during the holidays is different for everyone. A lot of it, of course, depends greatly on how much time and energy you put into capitalizing on consumers’ desires to fill up their shopping carts. The survey of 923 self-employed online retailers found the top five personal challenges associated with working during the holidays included not having enough alone time, time for family, time to rest, or time to buy gifts.
The top five personal struggles for solo retailers during the holidays:
- Finding time for themselves
- Finding time for family
- Not being able to relax or enjoy the holidays
- Not having enough time or money to buy gifts
These personal challenges should come as no surprise, however, as the study also discovered over 80% of retailers reported working extra hours each week during the holidays. More than half of those who work additional hours at their online retail jobs said they work an additional 10 hours or more per week.
How many extra hours per week do you put in during the holiday season?
Which of the following personal challenges do you face during the holidays? (Percent of respondents)
2 in 5 solo retailers say they struggle to save money for retirement
On top of the day-to-day personal and business-related challenges associated with running an online retail store, solo retailers also seem to struggle with their business’ financials. When it comes to retirement, 2 in 5 solo retailers say they struggle to save money for retirement, and 1 in 3 lists savings, in general, as a top challenge.
Managing cash flow, getting taxes right, and accessing affordable and reliable capital are among other challenges, as well as preparing quarterly filings.
There’s no business like holiday business—when you’re prepared
While 1 in 5 respondents says they don’t experience a difference in profits during the holiday season, nearly half of respondents say October through December is their busiest time of year. However, profits are generally up. One in 3 self-employed online retailers says they make 50% or more of their annual profits during the holidays, and half say they make at least 40%. The holidays might be great for business, but what are the behind-the-browser realities of living la vida retail?
Online retailers—and brick-and-mortar retailers, for that matter—have to prepare a great deal for the busy months. But the degree to which solo online retailers prepare for the holiday months varies. While some prepare well in advance, others don’t prepare at all.
The survey found it’s most common for online retailers to begin preparations in September, but 1 in 5 prepares more than a year in advance. A tenth of respondents said they don’t prepare for the holiday season at all, carrying on with business as usual.
The top five tasks solo online retailers do to prepare for the holiday season:
- Update inventory
- Create and order new products
- Update their website or online store
- Work on their marketing strategy
- Work on their shipping strategy
How to make the holiday season a success
And what about the competition? The No. 1 work-related struggle for solo retailers during the holidays is competing with other online retailers for virtual “shelf space.” To combat this, 85% of respondents said offering sales and promotions is their go-to competition strategy, and of those, the majority says sales and promotions boost profits. Still, nearly 30% say sales and promotions reduce profits, and they only offer deals to keep a competitive edge during the high season.
The top five most effective ways to market an online retail business during the holidays:
- Online ads (Google, Facebook, etc.)
- Word of mouth
- Customer reviews
- Promotional offers
- Email marketing
A lucky few (just under 4%) say they don’t need to perform market campaigns because customer demand for their product(s) is so high. But in the spirit of competition, self-employed online retailers also tend to rely on glowing reviews to entice new customers and turn a profit. About half of solo retailers say customer reviews are important to their business. And 40% say these reviews are essential to their business. This sentiment goes back to the word-of-mouth strategy that ranked second on the most common and effective business tactics.
Walking in a retail wonderland…or a logistical guessing game?
Although preparation and competition can be rough during the holidays, the other struggles self-employed online retailers experience during the holidays are logistical. For example, an online retailer might have a difficult time predicting demand for a particular product and will either order too many or too few units or supplies for that product.
For online retailers who don’t have sales data from last year’s holiday rush or are selling new products this year, that guessing game can be especially challenging. After predicting data, survey respondents say fulfilling orders is another logistically challenging part of the job. Supplying enough products and making deliveries to customers round out the top five work-related struggles.
The top five biggest work-related struggles solo online retailers face during the holidays:
- Competing with other online retailers
- Predicting demand
- Fulfilling orders
- Supplying products
- Making deliveries to customers
With those difficulties in mind, it should be a surprise to learn that 74.21% of solo online retailers say they can make better use of their sales data—only 1 in 4 says they’ve mastered the use of their sales data. This data points to a major opportunity for online retailers to use what they’ve learned to make their future sales endeavors more profitable.
When to outsource
Another question is the distribution of work. With so much to focus on, solo retailers aren’t afraid to outsource work during the holidays. More than half say they outsource deliveries and fulfillment, making and ordering products, and inventory management as much as possible during the holidays. Areas solo retailers say they do not outsource enough are administrative work, marketing, and accounting.
However, it’s not uncommon for online retailers to hire consultants in some of the areas they don’t outsource. Retail consultants, accountants, and marketing consultants are the top consultants hired by solo retailers.
Where does the (holiday) time go?
Remember: Most respondents said they work more this time of year than in other seasons. If you’re wondering where all those extra hours go, look no further. They’re spending their time on the very real challenges of making sales, supplying product, maintaining customer service, fulfilling orders, and finding customers in the first place.
What do you spend most of your time on during the holiday season? (Percent of respondents)
Shopping on holidays is generally good for business
In spite of the struggles, the holidays tend to be good for online retail businesses on the whole. Solo retailers, for their part, tend to think major shopping days like Black Friday and Cyber Monday are good for business. More than half of solo online retailers say Thanksgiving, Christmas Eve, and Christmas Day shopping does their bottom line good. Only 22% say Christmas Day shopping is bad for their business.
How do you feel about the following shopping days?
*In October 2018, QuickBooks Self-Employed commissioned an independent survey of 923 self-employed online retailers, using Pollfish to identify and verify the sample, about their experiences in retail during the holiday season. We welcome the re-use of this data under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original source is cited with attribution to http://quickbooks.intuit.com/self-employed