Chinese New Year can be the toughest time of a year for dropshippers if you don’t take steps to prepare. The holiday is a weeks long celebration where much of the Chinese economy virtually shuts down in celebration. Businesses close for weeks as their entire staff goes off to travel and celebrate the holiday.
If you’re a dropshipper that relies on Chinese suppliers you could be in trouble if you haven’t taken the time to get ready for the disruption. Thankfully there are tangible steps you can take to prevent the Chinese New Year from slowing down your orders and angering customers.
What is Chinese New Year?
Chinese New Year, also known as the Spring Festival, or the Lunar New Year, happens each year sometime between January 21 and February 20. Chinese New Year is based on a lunar calendar, which is why the dates shift relative to the standard solar calendar.
This year the holiday falls on Tuesday, February 5. To give you a sense of the variability here’s when the holiday falls the next five years.
- CNY 2019: Tuesday, February 5
- CNY 2020: Saturday, January 25
- CNY 2021: Friday, February 12
- CNY 2022: Tuesday, February 1
- CNY 2023: Sunday, January 22
On top of the extended vacations most people take during the weeks surrounding the holiday, this variability of date further complicates things for dropshippers because it means you need to check each year to be sure you know when the holiday is coming.
Each Chinese business handles the holiday differently, but in general, this is the worst case scenario you could be looking at with individual suppliers this year.
January 15 to February 4
This period is called the Little New Year, and it’s the run up to the actual holiday. Manufacturing can shut down during this period but most suppliers will have prepared with a surplus of products to keep orders afloat. However, during this period acceptance of new orders can begin to ramp down.
February 5 to February 19
The fifth is the actual holiday, and then you can expect another two weeks of shuttered businesses, slowed or no order processing, and then a slow ramp back up to full production / fulfillment.
Do you need to shut down your store?
No, not at all.
In fact, that is the worst way to deal with the holiday. Shutting off the lights for a few weeks can confuse potential customers that assume you must be some sort of “fly by night” company that can’t be trusted. Shutting down during Chinese New Year could be damaging to your reputation.
Instead, it should be business as usual for your business during the holiday, just with certain modifications. You will certainly face delays, on some products more than others, but Chinese New Year can be prepared for and dealt with effectively as long as you’re smart about how you handle your business during this time.
Contact your suppliers
The first thing you need to do to prepare is contact all of your suppliers to learn their plans for the holiday. It’s entirely possible they’ll list this important information on their websites or send it out in a blast email, but don’t rely on this. Take control of your store and get this important information yourself.
Make a master document that contains all of your suppliers, when they’re planning on shutting down, for how long, and to what degree. You’ll find that some suppliers are only shutting down for a week and will still be contactable for questions. Others though may be closed for an entire month and truly shut down, meaning impossible to contact (though this is rare). It’s important to understand the holiday policies of all of your suppliers so that you can effectively manage your offerings and customer expectations during the weeks surrounding the holiday.
When seeking this information, remember the likely communications delays you’ll face and make sure you start this process as early as possible. You want to give your suppliers ample time to get back to you.
Start alerting customers early
Make certain customers know about possible upcoming delays early. This may spur some customers to try and get their orders in before the holiday period, which is a win for both them and you. Consider placing sticky banners at the top of your store and other alerts around your site alerting customers to the period where orders could be delayed. You could also add a line to any outgoing customer emails.
If you’d rather keep the Chinese origin of your products a secret simply mention the dates of possible delays without going into specifics or mentioning the holiday. Most customers will assume you have a good reason for the delay and, assuming the rest of your customer service is stellar, will simply accept the situation.
During the holiday make sure you’re open and honest about shipping delays. Keep this information visible around your site. And consider sending out an email stressing delays again for each order that comes in during the holiday. There will certainly be some customers that are going to get upset, but with good, open, and timely communication you can avoid angering most of your customers.
Track active orders throughout the holiday
Keep tabs on all of your active orders. It’s important to be aware of all the possible delays your orders are facing so that you can keep your customers updated. If factors change and delays increase on a given order be certain to quickly share this information with your customer.
Consider sending update emails to customers that have active orders during the holiday. You know that they’re thinking about it and if they don’t hear from you they’re likely to contact you. So be proactive and send out frequent alerts. They don’t have to be long. Just a quick blurb stating the current status of the order and how much longer delivery is likely to take. More than anything customers want to know that you understand why they might be upset and that you’re doing the best you can to keep them alerted to the status of their order. This small gesture will go a long way.
In order to avoid the worst impacts of the holiday, you’ll want to use the information you gathered from your suppliers to manage the products you’re presenting in your store. If you find that one of your suppliers is planning on shutting down for an entire month you would be wise to temporarily turn off products in your store that come from them or look for alternate suppliers for those products.
Shift the focus of your product offerings from products that may face extended delays to products from suppliers only shutting down for a week, or to non-Chinese suppliers that won’t be affected by the holiday at all. You want to try and appear to your customers as if nothing has changed, and a good way to accomplish this is to shift your product offerings in favor of suppliers that won’t contribute to delivery problems.
Should you continue marketing?
You want to keep driving traffic to your store regardless of the holiday. Turning off your marketing efforts entirely is almost the same as shutting your doors. Keep marketing and keep up all of your other outreach efforts, like blogging and posting on social media. As we said earlier, you want your customers to see this as business as usual.
But considering the possibility of lower overall sales through the holiday it can be smart to ramp back your marketing some. Don’t spend as much as you normally do on advertising. And be smart about the products you promote. Don’t promote products likely to be badly affected by holiday-related shipping delays. Instead promote products from lightly-affected suppliers or non-Chinese suppliers.
That unfortunate fact is that, because the Chinese New Year jumps around year to year, it’s always hard to predict which products will be hit hard in a given year or to predict how badly your business will be affected. You may barely notice the effects some years, while get hit hard the very next year.
So be certain to sock away a Chinese New Year preparation fund throughout the year so that you’ll have some reserves to fall back on should your store be hit harder than expected. This financial pad will help fill in any holes you suffer in your cash flow during the holiday. The last thing you want to have happened is to suffer an inability to cover your expenses due to low sales volumes.
Consider a Chinese New Year sale
If, after the rest of your preparations you’re still concerned that customers will be upset by potential shipping delays you may consider flipping the script, turning holiday delays into something customers welcome. Embrace the holiday and turn it into a Chinese New Year sale! Let customers know exactly what happens during the holiday and why delays can be expected. But then offer discounts on the products most affected by the holiday.
This may reduce your per unit profit, but may actually INCREASE total sales volume through the holiday. And because customers will be purchasing with full knowledge of the shipping delays, and in a sense BECAUSE of the shipping delays, you won’t face upset or disappointed customers.
In the end this strategy could actually turn the Chinese New Year from a problem you have to get through into an opportunity. You need to look at the realities of your store to determine whether this strategy could work for you.
Use virtual warehouses
Another viable strategy is to order popular products ahead of time and have them held for shipment. There are companies that offer “virtual warehouse” service to help your business through the Chinese New Year. You can use this service to order a volume of your most popular products, those that you know based on your supplier research are going to be badly affected, and have them stored in a warehouse that won’t be affected by the holiday. This is a great way to keep your popular product lines flowing freely during the holiday to keep your cash flow up and, most importantly, avoid disappointing customers.
You certainly don’t need to, and shouldn’t use this service for everything in your store. Pre-purchasing products is somewhat risky and also runs antithetical to the basic premise of dropshipping, which allows you to avoid purchasing and holding onto inventory. But for popular products that you know will sell during the holiday this is a great option to keep your business running uninterrupted.
Note: These aren’t actually virtual warehouses, but real, physical warehouses that will hold and ship product for you. And they’re a much better option than buying a stock of your popular products ahead of time and having them shipped to you so that you can ship them yourself during the holiday. That strategy greatly increases your risk exposure and very much violates the dropshipping model.
Chinese New Year is manageable for smart entrepreneurs
The Chinese New Year shutdown / slow down is one of the oddities we face in the dropshipping business but, as you can see, it doesn’t have to spell disaster for your dropshipping business. With a little preparation, smart product management, and good customer service and communication you can navigate the worst of the holiday’s effects and come out looking very good with your customers in the end.
Happy Chinese New Year!