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How to Ensure Profitability Every Q4

Oct 16, 2023 - Nelson Lee
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In Q4, most brands are laser-focused on hitting their sales goals via slash-through pricing, coupons, paid search, paid affiliates, and much more. But post-Q4, an equally, and some may say more important key metric, becomes a focus—and that’s bottom-line profitability. It’s a fine balance of managing both top-line growth and bottom-line sustainability, and not all brands have the tools or knowledge necessary to achieve both. That’s why we’re breaking down how to ensure profitability this Q4—in four easy phases.  

Cart_Sept23_HolidayBlog6_Asset_1Phase 1: Preparation

It all starts with preparation and knowing your financial numbers. Most brands have an understanding of what their sales targets will be, what their COGs are, and how much they have budgeted for paid search. In fact, a lot of brands may even have a general sense of what it will cost (inbound transit, Amazon commission fees, storage fees, etc) to sell on Amazon. But building a robust model that captures all the above and the anticipation of return/refunds, shipping damages/lost packages, and lost opportunity (OOS), all contribute to a more clarifying image of financial health on the channel. And if you want to be ahead, you should start planning and budgeting in August to September.  

Phase 2: In the Midst

Once all the preparations are made, it’s time to be nimble when in the eye of the storm—AKA holiday shopping season. During October to December, some brands will set their budget and watch it, while others will plan for contingencies. And for the special few who live and die by Q4, they’re not only hyper-vigilant with their account data and metrics, but will be taking a pulse on their competitors and the category to ensure maximum opportunity leveraging, too. This means: price-watching competitors, determining any sellers that run out of stock early and cutting back on sale pricing, re-optimizing advertising to fill in gaps, tracking promotion effectiveness, amplifying sales signals with off Amazon posts, and in some cases where LTV is a key metric, driving as much conversion for a loss leader so rewards are reaped further down the line.

Phase 3: Post-Analysis

After the dust has settled from the consumer frenzy, January to March is the time to analyze the data and determine if your key metrics were met. Fundamental questions such as achieving sales goals, net margin projections, and ad budget spend will always be table stakes, but taking it a step further on contribution margin, return/refund anticipation, OOS lost opportunity, and competitor strength are all needed to prepare for next years Q4.  

Phase 4: Conclusion

As you can see, predicting profitability is a year-long process. And while most brands have the fundamental understanding and basic model to determine whether Q4 was “successful” or not, it requires dedicated resources, proven strategies, and the expertise to develop and definitively assess how successful, how profitable, and how it can be done better next year. See how Cart’s Marketplace Services can take this off your plate—and get you the results your brand wants 

 

 

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