Anticipation and Preparation are Essential to Managing Seasonal Sales Spikes and Viral Velocity
Most small and mid-sized eCommerce merchants are well aware that Black Friday, Cyber Monday, and the festive weeks that follow are periods of frenzied sales activity. Though most seasoned companies accurately plan for these predictable annual surges, nimble, growing businesses continue to refine their preparation tactics to efficiently manage sales spikes. However, the rise of social commerce has added a new element of unpredictability, as viral TikTok trends can generate sudden tidal waves of demand that are far harder to foresee.
As the landscape of year-end online retailing has evolved, so too have the strategies businesses use to prepare inventory and manage viral social commerce surges. By carefully considering which products to stock, in what quantities, and how to arrange the necessary cash flow, brand merchants can capitalize on consumers’ holiday gift-giving enthusiasm. Coupling these preparations with agility to meet viral social commerce surges enables companies to embrace sales peaks and fully reap their rewards.
The key lies in striking the ideal balance of supply and demand. With the right inventory and capital resources secured through strategic partnerships, brands, and social sellers can confidently ride seasonal waves and viral surges to explosive growth. By learning from experts to discover best practices, brand merchants can deploy advanced tactics to master inventory planning, forecasting, and financing in order to ride the tides of both seasonal and social tsunamis.
TikTok Shopping Trends and the Rise of Social Commerce
With the meteoric rise of TikTok, businesses must navigate the challenges and opportunities of viral social commerce. Products featured in popular TikTok videos can explode overnight from niche curiosities to highly sought-after items. While this rapid growth is exciting, it also strains supply chains not equipped for sudden demand shocks.
Out-of-stock notices and order delays after going viral lead to frustrated customers and lost sales. But with careful preparation, businesses can ride the TikTok wave to success. Read on to discover best practices for inventory management and meet explosive demand when your product goes viral.
“You can’t fully predict or plan for virality, but you can prepare your operations to swiftly respond when it happens.”
-Lisa Guerera, Experiment Beauty
The Impact of Going Viral
TikTok has an unparalleled influence on purchasing, especially among younger demographics. Products promoted by popular creators quickly go from obscure to impossible to keep in stock.
Recent examples include:
Ocean Spray saw a 300% sales spike after creator Nathan Apodaca’s skateboarding video set to their music went viral.- A specific Carhartt vest sold out after featuring in several popular clips.
- After Khaby Lame posted an avocado slicer video, the previously unknown product became a top seller on Amazon.
- Experiment Beauty’s Super Serum saw a 300% sales spike after a TikTok influencer with 16 million followers dedicated a video reviewing the product. The viral surge resulted in the product selling out a month and a half worth of inventory in just 72 hours.
This “TikTok Tidal Wave” is great news for brand awareness and sales velocity. But without proper preparation, it can cripple companies unable to meet surging demand. Just ask the small family business behind the “color-changing” Bubble Tea straw featured in a viral video. Overwhelmed by orders, they had to quickly scale up operations.
The meteoric rise of social commerce has fueled explosive growth for many brands, turning unknown products into overnight sensations. But riding a viral wave comes with big challenges. Sudden demand surges can swamp suppliers and drain inventories, leading to dreaded out-of-stock notices that turn away customers.
The True Cost of Stockouts
Running out of your hottest product can incur major costs:
- Lost sales from unfulfilled orders, estimated at $1 trillion annually.
- Permanent loss of up to 33% of customers who defect to competitors.
- Increased overhead costs to handle backlogs and complaints.
- Production inefficiencies when demand spikes post-restocking.
However, Experiment Beauty brand CEO Lisa Guerrera explains that the occasional brief sellout can also be leveraged to a brand’s advantage, creating buzz and hype.
As Guerrera explains, “In the beginning, I am not opposed to selling out – not a long sellout – but selling out for a little bit to gain hype and momentum because then when you restock, that’s another TikTok you can make.” She further illustrates this example, “… this creator sold out of serum and now we’re restocking it…and that creates social proof. It creates hype. It creates demand.”
She explains that a temporary stockout fuels curiosity, with customers eager to try the product that became so popular it sold out thanks to TikTok viral videos. Guerrera stresses this tactic should not be overused, as chronic inconsistent availability will damage brand perception. However, an occasional brief sellout can be leveraged to generate excitement and demand when restocking inventory after a viral surge. Not only that, restocking presents an opportunity to stock up with larger quantities of inventory that can yield greater profits due to reduced COGs.
Maximizing Peak Profit Opportunities Through Demand Planning
Though the occasional stockout is not the end of the world, Guerrera recommends a few key strategies to ensure you can meet demand and scale swiftly when social media lightning strikes to ensure brands can maximize the benefits of social media virality by limiting the risk of insufficient inventory:
- Analyze Historical Sales Data
Study past demand patterns for similar viral product launches on TikTok to estimate potential demand curves and inventory needs. Identify leading indicators of an impending viral surge. - Build Scenario Models
Create best-case, worst-case, and mid-range demand forecast scenarios. Estimate inventory levels needed for each. Outline sourcing plans to rapidly scale production. Proactive safety stock buffers provide an inventory cushion when demand spikes unexpectedly. - Monitor External Signals
Leverage trend forecasting tools to identify rising social media interest and purchase intent for your product. Continuously monitor signals across TikTok, Google Trends, reviews, and more. - Collaborate Across Teams
Get insights from partners in marketing, sales, finance, and operations to assess the likelihood of viral success based on campaign plans, growth priorities, and more. - Maintain Agility
Be ready to rapidly adjust forecasts and production schedules as viral trends accelerate or fade. Stay in lockstep with partners throughout the demand lifecycle. - Secure Capital
Explore inventory financing ahead of launch to access the working capital needed to produce an adequate supply for a fast-moving viral product.
Using Demand Planning Matrices
A demand planning matrix is a useful tool for mapping out demand forecasts under different viral scenario projections. Matrices guide inventory, production, and supplier decisions to align supply and demand. For example, a simple demand planning matrix could look like:
This matrix considers three scenarios ranging from low to high viral potential based on product characteristics and marketing plans. The demand planner then projects weekly demand rates, target inventory levels, and required production capacity to meet forecasted demand for each scenario.
Proactively developing a demand planning matrix is key to effectively leveraging the TikTok effect for surging sales rather than stockouts. They provide a blueprint for navigating uncertain viral dynamics. More advanced matrices could include additional variables like geography, product variations, marketing timeframes, and external risk factors. Having pre-built demand planning matrices for different viral trajectories allows businesses to swiftly pivot and scale operations when social media growth accelerates.
By following these tips, your business can confidently ride the TikTok wave without wiping out. Careful preparation is the key to seizing viral opportunities for explosive growth, not disruptive stockouts. With demand planning and inventory management best practices, your supply chain can respond efficiently when the TikTok effect propels your product into the spotlight.
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