Get ready for the retail peak season: costs and preparation you need to know

With Black Friday, Double 11, and Christmas fast approaching, are you fully prepared for the surge in consumer demand? Like any other peak season, retail peak season comes with higher costs - read on to find out how you can best manage these extra expenses, and explore strategies to maximise your sales potential.

Costs involved in the peak sales season

As tempting as it is to simply offer a discount to boost sales during the peak season, be mindful of the following costs to protect your margin.

1. Inventory and stock management

Apart from the costs of your products, you should also consider:

• Storage: warehousing fees, utilities, and security

• Insurance, taxes, and customs

• Shrinkage: potential inventory loss due to damage or spoilage

• Logistics: order fulfilment and delivery costs

• Inventory management system: software to help you track and manage inventory efficiently 

2. Staffing and labor costs

It is common practice for businesses to hire seasonal workers for production, packaging, and general customer service during peak seasons. Expect an inflation in labor costs, and plan early to avoid labor shortages and compromised customer experience. 

In Hong Kong, while the minimum wage is HK$40/hour, it can go up to HK$70 or higher during the peak season. 

3. Logistics peak surcharge

Be aware of surcharges imposed by couriers due to the high volume of deliveries. For example, SF Express imposed a HK$15 surcharge per shipment during Chinese New Year 2024; FedEx has also announced a surcharge of HK$4.3 - $6.9 per kilogram starting 5 August 2024, depending on the destination.

4. Marketing and advertising expenses

Advertising costs may seem straightforward, but in reality, most of these marketing expenses are overlooked:

• Promotions, e.g. discounts, free gifts, free samples, free trials

• Content production, e.g. flyers, posters, banners, blogs, videos, websites

• Software subscription, e.g. graphic design tools, video editing, automation tools, analytics

5. Foreign merchant fees

If your business operates in multiple markets, look out for foreign transaction fees (typically 1-3% of the transaction amount) and FX conversion fees that will quickly erode your margins. 

However, by utilising financial tools such as Airwallex, you will be able to avoid overseas transaction fees, as well as FX conversion fees by settling multiple currencies directly into your multi-currency account. 

Strategies for effective preparation

A well-rounded preparation for the sales peak season should encompass inventory management, supply chain optimisation, customer satisfaction, and data collection for future improvement. 

1. Forecasting demand

Stockouts and excessive unsold inventory are both retailers’ worst nightmares. Conduct a thorough demand analysis to decide how much inventory you should keep:

• Gather data: refer to past sales data and economic indicators. Be mindful of seasonal sales patterns, promotional impacts, and industry shifts.

• Data analysis: leverage forecasting software to identify patterns and predict future demand.

• Adjust for external factors: take into account the changes in consumer behavior and upcoming local events that might affect demand.

2. Optimizing supply chain

Delivering your products to your customers at the right time is crucial for customer satisfaction, it also increases the chance of returning customers and referrals. You may want to:

• Diversify shipping options: partner with multiple shipping carriers to avoid potential delays.

• Implement a just-in-time system: deliver ingredients / raw materials to production only when they are needed. This can help you reduce waste and improve cash flow, especially if your products are perishable.

3. Enhancing customer experience

Delight your customers by improving their shopping and checkout experience on your e-commerce store. According to our research, there are a few surefire ways to enhance their experience and boost your sales:

• Display in local currency: 93% of global consumers say that seeing the price in their local currency impacts their purchase decision

• Local payment methods: 77% of consumers say they will abandon the cart if local payment methods are not available

• Ensure no hidden fees: 35% of consumers claim they are unlikely to return to a merchant after being charged hidden fees

• Delivery tracking: approximately 70% of customers worldwide are willing to pay extra for faster delivery and tracking capabilities

Sounds too complicated? With Airwallex payment gateway, you can sell in your customers' local currency, accept local payment methods, and avoid the unpleasant surprise of overseas transaction fees and other hidden fees.

4. Utilising technology and tools

Harness the power of technology to streamline your operations and gain insights. Consider using advanced analytics tools to gain deeper insights into your customers’ behaviour for future reference, and leverage automation systems for inventory management and customer service to free up resources. 

Boosting sales during peak season

You don’t need a big budget or extravagant creative campaign to be able to boost sales. Consider the following strategic initiatives that capture customer interest and convert it into sales.

1. Effective advertising strategies

Plan your budget and campaign efficiently with the following tips:

• Channel optimisation: advertising on social media may seem a no-brainer (with a minimum daily budget of HK$10 / US$1), but don’t overlook the power of search engines to capture the attention of intentional buyers.

• Content creation: Ride on the latest trends to create content that delights your customers - or dig out your old content to adapt and reuse across platforms to save costs.

• Partnerships and affiliates: collaborate with influencers, bloggers, vloggers, or even a brand crossover that aligns with your target market to extend your reach. Consider a profit-sharing model or affiliate marketing, instead of a fixed fee to improve cash flow.

2. Promotions and discounts

Apart from simply offering discounts, there’s an array of ideas you can reference when it comes to promotions:

• BOGO and bundling promotions: great for fast-moving commodities that people need to restock regularly.

• Flash sales: create a sense of urgency by offering deep discounts for a short period. Take Hong Kong household brand LOG-ON as a reference: they created a dedicated Flash Sale page with up to 80% off selected products to encourage traffic and entice interest.

• Freebies: free trials, samples, gifts, giveaways, and free shipping - if your products or services are relatively new to the market, offering freebies is an effective way to introduce customers to your brand.

• Referral program: leverage the word-of-mouth of your existing customers, while having a little fun at it. For example, Sephora gamifies its referral program by awarding up to HK$800 gift cards to the 10 top referrers.

• Cashbacks and rebates: motivate customers to buy more by allowing them to earn more from each purchase. 

Other promotion strategies include coupons, loyalty programs, charitable causes and donations, co-marketing, and more.

3. Leveraging social media

Community marketing is the keyword in today’s world - instead of simply pushing social media content one-way, adopt the following strategies to build a community through social media and nurture genuine engagement. 

• Live engagement: host live sessions on social media platforms to interact directly with your customers. It can be Q&A sessions, live product demonstrations, or giveaways. This can make your audience feel directly involved and valued.

• User-generated content: encourage your customers to share their own experiences using your products. Whether it’s a photo, video, or a text-based review, user-generated content inspires trust and loyalty in others.

• Transparency and authenticity: keep your customers informed, entertained, and motivated by sharing real stories behind your brand, such as behind-the-scenes glimpses, team introductions, or “day in the life” features.

• Leverage other engagement features: be it Instagram Thread, Facebook direct messaging, or polls and surveys, leverage existing social media features that facilitate real-time conversations to gather feedback and engage customers.

How Airwallex Borderless Card can gear you up

With the myriad of fees and costs associated with the upcoming sales peak season, you will need a streamlined financial strategy to manage payments, and expenses, and simplify reconciliation.

Airwallex Borderless Card may just be the solution you need. With Airwallex Borderless Card, you can:

Manage international payments

You can use Airwallex Borderless Card to make payments in multiple currencies directly from the balances of your global account. 

This means you can easily pay for packaging materials in RMB, social media ads in USD, and logistic surcharges in HKD, while eliminating FX conversion fees altogether. 

What’s more, you can enjoy up to 80% off FedEx international shipping when using your Airwallex Borderless Card*.

Reduce transaction costs (with up to 1.1% cash rebate)

With Airwallex Borderless Card, you can benefit from 0% foreign card transaction fees and other hidden charges. 

Additionally, you can now earn up to a 1.1% cash rebate* for every dollar you spend with Airwallex Borderless Card – this essentially doubles your savings and enhances your margin.

Streamline Financial Operations

Airwallex Borderless Card enables a centralised approach to managing company expenses. You can issue company and employee cards in minutes online, and monitor all expenses from a single platform.

Budget control and reconciliation are also made easy with Airwallex Borderless Card, thanks to the built-in spending limit, real-time tracking, and an integrated reimbursement workflow. 

Limited-time offer exclusive for Airwallex Borderless Cardholders

Ready to earn more and save costs for the upcoming peak season? Sign up for an Airwallex business account today and start enjoying the many benefits of Airwallex.

Once you activate your Airwallex account, issuing Airwallex Borderless Card is a breeze – requiring no additional business address proof, you can simply create a new card via our web app in a few clicks.

Don’t miss out on our exclusive partner offers, including up to 80% off FedEx international shipping*, among other upcoming perks.

Simplify your payments, streamline your financial operations, and unlock exceptional rebates and discounts – all with Airwallex Borderless Card.

Frequently asked questions

1. What are the transaction fees for using Airwallex Borderless Card?

0%. Airwallex Borderless Cards do not charge foreign transaction fees or any other hidden fees. Moreover, you can eliminate FX fees by paying directly from the balances of your multi-currency global account. 

When currency conversion is needed, you can enjoy the market-beating interbank exchange rate to exchange currencies on the Airwallex platform. We only charge as low as 0.2% above the interbank exchange rate as a conversion fee.

2. How should I best prepare for the upcoming sales peak season?

To prepare for the upcoming sales peak season, focus on conceptualising and implementing the following strategies:

• Be mindful of the additional costs and surcharges involved to protect your margins, such as logistics surcharge, additional labor costs, and marketing expenses

• Earn up to 1.1% rebates* by paying the above costs with Airwallex Borderless Card

• Forecast future demand and maintain an optimal level of inventory

• Optimise the supply chain and implement a just-in-time system to reduce waste for perishable goods

• Enhance customer experience with the latest insights from our research, including providing local payment methods, displaying prices in local currency, and more

• Plan your budget and promotion effectively based on your target audience and product nature

*T&Cs apply.