For most of the Western world, the Lunar New Year, popularly known as the Chinese New Year, typically comes and goes with minimal fuss. However, in Mainland China and the surrounding countries, it’s a celebration of epic proportions. Picture an extended festive season with more extensive travel and where everything shuts down for several weeks – even your local convenience store!
For an e-commerce seller with suppliers in China, this period can be catastrophic without proper planning. Ultimately, each year, sellers across the globe gear up for this significant, annual supply chain disruption. Here is everything you need to know to ensure your business runs smoothly during this period.
What is the Chinese New Year?
This year, 22 January 2023 marks the beginning of the New Year and will conclude with the Lantern Festival on 5 February 2023.
Also referred to as the Spring Festival, this year will be the Year of the Rabbit, according to the Chinese Zodiac. The holiday is celebrated across several Asian countries, including Indonesia, Vietnam, South Korea, and Singapore. Officially, only the first seven days of the Chinese New Year are public holidays, but celebrations can last between 7 days and several weeks.
As a result, the extended holiday can cause massive disruptions for your e-commerce business.
How will the Chinese New Year affect shipping?
The Chinese New Year causes the largest annual human migration in the world – as observers travel home to reunite with their families. Inevitably there will be shipping delays, and product shortages as many businesses, factories, and supermarkets close for this holiday period.
During this time, virtually all workers in China get extended holidays to celebrate with their loved ones after a year of hard work. As a result, the nationwide shutdowns put the whole system under pressure due to increased demand as Chinese families stock up on their daily supplies to ensure they have enough food and luxury items to enjoy the festival. Likewise, e-commerce sellers need to plan and prepare their businesses and customers for impending shipping backlogs leading up to and during this period.
How will the Chinese New Year impact your e-commerce business?
The Chinese New Year will, directly and indirectly, affect your business, particularly if you collaborate with Chinese suppliers. The interruption can make or break e-commerce businesses depending on the level of preparation leading up to the holiday. Planning for potential delays due to a severely strained supply chain will help you maximize sales and avoid seasonal disruptions.
While Chinese New Year officially starts on 22 January 2023, factories in China gradually turn off their machines and shut down their workshops by the middle of the month. This helps the industrial sector to save costs while allowing employees to spend more time with their families.
Because of the significant factory downtime before and after the holiday, you may need to find a temporary alternative supplier to manufacture your goods. Without careful planning, this can result in manufacturing delays.
While most of the world has readjusted and begun to move on after the pandemic, China is still gripped by the effects of COVID with strict lockdowns and covid-related restrictions. To avoid further outbreaks, factories in high-risk areas have allowed their workers to start their Spring holiday early to slow the exodus with a trickle approach.
Furthermore, the holiday may be extended even more than usual as many need to quarantine during their travels. Considering all these features, factories can end up closing for an entire month between January and February.
You probably already did the math and have concluded that there will be product shortages when all these factories close. Not only that, but many factories in China also clear their inventory at the end of the year to prepare new products for the new year. Since a large number of factories experience a drop in orders at the end of the year, during the western festive break, some don’t even open between 10 January and 15 February.
As a result, order shipments in the new year can experience delays of 15 days or more! These delays can compound if the suppliers run out of stock and need to order new stock from manufacturers. So delays will still apply even once the holiday ends, and workers return to the floor.
Let’s say you are lucky and can source available products from your supplier during the Chinese New Year. Great! However, your orders may still not arrive on time because everyone in China celebrates the holiday – including the freight forwarders and couriers you work with.
While shipping companies won’t close for a whole month, like factories, they typically close for at least seven days. Each company will have its holiday schedule, causing a significant backlog of shipping orders. You may want to ask for a schedule from your shipping partner to help prepare for delays.
As an e-commerce seller navigating all the delays from the Chinese New Year, you can imagine the accompanying customer complaints you will receive. Customers have a short fuse, and if they cannot track their orders themselves, you can expect a few calls from frustrated shoppers.
Some upset customers may demand a refund or cancel the order and leave a negative review on your storefront – potentially damaging your brand’s reputation. This is where many new e-commerce businesses fail and why it will be essential to communicate with your customers during this time.
How can you be ready for the Chinese New Year shutdowns?
Preparation and planning are crucial to helping your business succeed during the chaos of one of the year’s longest holidays. Here are four tips to help you plan.
Purchase inventory stock in advance
Knowing that the Chinese New Year typically falls between January and February every year will allow you to purchase enough stock well in advance. This can reduce the risk of running out of stock, forcing you to source a new supplier whose quality may not meet the standard you and your customers are used to.
Use an international warehouse.
Given the delays in deliveries caused by this holiday, try and store your products in warehouses outside of China. To be safe, it is advised that you look for a warehouse based in the same location as your most significant target audience for this time. For example, if most of your customers are from the US, you can seek out a warehouse in the US to store your goods and handle the shipping when new orders come in.
This helps you cut down on shipping times and keeps your customers happy. For help deciding which warehouse option is best for you, look at some essential details on Amazon FBA vs 3PL providers.
Prepare your store
Shipping during the Chinese New Year will be quite different compared to shipping throughout the rest of the year. Therefore, you should update your store shipping and service policies to inform your customers in advance.
Be proactive and inform your customers of potential shipping time delays beforehand. This way, you can reduce the number of complaints while also building rapport with your audience and strengthening your brand reputation.
Stay in contact with your supplier and shipper.
Stay connected with your suppliers and shippers during this festive time. Getting first-hand information about the holiday schedules of all the parties involved in your shipping process will improve your business efficiency and avoid any extended delays of your goods.
Look to your suppliers and service providers for help.
Don’t let the Chinese New Year slow down your business – lean on your suppliers and service providers.
Stocking and shipping delays during the Chinese New Year can severely affect your inventory levels and potentially impact your sales and customer shopping experience. When choosing a solution, you need a quick and reliable method to combat these delays – especially during big holidays like the Chinese New Year.
Zee, for example, works closely with global carriers to ensure streamlined shipping and IOR services for your products to go directly from your suppliers to your designated warehouse. Our single point of contact for all your needs helps make these chaotic times a bit more manageable.
Let the Year of the Rabbit be the year you take your e-commerce business to new heights with Zee!