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Chinese New Year holidays are approaching. It is already confirmed that due to different factors, manufacturers and other suppliers will go on holiday a couple of weeks earlier will resume production around February 10.
If you source products from China, it is essential to understand the ins and outs of this important holiday.
The Chinese New Year brings typically business to stop across China; this holiday is marked by factory shutdowns, scarce local logistics services, and a massive uptick in travel. But don’t worry! Even if your dropshipping business relies on Chinese suppliers, there are some simple actions you can take to prevent complications for your business, yourself, and your customers.
This post covers points like the holiday official dates, how domestic issues and policies affect holiday dates, which niches will be affected, and finally, provide you with 9 crucial steps you should take to ensure your business operates smoothly before, during, and after the holiday.
How will the Chinese New Year affect dropshipping business?
Halted Production
Manufacturers will shut down one or two weeks before CNY and resume production one or two weeks later. This leads to a halt to mass production firstly because raw materials subcontractors might stop working earlier than expected and secondly because employees will take longer to come back to the factories.
Slower Domestic Shipping
Major domestic logistics companies will get on holiday and significantly reduce their operating output from January 25 to February 10. This will definitely slow down the domestic supply chain and increase the lead times.
Now, you must be wondering why manufacturers will take such a long and early holiday if they basically never stop working.
The main reasons are:
COVID-19
The recent COVID-19 spread in major cities in China has caused working personnel reduction, lockdowns in some towns, and mandatory 7-14 days quarantine for people traveling from low and high-risk areas. Resulting in longer holidays for employees working in different provinces.
Domestic Electricity Shortage
This year, massive production output increases, especially in Q4, have caused a considerable power demand with insufficient supply. On top of that, colder-than-normal weather adds to winter demand as people need heat in their homes.
But, why there is not enough energy supply?
This is all happening as coal, the fuel of choice for most of China’s power generation, remains in short supply. The government had limited imports to support domestic miners and imposed regulations to reduce carbon emissions.
What regions are facing challenges amid power shortages?
In Guangdong province, China’s industrial heartland, frozen power lines, and equipment have been causing brief outages, resulting in power supplies being cut to industrial and commercial customers and, therefore, cutting production outputs.
In Zhejiang province, some local governments have ordered factories to shut down production a few days a week.
In Hunan and Jiangxi provinces, power supplies have been cut by 12% to industrial and commercial customers. Production outputs have been down by 30%.
If your suppliers are from any of these regions, you should ask for updates as soon as possible.
Keep in mind that this does not apply to every Chinese supplier; some suppliers are luckily not affected by this situation and, therefore, will have short holidays. However, you must be aware that most domestic logistics companies and post offices will be off duty during the holiday period, influencing lead times and product prices. The main point is to be prepared and have an action plan for the holiday.
What is the Chinese New Year 2022 Timeline?
Usually, suppliers take a week off to spend time with their family and friends. Still, given the current situation, many suppliers and factories have decided to close at least 10 days in advance and extend the holiday to 2 weeks. You can refer to this Timeline to make adjustments to your books:
January 10-15: Stop receiving new orders (orders placed after this date will enter production after CNY)
January 21: Manufacturers and raw material suppliers stop mass production and prepare final shipments before the holiday
January 25: Most employees have already left the factories. Engineers and management may still be around for a couple of days.
January 28: All personnel leaves the factory.
February 1: Chinese New Year’s Eve.
February 10 – 15: Some factories resume production
February 15 – 20: Most factories will resume production.
This means that some suppliers have already started slowing down production and will stop receiving new orders in a matter of days. Hence, it is decisive for you to reach out to each supplier you work with to get information about their current production output, order handling deadlines, and exact dates on when they’ll be shutting down and starting up again. This information will be helpful for you to decide whether to slow down your Ads or keep them running as usual during the holiday.
Which niches will be affected by the Chinese New Year holiday?
If you do dropship from China, then you know that almost all the niches will be affected in the Chinese New Year for the simple fact that delivery times will be a bit longer than usual because domestic and international post offices and logistics companies based in China will reduce their working staff during the holiday. However, the most affected niches are the lingerie niche, the gifts niche, customized and generic jewelry niche, and other niches that are winners during Valentine’s day, so if you are planning to sell any of these, you must consult with your suppliers as soon as possible and start making an action plan.
Should I close my store during the Chinese New Year?
Definitely not; you should even consider closing your store a mistake. We know that many people in Dropshipping Facebook groups are dramatizing and exaggerating the delivery delays in the new year. Closing your store will make you lose the progress you have achieved so far, scare your current customers and deprive you of taking the advantage that many dropshippers are afraid to take (maybe because they do not know what to do). So instead of thinking about closing your store, you better pay attention to the following 9 actions you should take to smoothly run your dropshipping business during Chinese New Year 2022 and get yourself ready to make the money others are afraid to make during this holiday.
9 steps to smoothly run your dropshipping business during Chinese New Year 2022.
Step 1: Consult holiday schedules with your suppliers
Reach out to your most important suppliers to learn about their holiday schedules and important dates like the last day they will be taking your orders before holidays begin, or the last day they can deliver your orders so you can inform your customers and make a detailed and organized action plan for the holiday
Step 2: Double-check your fulfillment center’s order handling capacity
Some fulfillment centers will go on holiday during Chinese New Year or simply just reduce their working personnel during the holiday, which might affect their order fulfillment capacity and handling times. To avoid any complication, the best you can do is to double-check with them
Step 3: Consult any shipping time and price variations
As we mentioned earlier, most domestic and international logistic companies and post offices will be on holiday or work with reduced personal during Chinese New Year. This means that the shipping times and prices will not be the same as usual, and you need to be well informed about this so you can, in turn, inform your customers to avoid complaints, refunds, and returns.
Step 4: Adjust Advertisement expenditure.
Chinese New Year is not the best time to stop running your business, but it might as well be not the best time to scale your business, so pay attention to how much money you want to spend during this time.
Step 5: Notify your customers
Once you know the exact holiday dates and shipping times, you should inform your customers on your website about possible delays during Chinese New Year, or, if you don’t want your customers that your products are from China, you can list dates instead.
You can use a banner notification on your website or set automatic emails to be delivered to your customers right after they purchase any product to remind them that there might be some delays; the point is to make sure they get the message in case they missed it on your website.
Step 6: Forecast your sales and stock
First, look at your Ads expenditure and how many sales those Ads represent for you. Second, analyze the sales made during the previous months and calculate an average daily sales volume. For example, if you sold 300 items in the last month, take this number and divide it into 30 days; 300/30=10 items, your average daily sales volume is 10 items. Third, multiply the average daily sales volume for the days your supplier is gonna be off work, and then you will know how many items you need to stock to smoothly run your dropshipping business during the holiday.
Step 7: Confirm supplier’s production capacity and leading times
Once you know how many items you will be selling and want to keep in stock, you should reach out to your suppliers to make sure that they can supply the required stock on time.
Step 8: Carry out counts for packaging inserts and other accessories
Custom packaging, custom logo stickers, Thank You cards, discount offers, and other packaging inserts and accessories that give that special touch to your products are essential points that can never be forgotten. On top of that, these items take a while to be produced, so you must carry out packaging inserts counts in advance and take actions to avoid running out of precious accessories that make such a difference.
Step 9: Place orders in advance and prepare enough stock
After following the previous steps, you will know all the information you need to know to purchase the right stock amount at the right time. Once you place your orders and have your stock, you will be ready to take advantage of this holiday the right way!
How long does it take to deliver products during the Chinese New Year?
As we said before, some suppliers are affected by the current situation and will stop production really early. However, fulfillment centers, logistics companies, and post offices will still be working hard to keep your dream and your business alive, so as long as you have stock prepared for the holiday, delivery times will just vary one or two days. However, you’ll need to contact the suppliers you work with the most to get specific information. Ask each supplier when they’ll stop processing orders and when they’ll start again.
When does the business go back to normal after the Chinese New Year?
Hopefully, the dropshipping business will go back to normal around a week or two after Chinese New Year for most suppliers. Some suppliers might be off a bit longer, but it depends on each one. You’ll need to contact your suppliers directly to find out more information.
Keep in mind, since the holidays will be so long, suppliers might have a backlog of orders they need to deliver once they get back to work. This might cause delays, so keep an eye on orders and keep customers informed at all times.