---
title: "Distributors: Should You Stock Gift Boxes This Spring Festival?"
description: "As the Spring Festival approaches, distributors are torn between relying on the holiday for annual sales and fearing a repeat of last year's nationwide lockdowns that caused massive returns of gift boxes. The article advises a cautious approach: focus on low-risk areas, align production with demand, ship in batches, and prioritize safety over aggressive stocking."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-01-11"
language: "en"
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---

# Distributors: Should You Stock Gift Boxes This Spring Festival?

> As the Spring Festival approaches, distributors are torn between relying on the holiday for annual sales and fearing a repeat of last year's nationwide lockdowns that caused massive returns of gift boxes. The article advises a cautious approach: focus on low-risk areas, align production with demand, ship in batches, and prioritize safety over aggressive stocking.

**Click to read the original article for details**
During last year's Spring Festival, I wrote an article titled "How Can Distributors Resolve the Massive 'Return Wave' of 2020 Spring Festival Gift Boxes and Avoid Inventory Backlogs?" which attracted much attention from readers. Now that the twelfth lunar month is almost upon us, many manufacturers and distributors are torn, with two main concerns:
First, many companies indeed rely on the Spring Festival for their annual performance and profits. Giving up on the Spring Festival is equivalent to giving up more than 50% of their share. Not doing it is not an option, even if it means "pulling chestnuts from the fire," they are eager to try.
Second, if another wave of nationwide lockdowns occurs, gift boxes will be pressed into the channel, with no flow up or down, and the eventual blow to manufacturers and distributors could be devastating. After all, last year's trauma has not yet healed. Whether to do it or not is quite a dilemma. Today, I will discuss the issue of gift box stocking with you.
**-01-**
Gift boxes cannot bypass the "epidemic," so let's first talk about the epidemic situation.
This is a letter I just received addressed to all residents of the community:
Dear residents,
As the Spring Festival approaches, the festive atmosphere is getting stronger. We bid farewell to the extraordinary 2020. Here, we would like to express our gratitude to all residents for your continued understanding and support of our property services. Thank you!
Although the current epidemic prevention and control has achieved significant phased results, due to the continued spread of the overseas epidemic, sporadic cases have appeared in some domestic regions. Especially as the Spring Festival approaches, the movement and gathering of people are becoming more frequent, increasing the risk of epidemic transmission and the pressure of prevention and control. We need to overcome complacency and侥幸心理. To resolutely curb the import of the epidemic and ensure that all residents have a safe and peaceful 2021 Spring Festival, according to the requirements of the community epidemic prevention and control headquarters, we propose the following:
1. During the Spring Festival, if not necessary, please do not travel to medium- and high-risk areas. Reduce unnecessary gatherings and dinners. If you must go to medium- or high-risk areas for special reasons, please register with the community and report to your work unit before traveling. After returning to Zhengzhou, report immediately. Those coming to Zhengzhou from overseas or medium- and high-risk areas should report their itinerary to the local jurisdiction in advance and strictly implement nucleic acid testing and 14-day centralized isolation measures.
2. Residents should enhance their sense of social responsibility and self-protection awareness. Continue to maintain good habits such as wearing masks, washing hands frequently, ventilating regularly, using public chopsticks and spoons, and exercising more. Actively cooperate with prevention and control measures such as "scanning codes" (health codes, travel cards) for travel, minimize opportunities for cross-infection, and reduce the risk of epidemic transmission to the lowest level.
3. Please purchase cold-chain food from regular supermarkets or markets. Do not sell or buy cold-chain food of unknown origin, and do not contact or eat wild animals.
4. If symptoms such as fever, dry cough, or fatigue occur, on the basis of personal protection, go to the fever clinic of a regular hospital promptly. It is not recommended to take public transportation to seek medical treatment.
5. For epidemic prevention and control policy consultation, please contact: Community Epidemic Prevention and Control Office: ***************;
Epidemic prevention and control is everyone's responsibility. For your health and your family's health, please actively support and cooperate with prevention and control work. Wishing you and your family peace and all the best!
The epidemic prevention and control headquarters suggests: reduce unnecessary gatherings and dinners. From this sentence, we can interpret that the current epidemic is within a controllable range, with no mandatory requirements. Once a local outbreak occurs, that is an order, and road closures and city lockdowns will be inevitable. So my suggestions are:
1. With the continuous increase in epidemic prevention capabilities, a nationwide large-scale quarantine should not occur. China has entered the stage of normalized epidemic prevention. The national control policy is very clear, namely "control wherever there is a problem," to minimize the impact of the epidemic on the economy and life. This is also likely to become the basic principle of China's future epidemic prevention.
This means that during the 2021 Spring Festival, there will be no nationwide large-scale quarantine. So for manufacturers and distributors, the first thing to do is: **decisively give up the gift box market in medium- and high-risk areas and areas with a large influx of migrant workers, and focus on opportunities in low-risk areas.**
2. As a country of etiquette, China has the Spring Festival consumption characteristic of "visiting relatives and friends with a small gift." The consumption demand suppressed by quarantine in 2020 is likely to usher in a rebound in social activities this year. After all, for migrant workers, relatives and friends have not seen each other for two years. If conditions permit, they will still visit.
But many merchants this year focused on township markets, thinking that the relatives they didn't visit last year would be made up this year, and the gatherings they didn't have last year would be made up this year. Blind investment has left them a bit unprepared.
So for manufacturers and distributors, the next thing to do is: **produce according to demand, combine production and sales, ship in batches, and treat it rationally.**
How to explain this?
**Produce according to demand:**
**Distributors are the first touchpoint of the market. They can well understand the local epidemic situation and local consumption potential. Distributors submit their demand plans in stages, without coercion or pressure, ensuring emergency response.**
**Combine production and sales:**
**Many companies have digital execution management tools. They should always understand the sell-through situation at the terminal, not ship according to the distributor's will, but determine production based on sell-through within the demand range.**
**Ship in batches:**
**Demand reporting is the first step of production. Shipping should be done in batches to prevent product stagnation caused by sudden epidemic changes in the distributor's operating area.**
**Treat it rationally:**
**Don't blindly rush in when excited, don't give up when sighing at the sea, follow the trend, and seek advantages and avoid disadvantages.**
**-02-**
Let me talk about my recent market research.
From January 2 to 11, I cooperated with a company on a project that required researching some markets in Hunan, Hubei, Shanxi, and Henan. I also paid special attention to the stocking of gift boxes and the attitudes of terminal store owners towards gift boxes. I summarized the following points:
1. The gift box atmosphere in convenience stores around communities is relatively strong, mainly milk, supplemented by New Year gift boxes. The display area is significantly larger than usual.
Store owners' feedback is mostly: The epidemic is unstable, so they dare not stock too much (zero inventory, products are all on display), but gift boxes can sell a portion every day. Secondly, visits to relatives and friends have started earlier than in previous years, especially when migrant workers return and visit relatives and friends.
2. There are relatively more gift boxes in large township stores, but the price is mainly concentrated in 30-40 yuan for non-milk categories and 45-55 yuan for milk categories. Gift boxes priced over 100 yuan (mid-to-high-end dried fruits, supplements, etc.) were not seen.
Store owners' feedback: This year, gift box movement is mainly around 30 yuan. Visiting relatives and friends with two boxes costs 60-70 yuan. Consumption capacity is not as good as before. Secondly, they only accept old partners and well-known brands with after-sales guarantees. Recent sales are satisfactory. There is a small amount of inventory, but overall it is only about a week's demand.
3. The gift box atmosphere in hypermarkets is starting to get stronger. Weekend traffic is relatively large, especially Hubei people have started buying some New Year goods to be prepared. Unlike before, it is rare to see big brands building differentiated floor displays as in the past.
After communicating with the purchasing manager, I learned: In the past, brand salespeople would have come to negotiate floor display matters by now. This year, they are only testing the waters, without a strong willingness to cooperate.
4. A distributor doing New Year goods business frankly said: This year's epidemic situation is unclear, but I believe the country will control it well.
After all, the consumption power during the Spring Festival is still the strongest of the year. He also stocked some gift box products, but the logic of stocking is to buy fewer or no pure gift box products, mainly gift boxes that can be split and self-assembled.
Here's an explanation: The "split and self-assemble" gift boxes mentioned by the distributor mean that the brand arrives in the form of plain boxes and gift boxes, and the distributor assembles them. Once they become unsalable, the distributor can disassemble the gift boxes and keep them for next year, dispose of the products, and avoid too much loss.
**Overall:**
Giving up the Spring Festival window directly would be a pity for manufacturers and distributors. In terms of regional markets, from distributors to consumers, there is still demand for gift boxes. For example, on the high-speed rail I took during my business trip these days, I saw many passersby carrying gift boxes.
Consumption quality may decline (just maybe), but consumption quantity should not change. The biggest suggestion for this year's gift box operation is: advance the sales rhythm. It is safest to move the peak period of gift box consumption about ten days earlier than in previous years.
**-03-**
**How should manufacturers and distributors operate the gift box market this year?**
For this year's gift box market, I give the following suggestions:
**1. Calculate demand precisely:**
**The epidemic should not be exaggerated or minimized. Its characteristic is suddenness.**
So the quantity of gift boxes is particularly important. How to determine the quantity of gift boxes?
Gift box products are generally divided into two categories: One is pure gifts: the brand's annual sales rely on the three major festivals of Dragon Boat Festival, Mid-Autumn Festival, and Spring Festival.
For safety, the quantity stocked for the Spring Festival should be less than or equal to the actual sales volume of the Dragon Boat Festival in previous years. **If the shelf life is more than 9 months, unsold Spring Festival stock can be promoted during the Dragon Boat Festival, and overall there is still profit.
The other category is gift + retail: that is, it can be sold as gifts or split for retail. For safety, **the quantity stocked for the Spring Festival should be less than or equal to the actual sales volume within half of the shelf life.**
For example: if the shelf life of a gift box product is 12 months, the Spring Festival gift box quantity should be stocked based on the actual sales volume of split sales within 6 months, ensuring that it can be digested before half of the shelf life passes. In short, safe inventory is the guarantee of profit.**
**2. Emphasize product, de-emphasize packaging:**
The Spring Festival is for celebration. Many brands spend a lot of money to package their products, even making the gift box cost account for more than 30% of the total cost.
This is not advisable this year. Once a sudden situation occurs, any disassembly of the gift box results in loss, invisibly increasing the cost of response. This will consume the profits of sold gift boxes for both brands and distributors, leading to negative gross profit for gift boxes overall this year.
**3. Price sinking:**
Previously, we often mentioned channel sinking. Today, I want to talk about price sinking. In the markets I visited in Shanxi and Henan, where the festive atmosphere is strong, the common response from terminal store owners was:
This year's business is too difficult. I dare not stock expensive gift boxes. Customers mainly buy around 30-40 yuan. When giving gifts, they usually take two boxes and don't exceed 100 yuan. So manufacturers and distributors should grasp the price range of gift boxes.
**4. Don't spend expenses recklessly:**
Every year, brands operating gift boxes reserve a portion of expenses for promotions, floor displays, personnel stocking incentives, product rebates, etc.
This year, I suggest using expenses centrally. Based on previous data, early expenses should only support those outlets that generated huge sales in previous years. For image outlets, invest little or nothing. Later, concentrate a large amount of expenses to deal with possible emergencies (if a sudden situation occurs, these expenses can also be transferred to support new channels such as community group buying).
**5. Unit group purchases:**
This part of sales is relatively stable as long as relationships are harmonious, but it is necessary to have a plan. Units distribute late, so don't let there be insufficient demand or out-of-stock situations.
**6. Don't borrow money to do gift boxes:**
In previous Spring Festivals, distributors with financial difficulties would borrow short-term to do gift boxes. This year, it is not recommended to do so. "How big is the pot, how much rice you put in" – you know the logic.
**In conclusion:**
The biggest difficulty of the epidemic is its suddenness. The biggest difficulty for manufacturers and distributors is uncertainty.
My view is: safety first. In today's normalized epidemic prevention, sometimes not losing money is making money. Don't have an adventurous spirit. Market operation is not just about gift boxes; it applies to other products as well. Study previous sales data more, research the market more, and try to have a clear picture. Not being greedy and not being rash is the best strategy.
Editor: Asher | Proofreader: Chen Feng
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