If you do not plan thoroughly, you set your eCommerce business up to fail. Demand forecasting is one of the most important planning elements that you need to incorporate into your eCommerce company. By forecasting, you will get a more accurate picture of your stock and inventory management. To learn more about how important this process is for your eCommerce success, read on.
What is demand forecasting?
Forecasting demand is a technique that involves predicting your sales and inventory needs over time. By doing this, you can estimate future sales and adjust your processes accordingly. For example, if you analyze the data and predict you will sell 100 pickles next quarter but you only have 5 left, then you can order the rest ahead of time so that you do not run into understocking issues.
However, demand forecasting has many other key benefits aside from giving you an idea of ow much stock to order. Some of the top benefits include:
Managing inventory is a tricky process. On one hand, you can end up with a ton of unsellable stock that you are struggling to move, and at the same time, you can sell out of popular items. Both under and overstocking put strain on your warehouse and business. You can practice far more informed inventory planning when you consider your forecasted demands.
Cash Flow Management
Dealing with stock issues is not only time-consuming, but it is also expensive. Forecast to help with cash flow management. Having an idea of your upcoming demand will help you plan your budgets and avoid running into cash shortages due to stock changes.
Informed Marketing Strategies
The key to successful marketing is personalization. While there are some marketing strategies and discount times that are universal (think big holidays), you want to get specific when it comes to your marketing strategies. Understanding when certain products will sell well or struggle can help you plan proactive activities geared towards selling certain items.
Grow Your eCommerce Business with Demand Forecasting
Demand forecasting is more than just beneficial for your eCommerce business, it is a powerful growth tooth. By combining forecasting with other product research, you can figure out which new products will perform well and when is the best time to start selling them.
Since you will have more cash flow, you can push more into marketing and advertising. This allows you to run specific campaigns that will increase customer awareness and drive conversions.
You can also replicate demand forecasting for your existing channels on new channels and more effectively expand your sales channels. You will enter a new channel with a basic idea of what works when, and can start with a great baseline. Of course, you must monitor the new channels for their own demand metrics.
Growing your eCommerce business is risky, and demand forecasting can help you mitigate risk. The process allows you to figure out risks and overcome them accordingly. You will be equipped with new knowledge and great insight to plan for recessions, seasonal impacts, competitors, and more to ensure that you have enough cash flow and time.
Demand Forecasting Data
For accurate forecasting, you must combine market knowledge and historical sales. It is important to understand the overarching patterns of your sales over a long period of time and to break down the different factors that influence sales.
For one, you must assess quantitative data in the form of the last year of sales. You should look at monthly averages, trends, seasonality, and moving sales averages.
Additionally, you must look at qualitative data. The qualitative data includes market trends, new technology, fads, and economic trends. The key is to combine quantitative and qualitative data for the most accurate predictions.
Easier Forecasting for Your eCommerce Business
Not only do we offer unparalleled listing management, order fulfillment, and inventory syncing, but we also offer warehouse management. Our warehouse manager includes and Inventory Forecasting feature that allows you to track your previous sales trends and predict your stock needs. You can use the crucial information from the Forecasting feature to rapidly and safely grow your eCommerce business. Never fall victim to understocking or overstocking again, and make stronger predictions for your future sales. Learn more about our forecasting feature for yourself by starting your 14-day risk-free trial!