All eCommerce brands should forecast sales. Sales forecasting will allow you to predict demand and prepare as best as you possibly can.
Unfortunately, forecasting is not so easy, especially for eCommerce businesses. There are many aspects of your business that you must consider, as well as unpredictable situations and circumstances to predict. However, forecasting is a foundational process that can make all of the difference for your business.
Always remember that a forecast is a prediction. While it is based on data and mathematical properties, it is not an exact science. In reality, predicting demand is a special combination of science and art.
Even so, eCommerce forecasting can make it much easier to understand and adjust your marketing and inventory management.
Let’s get started.
What is demand forecasting for eCommerce?
For demand forecasting, you want to anticipate how much inventory you will sell per quarter (or month). Instead of relying on some vague sales number you hope to reach, you can make a more tangible plan based on what you’ve done in the past. Having an idea for your demand helps you adjust your inventory management strategy as well as your overall budget.
Forecasting allows you to address some important business questions. For example, you can predict:
- The effective stretch target for sales.
- Planning for hiring additional or seasonal employees based on demand.
- How sales with the trend and to what degree the variation is accurate.
- The best and worst-case scenario for sales.
Use Historical Data
Breaking down the sales you’ve already had is the best way to begin your forecast. While it may seem like it makes sense to focus on the most recent data, it is not the most reliable. For most businesses, sales are far too variable due to daily fluctuations for the most recent data to provide accurate information. Instead. You should look at historical data. But you cannot stop there. Daily sales numbers vary, so you should examine the data closely for patterns. Look for weekly or seasonable cycles, like sales on weekend days vs weekdays.
Look at the weighted average of historical data to account for trends and variations and to get the full picture.
eCommerce Sales Forecast Factors
When creating a precise forecast, you must carefully look at certain factors. For example, you should consider:
- The average number of website visitors
- The average cost of each product
- The number of average products in the cart
- Total gross sales
Maintain clear records for all sales strategies and programs.
Next, you will need to analyze the cost. Figure out your one-off costs, monthly costs, annual costs, and product fulfillment. Break down all of your current costs as well as planned upcoming costs.
The main objective of your forecasting is to assess your prospective finances and capital. You must not exceed the return on your investment with the amount of capital spent. You should track and forecast sales to estimate your costs and plan accordingly. By doing this correctly, you can find places to save and determine the best times to spend on marketing, PPC, and other investments that can help ramp up sales.
Easier eCommerce Forecasting with Listing Mirror
Forecasting is a big challenge for many eCommerce businesses, but it can be much easier with Listing Mirror. Our #1 listing software helps your business streamline forecasting.
On top of listing management, order fulfillment, and inventory syncing, we offer critical warehouse management services. Forecasting is one key feature of our warehouse management service that helps you track and analyze previous sales data and trends to decide how much inventory you should order.
With our powerful software, you can generate more accurate forecasts so that you are never are under or overstocked. Simplify and streamline demand forecasting today. To learn more about our incredible forecasting feature or to test it out for yourself, try out 14-day risk-free trial.