Ecommerce Demand Forecasting
Ecommerce demand forecasting is the process of predicting and estimating the future demand of your business’ products or services and, ultimately, sales. The idea is to create accurate benchmarks that help inform your cash flow, marketing strategy and procurement processes. This type of forecasting is an important practice because when you understand your sales trends, you’ll have an advantage over and can outperform your competitors. With the right information, you’re armed to make solid decisions for your business that will grow your revenue and profits, like knowing how much stock to order and how to price things well.
Benefits of Ecommerce Demand Forecasting
Using demand forecasting in your ecommerce business allows you to benefit in several ways, including:
- Improving your pricing and sales strategy,
- Fulfilling your customer demand,
- Reducing your business risk.
- Benefits of Ecommerce Demand Forecasting
Learn more about these, below.
Strategized Pricing and Sales
You have total control over your pricing and the strategies you use to determine it, so keep in mind that prices are never fixed. Ecommerce demand forecasting helps you see where there’s opportunity for improvements here. For example, if you sell snowboards in the fall and winter but they don’t do well over the spring and summer months, you could simply lower the price of your stock at that time and bank on more unit sales, instead of reduce your orders. By the same token, during peak winter season when it sells out, you can then raise the price instead of ordering more stock.
Fulfilled Customer Demand
Customer data is truly invaluable to any business. Traffic and purchase details are vital to informing how you launch campaigns, conduct email marketing, advertise and manage your inventory. For example, customer demand forecasts in your inventory planning help with deciding what to stock, where to stock it, and when to stock it, like at Christmastime or Easter.
Reduced Risk
When you’re growing an ecommerce business, there’s always risk that comes with reward. The good news is that you can mitigate that risk with demand forecasting since it’s an educated prediction that helps you find and analyze information, balance decisions, and move forward with as few surprises as possible. Reducing risk in your business means controlling what goes into it so that you can better control the outputs it produces.
When those outputs make sense, you’re well equipped to plan for things like new product launches and handle the competition, economic pitfalls and seasonal effects that inevitably occur in any business. Knowing what’s happened and what is currently happening means you can find patterns in activity and sales trends that form an educated benchmark to set future expectations. And if things don’t look too promising, the great part is you can adjust and make different decisions to avoid potential negative impacts down the road.
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