Today, most business transactions are conducted online, so getting a detailed analysis of your e-commerce website is one of the best ways to gain some competitive advantage. With demand forecasting, your ecommerce site will be ready to answer any new challenges quickly and effectively.
The definition of demand forecasting
By definition, demand forecasting is: “a process of anticipating the demand for the product and services of an organization in the future, to optimize supply or execute decisions.” Put simply – demand forecasting allows you to plan your demand for retail e-commerce in the most effective way. This will give you the information your need to determine your inventory levels and reduce costs.
This helps your business thrive in a competitive online market where things change in a matter of days. Instead of making uninformed and bad decisions, you can use demand planning to plan your every move, reduce costs, and make your online retail store more competitive.
In the end, it all comes down to effective retail inventory management, as this can be extremely beneficial to the entire manufacturer-supplier-retailer chain. On the other hand, your online business depends on the end-consumer demand and current market trends. Demand planning and forecasting allow you to get ahead of those trends and demand.
The importance of retail inventory management
This has undoubtedly happened to you before – a consumer abandoned your website because a specific product was out of stock. This can lead to poor brand reputation. On the other hand, having an inventory filled with outdated products requires you to sell at significantly lower prices than usual.
You can avoid all this by getting in control of your retail inventory with demand forecasting. Keep in mind that most online consumers will try to find a product elsewhere if you don’t have it. Effective inventory management and control means establishing a healthy balance between brand revenues and customer satisfaction.
Nowadays, retail e-commerce is all about providing the right product in the right place and at the right time, to the right consumers. To meet consumer demands, you need to have enough items in stock, as this helps you avoid overspending and over-stocking.
With all this in mind, it’s safe to say that retail inventory management using demand forecasting is crucial for your e-commerce website. It helps deliver the wanted goods, every time your consumers demand it. It will also help get positive feedback from your consumers so that you can build brand loyalty, reputation, and credibility. If you always deliver, it will be easy to drive more traffic, increase lead generation, conversion rates, and revenue.
There’s an excellent advantage you can count on here, as modern technology offers plenty of excellent tools you can use to manage your retail e-commerce store with absolute efficiency to achieve absolute customer satisfaction.
Demand forecasting tips
- Data baseline
The best way to forecast demand properly is by establishing a good baseline for all valuable data. Data is crucial in demand forecasting, as it provides the needed insight to make educated predictions and decisions.
To establish a data baseline of what you can expect when it comes to your e-commerce demand, pull in sales data from the last year, and include the current business growth rate.
- Know the market and your consumer
Forecasting demand is all about understanding your consumers and their buying behaviors. Consider these questions:
- Are your consumers seasonal or consistent when buying?
- What are the preferences of your consumers?
- Do your consumers prefer certain brands over others?
- Do your consumers follow trends?
Analyse the answers to get the exact picture of what your consumers really want, and you will be able to forecast demand properly.
- Track the key metrics
This process is all about analysing key metrics to gather valuable data based on which you can make your predictions. Those key metrics are:
- Sell-through rate
- Market information
- Promotional plans
The way to track the key metrics and forecast your demand properly is to leverage automation and technology. This will increase your accuracy when forecasting processes such as:
- Data centralising
- Automating workflows and processes
Forecasting your demand for an e-commerce business will be easy with these useful tips. It’s important to understand the importance of data accuracy, however, as it will determine how precise your predictions will be.
This article was written by INTURN, a B2B platform that enables brands and retailers to confidentially buy and sell excess inventory on a global scale