The famous quote “if you fail to plan, you are planning to fail,” is most relevant to companies selling products or services online. Demand forecasting is one of the most overlooked strategies for increasing the profits of an eCommerce business. Accurate and prompt demand forecasting benefits the eCommerce business in many ways to increase its bottom line ultimately. It helps you prepare for busy days of the year like the holiday season to sell more even without getting out of stock and you can determine the right timing of sales to plan your inventory accordingly. Effective demand planning helps businesses boost profits and increase customer satisfaction at the same time as it helps them maintain a healthy balance between inventory levels and customer demand.
What is demand forecasting?
Demand forecasting can be defined as a process of using predictive analysis of past sales, consumer trends, and seasonality data to optimize a business’s ability to meet customer demand in the best way possible. Ecommerce businesses use this planning process to estimate and predict customers’ future demand for a particular product or service. It helps brands and businesses make informed and data-driven supply decisions to estimate the total sales and revenue for a particular period of time in the future like the holiday season or New Year’s Eve. Data and numbers obtained from the demand forecasting process are used by businesses to make well-versed business decisions about everything from effective inventory optimization and stocking to introducing special offers and meeting customer expectations.
What is Demand Forecasting Software?
Demand forecasting software are tools that provide businesses with advanced forecasting features that not just help them quickly re-plan but also predict possible demand changes throughout the year before they befall. Demand planning software like Intuendi are developed to help businesses especially online sellers serve their customers by predicting and understanding their long-term needs. As a result, businesses can better prepare for rising demands in the future by making sure the sufficient quality and the right type of inventory is stocked to meet customer needs. A business can integrate its demand forecasting software with a CRM system to get accurate forecast data and plan inventory accordingly to stay on top of customer demand and stock levels.
Go through the article to learn why demand forecasting is so important for your eCommerce business and how demand forecasting tools can make the forecasting process a breeze.
Benefits of Using Demand Forecasting Tool for Ecommerce Business
Improve Supply Chain Efficiency
Effective demand forecasting is an integral part of operations management that helps eCommerce businesses improves the supply chain. Accurate forecasting data provides business management with the number of sales and timing of sales that help them optimize all aspects of the supply chain such as production, stocking, and shipping, etc. Demand planning tools help businesses predict radical increases in customer demand and plan business operations accordingly to make sure there is enough inventory and materials to meet the increasing demand of customers.
Marketing is the backbone of every business as it helps promote products or services to a particular group of people and encourages them to make purchases. Demand forecasting tools help business estimate their revenues for different times throughout the year and then they can set marketing budgets for different periods. For instance, during low sales periods, a business can spend money on cost-effective marketing tactics to reach the target audience. And during the busy times of the year when sales might increase, they can implement expensive and more targeted marketing techniques like PPC to get more eyeballs on their advertisements and secure more sales.
Accurate budgeting is one of the top benefits of using demand forecasting tools for eCommerce businesses. Data obtained from forecasting helps businesses create annual budgets and plan other financial aspects including cash flow, overheads, warehousing, and marketing, etc. It also helps them create flexible budgets so they can easily shift through efforts based on busy or slow periods of the year.
Effective Labor Management
As an eCommerce business, you can use a demand forecasting tool to get numbers that indicate staffing needs for different sales points throughout the year. You can effectively increase or decrease staff according to the customer demands in both low and busy times of the year. Having demand information ahead of time enables you to make effective staffing decisions in a timely fashion. For instance, if there is a need to hire more staff, you can hire early enough so you can have more time to train and educate about your business operations to keep things running smoothly. With help of demand planning, you can forecast your staffing needs, create flexible employee schedules and hire new people proactively.