5 tips for Accurate Seasonal Forecasting – without the guesswork
E-commerce retailers have a multitude of priorities to juggle in today’s ever-changing economic climate – but if there’s one thing that’s always guaranteed to proffer challenges, it’s seasonal forecasting. Ordering the right amount of the right products, just as demand starts to fluctuate is a real skill, and arguably one of the most important factors of keeping revenue and cash flow afloat.
There is simply so much to consider when it comes to accurate forecasting. As we’ve seen consistently in recent years, supplier issues, sudden influencer trends or shifting economic conditions can send demand into disarray with less than a moment’s notice.
What’s wrong with guesswork?
You may think you’re an expert in your industry and can detect an up-and-coming trend with your trusted nose for business (read on for why this is a powerful skill to harness alongside an inventory planning tool) – but choosing to base your purchasing decisions on guesswork is rarely a good idea.
Guessing what, how many and when items are going to see a rise or fall in demand is risky to business – in most cases it results in financial losses and erosion to your brand’s reputation. This is either due to not ordering enough of certain items, therefore running out of your best-sellers before you’ve ordered another batch; or ordering way too many items (bolstering your ‘safety stock’, for instance) that you find difficult to shift, therefore wasting your inventory investment, missing out on sales opportunities, as well as incurring holding costs for items that end up gathering dust.
So, what can retailers do to laser-sharpen their seasonal forecasting, while simultaneously boosting their business resilience, cash flow and ultimately, customer satisfaction? Read on for our top tips for accurate seasonal forecasting, without relying on guesswork.
Tip 1: Use historical data
Without data to back up an inventory decision, retailers are essentially taking a stab in the dark at what products will sell. Guesswork might work when a business is just getting off the ground and you’re somewhat new on the scene, but when sales are coming thick and fast, you’ll need to know exactly how much of each item is required to satisfy demand.
By harnessing historical data, you can hone in on a specific season or time period from a previous year and use the figures to predict incoming interest. A smart, data-driven tool such as Inventory Planner by Sage does this for you – whilst also factoring in the many variables that can impact the numbers, such as supplier lead times and microtrends.
If sales have been inconsistent lately, or you think the previous year’s forecasts won’t reflect this year’s, you can also use data from a more recent, shorter time period, and choose to forecast more often so the source data is always fresh and up-to-date. With Inventory Planner, for instance, forecasts can be derived using Recent Sales and Trends, Last Sales, Seasonal or using a custom time period.
Tip 2: Collaborate with Sales and Marketing Teams
Hopefully everyone in your staff has some skin in the game as to what products are going to be best-sellers and which slow-sellers need to be shifted. By communicating with sales teams and marketing departments, you can get a fresh perspective on what products might need to be repurchased sooner than usual, or which are seeing a lull or surge in demand. For instance, you may think ‘pineapple-print polo shirts’ are a slow-seller, only to learn they’re being pushed via a social media or email promotion, and therefore will likely see a spike.
By keeping your finger on the pulse of every team’s priorities, you’ll get a well-rounded idea of how sales patterns may develop. You don’t have to do this just with meetings and project management tools either (though they of course help); ensure your inventory planning software, like Inventory Planner, is synced up with any sales or marketing analysis tools your business uses. This will allow for easy cross-referencing between teams so you can work towards mutual goals.
Tip 3: Leverage Predictive Analysis and Tools
If you want to be laser-accurate with your forecasting, you’ll want to implement all available technology to make life easier – especially for staff members in your purchasing team who are potentially wasting hours conducting manual forecasts in spreadsheets. A smart, inventory-planning tool such as Inventory Planner contains a roster of features to save you time, reduce human error and boost efficiency and accuracy in predicting seasonal sales.
Inventory Planner’s data-led sales forecasts can be customised to suit whichever product lines or market you’re focusing on for each season. For instance: its automatic purchasing recommendations mean you’ll swiftly receive notifications over what to order, when to order, and if items are about to sell out; while its full inventory visibility – with the potential for seasonal product tagging, predicting for bundles and kits, and hundreds of custom data metrics – means you can order with each changing season based on granular business KPIs.
Without these technological tools, it would be almost impossible to leverage this high level of predictive analysis manually.
Tip 4: Monitor and Adjust Forecasts
Demand and the market is always changing – as a rider on the thrilling e-commerce rollercoaster, we’re sure you already know that. You could set an automatic forecasting/purchasing cycle for inventory and let it do its thing – but you’d be losing out on major revenue gains that come from monitoring and tweaking your forecasts alongside current sales.
This is especially important both as seasons change and throughout a season. As we’ve ascertained, seasonal sales aren’t always predictable or the same as the previous year. Unexpected weather (such as a washout summer, UK?), national or global events like the World Cup, or even a viral TV or social media moment may have one or more of your products unexpectedly soaring in popularity.
When forecasting and purchasing recommendations are set, make it a priority to go back and check whether they’re still working at capacity for you. It could be worth using a different time period of historical data, purchasing fewer items more frequently, or changing up suppliers if lead times are slowing down your purchasing cycle.
Tip 5: Bolster your own expertise with in-depth insights and reporting
As a player in your chosen industry, you’ll hopefully have plenty of foresight as to what new products or cultural trends are likely to impact your sales and purchasing decisions. Keeping up to date with the news in your sector and the retail world at large should help with this, as well as closely watching your competitors. These are great skills to have when it comes to forecasting, but as with any guesswork, there’s always a level of risk.
By bolstering your own expertise or predictions with data, you’ll have a solid foundation for purchasing choices you want to take a risk on. For instance, have you noticed certain items seem to trend in a certain region or territory, but not everywhere? Do you think a particular color or style of product could be discontinued? Have you noted your best-sellers online aren’t the same as your most popular products in physical stores?
With Inventory Planner’s in-depth insights and tons of potential for granular reporting, you can explore these hunches and use them to direct your next inventory-planning moves as seasons shift. The combined effect of your in-person awareness with a smart, inventory-planning tool will ensure your purchasing decisions become strengthened and unbreakable.
Want to quit relying on guesswork or time-intensive manual calculations when it comes to your seasonal forecasting? If you’re seeking more tips for seasonal forecasting using a smart, inventory-planning tool, grab a copy of our ‘Ultimate Guide to Demand Forecasting’. It’s packed full of insider tips to unlocking the potential of super-accurate forecasting with Inventory Planner, and it’s free.