There’s that age-old saying: “Fail to prepare, prepare to fail”. While this is still sound advice it is also true that, when it comes to running a business, not everything can go exactly as planned. This is particularly true for small, growing online retailers that don’t have years of experience under their belt.
The growing prominence of omnichannel commerce also means that you simply can’t base supply-demand forecasting on historical data anymore, and ecommerce businesses must now pull in near real-time data from several channels including social networks. With this considered, the following blog provides insight on how to improve demand forecasting, with strategies that may optimise profitability for multi-channel online retailers.
The power of promotions
Quantify the success of previous and current marketing campaigns by directly tracking their effect on increasing demand for certain products. Allow these figures to predict the subsequent demand that future marketing campaigns may provide for similar products.
If you don’t have a great deal of promotional history to go off, or you’re aiming to optimise demand forecasting for new products, then review your competitors’ promotions to identify opportunities for success that you may usually miss. Before syndicating these promotions across your own site and marketing channels, optimise your stock levels in anticipation of the heightened demand that you expect to face for the line of featured products.
Similarly, keep an eye out for when your competitors are out of stock of certain items you also carry. As their sales drop, you may expect to see an increase in traffic across your chosen channels, so prepare for this gateway of demand by topping up your stock levels accordingly.
Analyse the external environment
There are always going to be independent variables there to sway the success of your business. When historic data is unavailable to predict their effects on your demand in sales, a qualitative method may come in handy. Perform a cross-section examination of external factors-political, economic, technological, seasonal- that may signpost fluctuations in demand for your business.
In the same way, your business may also depend on the size, capabilities and efficiency of wholesalers, 3pl providers and carriers, so strategic resource allocation is key. It’s important to outsource to companies that have the flexible business model necessary to accommodate for your anticipated demand and the resulting order volume. This will then determine your average lead time, and how quickly you can meet demand.
Know your products
If fluctuating sales begin to show a pattern, then it may help to forecast future demand by asking the following questions: What is each product’s lifetime? Are you capitalizing on trends, for example the latest phone accessories, or seasonal/fast fashion? What are your repeat customer levels?
Another top tip is to always read your customer feedback- demand forecasting for existing products can be heavily influenced by the reviews visible across your sales channels. If your demand is sporadic across individual SKUs rather than continuous, it may also be wise to shorten products life cycles and improve current products based on the feedback you receive. All in all, anticipating the success of your products based on existing customer satisfaction will help you to minimise delays, increase your adaptability as a business and optimise your operational efficiency.
Automate the process
If you have a large product listing across several online marketplaces, outsourcing with an integrated, automated supply demand software can operate on tens of thousands of SKUs to save you masses of time, eradicate human error and simplify the collection of quantitative data.
Within the supply chain management feature of fulfilmentcrowd’s own order processing platform is a forecasting module. Existing stock levels, minimum order quantities and lead times are factored into an algorithm that allows our software to suggest purchasing quantities and ideal replenishment dates.
As well as simply restoring your stock levels in advance of estimated future demand, our software allows you to optimise your stock holding and reduce cost, ensuring that opportunity for a sale is never missed. If the state of your current demand forecasting and its techniques could do with improvement, then don’t hesitate to get in touch and see what the intelligent business modules of our software could do for your business.
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