As the eCommerce industry is growing, the challenges of e-tailers are growing with equal intensity due to increasing competition, product clutter, inefficient supply chains, and finicky consumer demand. In such a scenario, demand forecasting forms a crucial part of the success of eCommerce.
For brands selling on the online channel, it becomes critically important to understand and know what customer buys, when a customer makes the purchase, and how much is the purchase being done. An efficient demand forecasting method can help the brands in boosting sales and increase revenue to maximize profit and also helps them avoid overstocking & understocking.
Demand forecasting is analyzing historical data by plugging in factors such as seasonality, Events, cannibalization, trends, and evolving demand to predict customers’ future willingness to purchase the products
Given the Complexity, reach, and offerings of the eCommerce channel, demand forecasting becomes an integral part of the eCommerce operations. Some of the factors that are crucial include:
Forecasting demand is never easy. E-tailers are constantly dealing with the three Vs of big data: volume, variety, and velocity. This when coupled with fierce competition makes going tough for these E-tailers. Some other challenges include:
Having correct and detailed information on the data points that are reliable, accurate, and deep can help in decision-making at multiple stages in the eCommerce value chain.
With the market flooded with numerous tools, it becomes critically important for brands to choose wisely from the available options that cater to their requirements.
Among the multiple capabilities that PiWheel offers, one such capability is offered through our tool Beacon which gives you an internal view of your Brand. This tool provides you with numerous data insights at the category, brand, and SKU levels.
Some useful insights from Beacon on SKU-level sales trends, Inventory as it provides total stock available and how many weeks on hand for that product before you replenish can help in efficient demand forecasting
Some omnichannel retailers make the mistake of treating eCommerce as a separate business that necessitates separate tools and different approaches to succeed.
However, it is more similar rather than different. Here also you need to order inventory that customer buys, set prices to match the competition & maximize profits, replenish your delivery centers as if they were stores and warehouses, and so on.
Some effective tactics to excel –
Demand forecasting calculates the demand for each product using a much wider range of data and variables than that used in traditional sales prediction methods. Such as:
As is customary, there are numerous methods for forecasting demand which are available and retailers can choose among them depending on the expertise and complexity involved.
To name a few –
Ecommerce demand forecasting is all about predicting the future using historical data points. If you get it right, you can control your eCommerce operations to a huge extent and meet consumer demand.
Our eCommerce tool can help you with a holistic view of your brand and alert you to mission-critical changes in price, stock, and competitor activity and reveal untapped opportunities.
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