The holiday season has already begun and your sales are probably pouring in. However, are you really ready in such an amazing spike in sales?
Imagine this. A customer orders a product just to find out it has gone out-of-stock. Instead of celebrating a successful sales season, you would need to deal with lots of furious customers, answer their questions on social, issue refunds, etc. And, no matter how much time, resources, and energy you invest to make things right, your brand reputation will be damaged.
So, is there a way to plan your inventory proactively? The answer is inventory forecasting. Simply put, this is the process of predicting your inventory levels to fulfill future customers’ orders.
Increasing Customer Satisfaction
Customer satisfaction is your priority. As shopping online has become a mainstream activity, your customers expect their whole buying journey to be effortless. If they cannot immediately find or order the product they like, they will ditch your site and go to your competitors.
Surveys show that poor customer satisfaction leads to a greater churn, Namely, 1 in 3 customers will stop shopping after just one negative experience, while over 90% of customers would never come back after 2 negative experiences.
And, one of the main causes of customer dissatisfaction is missed delivery promises. These issues are often linked with poor inventory management, the lack of organization, and insufficient resources. With the help of inventory forecasting tactics, you will be able to track your sales, predict higher demand sales periods, and ensure you have enough resources during those months.
This way, customers can order and receive the desired product faster. Above all, by boosting their shopping experiences, you will encourage them to come back and turn them into brand advocates.
Optimizing your Production Cycle
There are multiple phases, from product planning, prototyping, and sourcing to manufacturing, costing, and storing, you need to go through to develop and monetize your products.
Precisely because of that, you need to observe your inventory data through the lenses of manufacturing, sales, and business analytics. That’s where enterprise planning software can help. For example, cloud platforms like ERPAG cover all critical business processes for small and medium-sized businesses. By understanding your supplier’s lead times, exact stock levels for each product, customer shopping habits, and so forth, you can make more informed decisions and reduce the cost of production, storage, and shipping.
Minimizing Overstocking and Overselling
Inventory forecasting provides more accurate predictions of future sales and the number of products you will need. Many inventory management tools let you track customers’ historical purchases and trends and manage your inventory based on them. For example, if you notice that customers are expressing more interest in a particular product, you will be able to restock on time to meet their needs. This is particularly important to those businesses working with suppliers with a long lead time.
Apart from increasing your sales, this practice will also improve customer satisfaction. They will be glad to see that the product they’re looking for is available on your site. For every visitor you lose by not offering the products they need, when they need them, you risk harming your brand image and receiving lots of negative word-of-mouth.
On the other hand, you will also prevent overstocking products. This is yet another problem that can seriously harm your bottom line, especially if you’re selling perishable goods or using extra storage.
Reducing Storage Expenses and Product Obsolescence
Overstocking also means you will need to use additional warehouse space for your products. This may lead to higher storage fees, affecting your profits. With inventory forecasting, you will understand the current market demands and order exactly what customers need.
Also, many businesses often get disappointed to find out that their once large investment is now a waste of resources. Products that don’t sell usually generate a poor return on investment and yet, increase your storage expenses. That’s exactly why you need to identify obsolete stock and remove it on time.
How to Make the Most of Inventory Forecasting?
Now that you know why inventory forecasting is important, let’s see what to do to improve it.
- Inventory forecasting shouldn’t be siloed. Encourage your teams to work together and share their data. Each group, from your marketing teams to finance and product development staff, have different insights that can be critical to improving your inventory forecasting processes.
- Equip your teams with cloud-based enterprise planning software that streamlines all ecommerce business processes, from inventory to sales, as well as provides higher security.
- Collect historical data and revisit your decisions in the future. For example, make lists of any trends and events that impacted your sales or production, such as holiday seasons, giveaways, promotions, and so forth.
- Use tools that let you track your stock levels in real-time. This is especially important for businesses wanting to check how accurate their inventory forecasting tactics have been. If your estimates were inaccurate, try to understand what caused the problem and fix your forecast as you go.
Over to You
Inventory forecasting plays a fundamental role in boosting your ecommerce brand image, reducing costs, and maximizing customer experiences. These estimates will help you identify the practices that work or don’t work for you, as well as help you understand your target customers, stay on top of the hottest trends, and provide your shoppers with more relevant and personalized offers.
Any thoughts on inventory forecasting? We’re listening!