INVENTORY MANAGEMENT | 4 minute read
Forecasting sales and inventory levels is the secret ingredient to sustainable growth for many online businesses. Anticipating future trends for your business is key to being prepared for changes, maintaining streamlined operations, and maximizing profitability.
While there are many inventory and sales forecasting methods out there, it can be difficult to know where to look for the most accurate information. The good news is that by utilizing the right tools, you’ll have plenty of valuable data at your fingertips.
Simply put, sales forecasting helps with business planning, budgeting, and goal setting. Once you have a good understanding of what your future sales could look like, you can begin to develop an informed procurement strategy to make sure your supply matches customer demand.
Through sales forecasting, you can also identify and ideally rectify any kinks in the sales pipeline ahead of time to ensure your business performance remains robust throughout the entire period.
While you might think you can use a one-size-fits-all sales forecast formula to predict your future sales, the reality is that most eCommerce businesses’ sales are impacted by a number of factors – such as variability of sales channels, changes in inventory, seasonality, and other considerations – that can complicate simple forecasting methods.
Utilizing a customizable template like TradeGecko’s sales and inventory forecast model allows you to input the necessary data ahead of time, with all the forecasting calculations done for you. From here, you can forecast sales, costs, and revenue in the one place, as well as project your sales by channel, so you can determine where to focus your marketing efforts and other investments. Taking the manual processes out of forecasting leaves less room for error and frees you up to start planning for the future.
Most eCommerce business owners know all too well that too little or too much inventory can be detrimental to operations. Buying too much inventory can have a significant negative effect on cash flow and earning potential, while having too little stock can mean customers are unable to make purchases, resulting indecreased sales.
Accurate inventory forecasting can have a big impact on the inventory management process and makes sure stock levels remain at an optimal level. Keeping just enough inventory on hand can also reduce tax liabilities by lessening the amount that needs to be subtracted from deductible expenses – meaning you’ll have more cash to invest back into the business.
Inventory levels can be impacted by cost prices, changing products, supply chain issues, and many other factors, which means making assumptions about upcoming inventory purchases can be difficult without the right tools.
TradeGecko’s sales and inventory forecasting model can be used to input specific inventory data including:
After inputting this information, you’ll be able to project inventory levels over a defined period and make adjustments. Being diligent about tracking and predicting inventory means you can purchase new inventory with confidence and keep stock levels at an appropriate level year-round.
Ultimately, sales forecasting and inventory forecasting go hand and hand, which means it’s important to stay on top of both if you’re serious about growing your business. You might know how many theoretical monthly sales you’ll receive over the next year, but if you run out of stock, those sales won’t eventuate. Conversely, you need to understand sales projections to ensure you have the right inventory levels to meet customer demand.
With TradeGecko’s forecasting model you can easily manage and customize both in the one place – giving you a whole picture of your business growth. Download the free sales and inventory forecast tool today.
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See also;
Sales & Inventory Forecasting Model: How to use this free tool
How to get your business ready for seasonal sales periods
How to calculate finished goods inventory
