When selling products online, you must meet the customer’s demands. It is a delicate balance since having large stock means no cash, and having no stock to meet customer’s request leads to order cancellation and negative feedback. So, how do you maintain the balance?
If you only had 200 shoes to sell online, and you sold all of them within an hour, then how do you truly understand the demand? Therefore, inventory forecasting remains a great tool to help online stores manage their stock. Are you interested to know more? Read here.
What Is Inventory Forecasting?
To understand what it is, think of it this way. We all love to watch the weather forecast, right? We get to know how the weather condition will be tomorrow or in a week. That helps us know what to wear and what to carry throughout the current week. So is the case with inventory forecasting.
Inventory forecasting is nothing but making an informed prediction about how much stock you will need. It is a situation where online store owners calculate the inventory that they need to fulfil future orders. Well, it includes the use of historical data, i.e. past selling data, planned promotions, and much more.
Every entrepreneur tries to keep the cost of operation down while making customers happy at the other end. Inventory forecast is a powerful tool that creates a win-win situation between you and the customers. How is that so?
Why is Inventory Forecasting Important?
In 2017, almost 34% of businesses shipped their orders late just because the product was out of stock. Thus, in today’s world, the success of an online store depends on the correct forecasting of the inventory. The following are the top benefits of inventory forecasting.
1. You Need Less Stock on Hand
Stock forecasting helps you wisely spend your cash. It enables you to create a balance of optimizing stock levels while still managing the cash flow. In short, it means that when you do a demand forecasting, you can avoid having a lot of products in the warehouse. Here, working with a fulfillment center such as NextSmartShip helps a lot.
NextSmartShip understands the variations in inventory levels. That is why the company works to get your inventory ready for your customers immediately after they place an order. The company offers free warehousing for 90 days. It gives you ample time to talk with suppliers to bring products to the warehouse for inventory management.
2. You Make More Sales With Less Stock
The fantastic thing about online selling is that the buyer does not have to know whether you have the product in stock or not. For SMEs, inventory forecasting is an incredible starting point since you don’t need to put all your cash on products that may not sell.
Using historical data, current sales, and planned promotions, you can identify a reorder point. It is a formula that tells you “when” to order the item. Check the following formula and do some math, you will get the reorder point.
Reorder Point = (Safety Stock)+ (Lead Time Demand)
Check this article for more information about the formula
So, if your stock falls to this level, then it’s time to reorder it. NextSmartShip offers a central place where you can do your inventory management. The company keeps track of real-time updated data to make sure you never run out of stock.
3. You Have Less Workload
Inventory planning is tiresome and time-consuming, especially if you have multiple online stores. Continually checking your stock, getting reminders of warehouse charges, and worrying about what to do with stock on the shelves. You can avoid all these troubles by doing an inventory forecasting.
Here, you will do a demand forecasting first, and then check your stock levels to see if they can satisfy customer’s demand. Once you do that, you can place an order to your supplier, depending on the outcomes.
At this point, NextSmartShip offloads you all the stress. With its easy to use fulfillment system, you can manage all your inventories by streamlining the supply chain and get products to customers fast and easy.
4. Efficient Production
It is the goal of e-commerce owners to have seamless transactions after launching new products online. Inventory forecasting helps in reducing production and warehousing cost.
Working with an order fulfillment center like NextSmartShip makes it even easier for you. The company has an integrated system to help their customer get products as soon as they place an order.
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Best Methods to Do Inventory Forecasting
Now that you know what is inventory forecasting, and what benefits it has, how do you make sure you get things right? Forecasting inventory is a kind of guesswork. It can either work well or fail, depending on how you do it. So, given below are the best practices you can apply in your inventory forecasting.
Work as a team
Hey, you cannot do it alone. You need to work with your suppliers, order fulfillment center, and other people in your supply chain. NextSmartShip offers an inventory management system where the users can integrate multiple suppliers and have the whole supply chain on one platform. That way, your work becomes more manageable.
Manage Your Operations and Finances
Inventory management requires you to have all historical data in place. That’s because you use the information, together with base demand and other external forces, to predict future sales. Sometimes, you need to make large orders, mainly when you sell seasonal products. Therefore, you should also have standby finances.
Be Keen on Details
Here, tiny details matter. Customer trends, periodic sales, and seasonal changes matter a lot when making an inventory forecast. A slight mistake can lead to having a massive stock in the warehouse. Take notes, revisit your strategy, and always use your data to predict future sales.
Always Be Aware of Your Stock Levels
Integrated systems will help you in this. You can do your inventory management by tracking what the supplier is bringing in and what is going to customers. That way, you can identify your reorder point and make new purchase orders depending on your inventory forecast.
Make Use of Technology
Using the right software to computerize your operation helps a lot. Data management, record keeping, and inventory planning require you to have software that is easy to use. NextSmartShip provides an easy to use and up to date software to its customers.
Reduce Storage Cost – Claim 90 Days Free Storage!
Inventory handling is expensive these days, especially for small businesses and seasonal product sellers. NextSmartShip wants your start to be more relaxed. For that, we give 90 days of free storage time for any items in the automated warehouses. That gives our customers, especially those who sell seasonal products, ample time to advertise and sell items without the worries of warehousing costs.
It is tested and has worked. Check out the case study of one of the NextSmartShip clients who sell own Strapins products online. According to the report, his sales shot by 300% after opening an account and getting the 90 days of a free storage facility in the warehouses. Bill Brown says that he is delighted with the attention and exceptional customer service that NextSmartShip employees give him whenever he contacts them.
That is what NextSmartShip is all about. The company strives to give a seamless experience to its customers by offloading storage costs that increase operating costs and decrease profit margins.
Over to You!
In short, inventory forecasting is a prediction of future sales. It is a way to calculate the warehouse stock level depending on your past transactions. Using your base demand, historical data, and planned promotions, you can place an accurate stock repurchase order that is enough for your customers. That leaves you with happy customers and money in hand to handle other business matters.