Demand projection, also known as demand forecasting, is a prediction process used to study, comprehend and foretell consumer demands for a corporate supply company, like an E-commerce Company, to make the most favorable supply decisions. The predictions are usually based on historical data collected alongside some other information and are used to forecast sales over the next few months.
The E-commerce industry is a highly competitive one and owners of such companies are always on the lookout for tips on how to stay a step ahead of other owners. Although there are several tips on growing your e-commerce company available on Luminablog, the process of demand projection has proven to be effective if you know how to do it right.
To project demands accurately, you need to set specific aims. You also need to gather and record data on shopping profiles to get an overall idea of the demand scale of your products. Once the data has been measured and analyzed, you can now budget as required.
Before you do all these, here are a few ways through which demand projection can help to grow your e-commerce company.
- It Improves the Efficiency of your Supply Chain
Based on the record of past sales, demand projection helps you to figure out the peak moments in your business; not just which product sells the most but also when it does. Such knowledge enables you to reach out to suppliers in time before the sales boom happens.
- The Accuracy of your budget is increased
Without the demand projection process, you can allocate funds to the wrong things at the wrong time. But when you deduce conversion flow from past data, you can make a budget that is concrete and feasible.
- Human Resources Management is made more effective
You can reduce labor during a low sales season and employ more hands when it is obvious a spike is about to occur. That way, your staff strength will always be at the right number, saving you the hassle of paying unused hands or being low on workers.
- Inventory Management is at its Best
You can be certain that your supply and demand routine is perfectly aligned to suit changing times and seasons. Supply orders are only sent when required and this reduces the amount of money spent on logistics compared to getting stocks replenished when they are not needed.
- Unnecessary Risk
Every business comes with its own risks. But what if you could minimize the risk that comes with running an e-commerce company? Knowing when consumer demands are high helps you allocate resources to the right channels, invest in other businesses instead of buying stocks you won’t be selling anytime soon, and most importantly, widens your profit margins.
Using outdated forecasting methods will not guarantee you the above-mentioned benefits. So you need to use accurate data and also make backup plans in case unexpected weather conditions, rival companies, and changes in consumers’ preferences interfere with your well-laid-out plans.