Learn how to use the Shopify account page for eCommerce inventory forecast and management.
For eCommerce stores selling products, inventory management is one of the biggest challenges.
Unless you have figured out a fool-proof inventory management model, there’s always a disaster waiting to happen.
Have you overstocked your Shopify store inventory? Or will you need more stock to meet demands? Do you have safe stock? And what should you do with dead stock?
Did you know the answers to these questions are hidden inside your Shopify customer account page?
It’s true! You can uncover insightful data from the Shopify account page to help you with inventory forecasting.
In this blog, you’ll learn these tricks of the trade.
Inventory forecasting is a way to predict and estimate future demand and product requirements. It is also known as demand forecasting. Companies use different types of data to predict future demand.
Inventory forecast enables companies to maintain a healthy balance between demand and supply of products and reduce stock outs or surplus inventory. It helps businesses make informed decisions regarding purchases, production, and distribution, among other aspects.
ECommerce stores use four main types of inventory forecasting methods. Brands may use either one of the methods or combine all. It depends on the type of their products and industry.
Quantitative inventory prediction involves using past sales data. The Shopify customer account page stores data such as past orders, returns, exchanges, etc. Using this historical data of a specific time frame can help you forecast future possible sales and needs for the product. Quantitative inventory forecasting may take into account various numerical data.
Qualitative inventory forecasting uses external data sources like market-impacting events, inflation, trade treaty changes, economic trends, etc. to predict consumer demand for specific products.
For example, inflation, war, and geopolitical changes can have a substantial impact on sales and hence, inventory forecasting. If you don’t consider these unforeseen events, your inventory might be unable to sustain when there is a disturbance. You could be left with unsaleable stock or find it challenging to fulfill demands.
Another type of forecasting model for eCommerce inventory management is trend forecasting. It considers changes in product demand, consumer behavior, and buying trends to forecast inventory requirements. A simple example of this could be a new style of shoes in high demand that took the market by storm.
Trend forecasts use past sales data to analyze sales patterns/numbers variations over extended periods instead of seasonal demand swings. The Shopify customer account page data can be helpful in trend forecasting.
Demand forecasting uses seasonal inventory data and information on upcoming events. The timings of sales, for example, the holiday season, Christmas and New Year time, and weather conditions, can all impact seasonal forecasting.
You can create your projection using historical data from different seasons. Consider analyzing data from many years for best forecasting. You can collect this data from your Shopify account page.
Pro tip: Most online retailers divide their seasonal statistics into quarters.
There are many benefits to getting your inventory forecast calculation right. Here are some of the key benefits.
Inventories require a lot of capital resources—for example, the stock itself, storage facilities, warehouses, insurance, packaging, and transportation. And so, everything comes down to how efficiently you manage your inventory. You can avoid extra expenses when you get your eCommerce inventory management right.
Inventory forecasting assists firms in meeting customer expectations by ensuring that products are continually available. Businesses can prevent consumer displeasure and significant sales loss by preventing stockouts and backorders.
Additionally, accurate inventory forecasting enables companies to manage consumer expectations and provide precise delivery predictions, helping to build customer loyalty and confidence.
Proper inventory forecasting helps Shopify stores optimize their procurement, production, and distribution operations by knowing which products will likely be in high demand. This helps maximize the use of resources, including manufacturing capacity, storage area, and logistics for transportation.
Your Shopify customer account page is a goldmine. But only if you can use the data intelligently. In this section, you’ll learn five ways to use data from your customer account to better your inventory forecast.
Example of a customer account page.
Whether you use order history data or just let it sit in the Shopify customer account page, it can make a massive difference to your eCommerce business success. Data-driven inventory prediction can help you avoid guesswork and work with calculated numbers. This helps avoid losses.
The order history section stores information about customers’ past orders. You can use this information intelligently in many ways.
- Extract data about specific products. For example, if you sell stationery, orders for notebooks in April. Or orders for A4 size sheets in the last six months. You could match the result with the inventory you started with and determine how much you should stock for the future. Such historical data can help you segment using various parameters for each group of products.
- Use return and exchange data. You must keep in mind that not all orders placed are fulfilled orders. Some may have been canceled or returned or exchanged. For better accuracy and efficiency, you must collect and analyze the return and exchange data from the order history section of your Shopify customer account page.
- Identify order patterns. Sales on your Shopify store don’t always follow a linear pattern. They may be more in some months and less in slow periods. By understanding patterns, you can know the high-demand months and be prepared.
40% of consumers think the wishlist feature enhances their shopping experience. That’s because they can create a personalized list of products they want to buy. In addition, they can wait for discounts and buy the products at a lesser price.
But there are other reasons customers use wishlists.
For example, if products are out of stock or if you’re going to launch a new product, customers might add them to Shopify wishlists.
So, ensure you have the wishlist feature on your Shopify website, and you enable customers to use it easily. One of doing this is to make the wishlist a part of the Shopify customer account page so customers know where to access their saved products.
Now let’s understand how you could use Shopify wishlist data to predict inventory.
- When you’re about to place wholesale orders for specific products to restock your inventory, consider the number of pieces customers have added to the wishlist. This will help you ascertain an accurate number, and you won’t fall short when the demand arises.
- If you’re launching and promoting a new product, you could refer to your Shopify wishlist data to determine how many of the products you must stock or produce (in case you manufacture them). This data can also help you manage your production, materials, distribution of resources, etc.
Reorder is a feature that allows customers to place repeat orders with ease. This feature enhances the customer experience by making it quicker and more convenient to place repeat orders, especially for recurring items.
Here are some use cases of how to use reorder data from your Shopify customer account page to predict inventory.
- Say, you sell beauty products; customers would most likely place repeat orders of the same items. You could use the reorder data to determine the intervals at which customers place orders. This will help you understand the demand and manage your inventory.
- eCommerce stores also use the reorder feature to send replenishment prompts to customers to boost sales. This, too, can indicate product demand. You can determine demand based on the alerts you have sent to customers.
Future demand forecasting requires more than past sales data and information about external influences. Use information from within your different teams for inventory forecasting.
Say, your Shopify store marketing team has been running marketing campaigns to promote a specific product. If the campaigns are performing well, there surely will be more sales of that particular product.
Conversely, if you run a marketing campaign for a product in one year, but it is not going to be rerun, the sales of that product might be lower. And hence, you would ensure you don’t over-stock that product this year.
- To be ready to meet increasing demand due to a successful marketing campaign, incorporate internal planning into your inventory forecasting.
- Encourage open communication between departments so you can consider things like internal capacity and how marketing efforts may affect future inventory requirements.
- Understand which data from the Shopify customer account page could be helpful to inventory planning. For example, if there are discount campaigns, consider those when working on your inventory forecast.
Another feature you can use well to support your inventory forecasting is recently viewed products.
Did you know most customers view a product at least five different times before purchasing it?
This tells a lot about customer behavior and patterns of behaviors converting into sales. And you can use this data for your inventory planning.
For example, if you see a significant number of customers viewing a particular product, it will most likely be one of your star products. It makes sense to plan for it in your inventory.
In addition, say your marketing team runs a discount campaign based on recently viewed products as a personalization tactic. You should include the campaign performance data in your inventory planning.
Lastly, one crucial inventory forecasting best practice is to remain flexible.
Examine the accuracy of your inventory estimates in relation to consumer demand. You might need to change your data inputs or inventory forecasting techniques to fine-tune your outcomes.
Even if you feel confident in your inventory forecasting approach, compare your demand forecast to the outcomes and make any revisions.
Since the eCommerce market goes through many ups and downs and continuously evolves, so should your inventory forecast model.
You may use the above inventory forecast models as standalone or combine them. In addition, you must also look for other ways in which data from your customer account page can help you manage your Shopify inventory better.
However, no matter how efficient your inventory management skills are, you will need a Shopify customer account page app to run the above strategies, which helps you collect data, analyze it, automate tasks, and optimize your store.
Explore Flits Customer Account Page App. Its add-on features, such as store credits, wishlist, reorder, and recently viewed products, can help you calculate inventory forecast efficiently.