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Ecommerce and the Importance of Forecasting

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By Sponsor

8 Nov 2021

Business

Ecommerce remains a complex, intricate business - even in today's day and age. In order to succeed, not only do e-tailers have to offer the right products at the right time, in the right place for the right price, but they also have to remain agile to any changes in the market. As the global ecommerce market continues to grow exponentially, knowing what customers want and when: remains vital for success. In the past, "seasonal peaks" around key dates, such as holidays like Thanksgiving or Christmas, or the end of the season for fashion retailers, helped ecommerce businesses plan their inventory and warehousing accordingly. By looking into previous trends to see what type of stock shifted and when ecommerce companies could try and predict how future peaks would affect their business. However, these peaks are shifting, with many seasonal sale peaks, for example, becoming longer. With many fashion e-tailers launching several collections a year, the idea of an end of season sale is changing, making it more difficult to predict future demands for certain products. As the concept of "peak season" continues to change, what can e-tailers and online businesses do in order to know what consumers want in a week, month or year?

This is where the importance of forecasting comes in. A process that predicts the future demand for products by using historical sales data, which can be used on both new and old products, demand forecasting is vital. An ecommerce business can track patterns and trends by studying their order management system for sales data and then estimate future sales and how they may vary. While some online companies categorize their forecast models on a macro-level, which is the broadest context, others prefer micro-level forecasting, short-term or long-term. Depending on what sector the ecommerce company is in, fashion companies, for example, may invest in short-term forecasting as product offering is seasonal and still fluctuates depending on the time of the year. Without the correct model of forecasting in place, ecommerce companies can face a plethora of complications, ranging from stock and inventory problems, to a shortage of warehousing staff and returns issues.

Not only does forecasting help e-tailers provide customers with the products they want, but it also helps keep them ahead of any potential competition. E-tailers can increase inventory on certain products before stock levels get too low during a sale for example and ensure hot-ticket products sell-through. This keeps customers happy while preventing them from going over to rival brands for similar products. At the same time, accurate forecasting can also help ecommerce businesses reduce financial risk and increase financial decision making. For example, previous sales data may indicate that new products take longer than expected to start selling in larger volumes, so e-tailers can choose to invest in less stock when launching a new product or line. Forecasting can also help ecommerce companies with pricing strategies, as historical data with market research can indicate which products are in demand at the moment and how much typical customers would be willing to pay for them. However, one of the main areas that forecasting can greatly benefit ecommerce companies is inventory and warehousing expenses. Global fashion fulfilment expert Modexpress seeks to help its ecommerce clients and merchants with their forecasting models to ensure they retain all the flexibility and agility they need to keep their customers satisfied.

Offering accurate inventory management solutions that provide real-time insights into product inventory, Modexpress can help e-tailers increase or decrease their stock levels in line with their needs. Its state-of-the-art management information systems offer up-to-date overviews of stock levels at all times, as well as insights into turnover rates and return percentages. This gives e-tailers more flexibility to respond quickly to market developments. Keen to optimize space, Modexpress operates from various warehouses in strategic locations to shorten "time to market" for products while using its space as efficiently as possible. At the same time, Modexpress also offers assistance with backlog management, expectation management when it comes to busy periods and returns. Although returns cannot be forecasted, Modexpress processes returns with great care, checking to see if they are complete, undamaged and still in new condition before being categorized and processed. "Fast and reliable returns handling is as important as outbound shipping," says Cor Noorlander, CCO of Modexpress. Serving all channels from ecommerce to stores and outlets from its warehouses, Modexpress helps keep stock management costs low while providing maximum flexibility.

Apart from its years of experience and expertise, what sets Modexpress apart is its dedication to supporting its staff. In order to fully support its customers, the logistics firm ensures its warehouses are always sufficiently staffed, working with several in-house and external agencies to procure the finest staff. During the busier seasons, the firm ensures all new staff are properly trained and up to date with all the health and safety requirements to keep processing orders and managing inventory, no matter what time of the day, month or year. "The upscaling and training of staff is of essence to meet any seasonal challenges​​, like Black Week," adds Noorlander. "Forecasting on basis of historical data contains always contains some risk elements​​, but in combination with our solutions e-tailers are likely to succeed."

For more information, visit: Modexpress

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