As an ecommerce shop owner, you know how complicated the business can be. Things change fast, and you must be on top of those changes and ready to pivot at a moment’s notice. That said, there are some tried and true methods you can follow to maximize your sales and bottom line.

This is where ecommerce demand forecasting comes in. When you make a point of doing this well, you’ll have a good handle on your customers’ demands including what they want, when they want it, and how you can fulfill that need. Here, we’ll tell you all about this type of forecasting, the benefits it brings to you, and how to go about estimating and predicting your ecommerce shop’s demand.

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What is Ecommerce Demand Forecasting?

Ecommerce demand forecasting is the method of estimating and predicting your business’ future demand for products or services — ultimately, sales. The idea here is that when you understand your sales trends, you’ll have a leg up and can beat your competition. The ultimate goal of ecommerce demand forecasting is to establish accurate benchmarks that guide your cash flow, inventory levels and marketing strategy.

Once you have accurate information you can make the right decisions for your business. These include knowing your niche’s market potential, how much stock to replenish and when, and how to price merchandise effectively, to get that healthy bottom line and profit.

Back In Stock is a great tool that can help you get these critical insights. We’ll get into it shortly, but first, check out the benefits of forecasting demand for your ecommerce business.

Why Bother? Benefits of Ecommerce Demand Forecasting

demand forecasting for ecommerce

When you implement demand forecasting into your ecommerce business, you set yourself up to reap a variety of benefits, like these.

Reduce Risks

Demand forecasting helps you spot, assess, balance and get past the risks inherent to growing an ecommerce shop. By making educated investments of money and time, this type of forecasting arms you with the background and information needed to:

  • Plan for new product launches.
  • Deal with inevitable competition, economic downfalls and seasonal effects on your business.

With demand forecasting, you can spot trends in your shop’s activity and sales by understanding what’s happened before and what’s going on now. If those trends consistently create a pattern, you’ll have an educated baseline of what will most likely happen down the road. And, if that baseline isn’t positive, the great thing is you’ll have the chance to avoid similar past mistakes. Reducing risk comes down to fully controlling the inputs to your business so that you can better control the outputs it creates.

Strategize Pricing and Sales

how to strategize pricing

Rather than view your pricing as static and fixed, it’s healthy to remember you have complete flexibility over it. Pricing is as open as makes sense for your business. Say you have a top-selling product that sells poorly during the winter, like a surfboard. Rather than decrease supplier orders in colder months, you could consider lowering the price during this time in the hopes of higher unit sales. (And with US ecommerce projected to continue growing over the next five years, why wouldn’t you want to?) That same surfboard could sell out at the height of the summer. With the same rationale, you could raise the price rather than order more units.

Improve Customer Awareness

When you maintain stronger cash flow, you have more freedom to invest in advertising and marketing. With that, you can boost your brand’s customer awareness through targeted campaigns to increase conversions.

Fulfill Customer Demand

Your customer data, such as engagement and purchase details, are invaluable to your business and should impact your digital marketing strategy. These insights are key to informing things like campaign launches, email marketing product features, advertising, seasonal procurement and inventory management. For instance, forecasts are used in inventory planning to establish customer demand for existing and new merchandise, demand by location, or demand by occasion or time of year, like Black Friday or Mother’s Day. Demand forecasting and research help you pinpoint existing and new products that will perform well at certain times of year — and within the right sales channels — to sell.

Of course, with benefits come challenges you should be aware of, which we’ll get into next.

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Challenges of Forecasting Ecommerce Demand

There are a couple of key challenges to forecasting the ecommerce demand of your business. For one, it’s entirely possible to apply the wrong methodology. It’s crucial to take your time and consider what you can choose from, like these common options:

  • General collective knowledge. Get input from all of your sales, marketing and procurement team members about what they see when it comes to sales trends, product performance, customer preferences and other related things.
  • Expert insight. Collect thoughts and insights from the market experts of your business’ industry and see what can be applied to your specific circumstances.
  • Historical analysis. Making predictions with historical data can help you make solid business decisions. For example, a product that sold in record numbers at Black Friday last year could mean it will do so again this year.

Another common challenge when it comes to ecommerce demand forecasting is the act of making decisions with incomplete data. This often happens when qualitative methods are used, too. For example, if you don’t have current, actual inventory or sales data, you might come to conclusions — and then decisions — that are outdated or irrelevant for your shop. As well, if you don’t have enough data, such as inventory for just one month, you simply can’t make informed choices. Bottom line: the more extensive your set of data, the more effective conclusions and informed decisions you can make from it.

Now that you’ve seen some benefits and considerations to forecasting your ecommerce demand, let’s dive into how it all works.

How Ecommerce Demand Forecasting Works

forecast demand

There are a couple of ways to estimate and predict your ecommerce shop’s demand.

Quantitative data analysis uses historical metrics and their fluctuations, like your previous sales, website analytics, repeat purchases, and number of customers, to find patterns and projected trends that help to estimate future sales. Data to establish these metrics comes from trends and patterns shown by sources like your order management system. On the other hand, qualitative forecasting focuses on market research-driven results like target market surveys and industry expert opinions, along with the economic circumstances of your local and international markets.

When you implement both quantitative and qualitative data in your forecasting, you’re better able to understand elements responsible for past demand spikes of a product or service and therefore more accurately predict its future market.

​​Coming up are some methods to actually put ecommerce demand forecasting into action for your business, including how to use Back In Stock for just this purpose.

Get Started with Ecommerce Demand Forecasting

With Back in Stock, you automatically capture consumer information and send them notifications when your products are in stock again.

Free 14-Day Trial

How to Estimate and Predict Demand for Your Ecommerce Shop

estimate and predict demand

Quantitative data analysis

Know your goals and time frame, plan ahead, and get buy-in

Before diving into collecting whatever data you can get your hands on, it’s important to think about your goals and objectives for your business along with the time frame in which you’d like to achieve them. This will help you plan out what you need to know and focus on getting that information. Then, get buy-in from your stakeholders, including your sales team, social media marketers, and company leaders. Everyone should be aligned so there are no unpleasant surprises later on.

Collect and record historical data and future projections

Demand forecasts should account for consumer purchase behavior, as well as your customers’ past purchase patterns. You’ll want as much data and information on both of these as you can get, so you can forecast as accurately as possible. For each of your products and services across all sales channels over the past 12 months (or as close as possible), it’s best practice to identify their:

  • Order dates,
  • Rates of returns,
  • Monthly sales averages,
  • Moving sales averages, and
  • Underlying and seasonal market conditions or trends.

You need to know where to seek out this data and utilize it effectively so your procurement strategy and forecasting are sound. As for historical customer data, your order management or CRM platform should tell you a lot. You can get reliable external sources for this information from existing reports and surveys. Or, partner up with a market intelligence or data analytics firm that specializes in consumer behavior research with statistics to back it up.

Measure, organize and analyze your data

measuring data

At this point, you’ll analyze your data to find trends and patterns from which you’ll make conclusions. If you’re a small enough operation, you can do this manually with an Excel spreadsheet or an ERP system. If not, you might need to seek the automated help of an AI-driven data analytics platform. These tools use machine learning to quickly capture insights from your data.

Bottom line: However it is you decide to measure and organize your data, ensure that data is tied to an easily accessible and repeatable process throughout your business. The models should feed into user-friendly, intuitive software, for whoever needs the information. And, this way you can compare your predictions to actual sales figures and make adjustments for the next forecasting period.

Estimate demand and adjust your operations accordingly

Don’t forget about your budgets and anticipated revenue as you work with demand forecasts. These should be adjusted so you know what to expect coming up and can minimize inventory or overhead expenses and plan how much you’re spending on production, marketing and other areas. Look at your forecasts and adjust your business operations to align with them. For example, if you’ve forecasted declining demand for a certain item, you can adjust your purchase order numbers in the future so you keep fewer of these items in stock.

Types of quantitative demand forecasting

types of quantitative forecasting

Here are a few methods of quantitative demand forecasting that you can try once you get the hang of the data you’re seeking and using to make forecasts. Consider what works best for your business.

Trend projection

The trend projection forecasting method follows the assumption that your sales trends from the previous year will repeat themselves this year, or you’ll have the same demand levels. For instance, if you saw a 15% spike in demand over the two-week period after running a Google ad, assume the same thing will occur again and order enough inventory to accommodate this.

Time-series analysis

Time-series analysis uses past sales data to draw conclusions about events and seasonality throughout the year. When you analyze exactly when a product or service sold well (such as a jacket around Black Friday), you can safely assume the pattern will repeat next year. Based on that, you can logically adjust your marketing tactics and stock levels.

Causal forecasting

Causal forecasting uses as much information as possible to predict accurate sales forecasts over the upcoming year. This includes data on sales, competitors, marketing activity, economic conditions, and even weather.

Barometric forecasting

In the barometric forecasting method, you’re using past economic indicators to predict future sales trends. For instance, if new high-rise apartment towers were built locally and you’re selling home decor items, you can expect higher demand in the six months following occupancy since that’s what happened before.

Qualitative forecasting

qualitative forecasting

The second way to predict your ecommerce shop’s demand is by qualitative forecasting. This includes predictions based on factors like market trends, the local and broader economy, impact from advertising, trends and new technology. Your own experience and knowledge can inform this, or things like surveys and industry expert opinions can help, too. Common qualitative techniques include:

  • Market research, using hypotheses to forecast future demand, is a highly systematic way to get a feel for your market.
  • Salesforce read, which is useful for shorter-term forecasts and smaller geographic areas. This technique uses the thoughts and opinions of your own sales team based on their knowledge and experience with your customers and the market conditions.
  • Delphi technique, a common method for demand forecasting, is asking experts in your field questions about specific circumstances or past experiences that help you analyze previous events and inform your forecast.

Get Accurate Predictions with Back In Stock, a Top Tool for Ecommerce Demand Forecasting

back in stock product reporting

It’s easy and convenient to get your ecommerce demand forecasting done with a solid tool like Back In Stock. When you sign up for out-of-stock products, add products to a wish list, or sign up for a pre-launch, you’ll instantly have a better idea of which products are most in-demand. This means you can better manage your inventory, ensuring that items aren’t overstocked or understocked at any time.

Plus, the Back In Stock app provides analytics and reporting on product demand with its conversion tracking, products report, customer notifications report, and admin email updates. These tools let you monitor your conversions, most wanted out-of-stock items, and recent notifications sent to your browsers and shoppers. When you take advantage of this functionality, you get to explore and assess your data further and – most importantly – make accurate demand forecasts for your future.

Back in Stock features

Back in Stock comes with some helpful features when it comes to understanding where your business and its inventory are at, gauging your customers’ interest in certain products, and forecasting future demand.

Analytics dashboard and reports

The comprehensive analytics dashboard and reports let you use data to maximize conversions of items you’ve just restocked.

Customizable email template

You can easily customize Back in Stock emails to your customers by making template changes with the “no code” settings or editing the HTML.

Instant setup

It literally takes seconds to install the Shopify theme integrations, and more can be created on request.

Customizable signup form and button

It’s easy to update and customize the text and style of your “Email when available” button and signup form to complement your Shopify theme.

Quantity required field

Find out an out-of-stock item’s demand with a “Quantity Required” field on signup forms for back-in-stock notifications.

Mailing list integrations

You can grow your store’s email list with an option for customers to subscribe when they sign up for back-in-stock notifications.

Instant and scalable email delivery

When an item is restocked, your customers will be automatically notified within one minute of it, even if you run a high-volume store.

Email delivery settings

There are many email delivery settings to pick from so you have total control over when and how your customers are notified.


Now that you know the benefits of implementing ecommerce demand forecasting, follow the steps above to try it for yourself with Back In Stock. When you can anticipate your customers’ needs early on, you’ll get ahead of your competition and meet those needs first. The end result? Satisfied customers who bring repeat and referral business time and again.

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