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Why Inventory Forecasting is Important for eCommerce Success

Guest PostGuest Post
November 21, 2017

Editor’s note: This is a guest post from Nick Maglosky, CEO of ecomdash.

There is nothing worse for an online business than to run out of stock. It doesn’t matter how great your marketing is, or how appealing the website is, if you run out of inventory, potential customers will go to a competitor to find it.

That’s why it is crucial to plan in advance when selling merchandise online. Inventory forecasting is important. Using a combination of sales history, trends in sales, and the average lead time needed to receive new inventory, will give you a fairly accurate reorder point for every product.

Top Reasons to Use Inventory Forecasting

Inventory forecasting is a key factor to the success of your ecommerce business and the following are a few of the benefits:

Customer satisfaction

It’s extremely important to keep your customers satisfied. Companies lose an average $41 billion a year due to poor customer service. The main reason for customer dissatisfaction is shipping speed and missed delivery promises. Most delivery issues are due to poor inventory control, disorganization, and lack of resources. Inventory forecasting can help you stay organized and ensure you have enough resources during those months with higher demand.

Overselling and stock outs

Stock outs and overselling are two main reasons for loss of sales. Inventory forecasting can prevent overselling by giving a more accurate view of future sales and the amount of product needed. This is essential, especially if you are using a just-in-time ordering or buy from suppliers with long lead time. Boon Koh, an ecomdash customer, could stay on top of his exponential increase of sales on Amazon by using our forecast report to predict when to restock. Multichannel selling is easy with proper inventory management. Forecasting helps you know when and what to order.

Lower storage fees

Inventory forecasting, when done effectively, will help overall inventory management. You will have the stock that is needed, not too little or too much, to fulfill your customers’ orders. That means you will not be using storage space in a warehouses that isn’t needed. It’s easy for retailers to keep too much stock so they don’t run out. This leads to unwanted storage fees that cut in to your profits. Accurate inventory forecasting means that you order exactly what is needed.

Reduced product obsolescence

Another benefit of inventory forecasting is that you will be able to easily identify obsolete stock and repurpose or remove it promptly – thus lowering both direct and indirect costs associated with keeping it. Having an inventory forecasting process means that you won’t order more stock that isn’t selling. You can identify slow-moving stock and plan campaigns to get rid of it.

Improved pricing and marketing strategies

If you run multiple promotions at the same time, inventory forecasting will help you see the impact those price changes have on revenue and gross margin dollars. It also improves the flow of your inventory. Understanding how promotions and marketing affects your bottom line will allow you to adjust or tweak strategies to increase profits.

Revenue forecasting

When you know what products typically sell and when, you can accurately forecast sales revenue as well. This helps you manage cash flow. Utilizing inventory forecasting positively affects many different areas of your business including sales, marketing, procurement, advertising, and others. All of those areas have the potential to eat available cash, but with proper forecasting, you can minimize unnecessary expenses.

Accurate budgeting

In addition to freeing up cash, inventory forecasting also allows you to accurately budget. The better you forecast demand and the timing of sales, the better you can pinpoint how much and where those funds will be directed. By not wasting money on obsolete stock and warehouse fees, you will have additional funds to spend on marketing the business.


Inventory forecasting is important for all retailers. Being able to anticipate sales and reorder estimations gives you better visibility into the health of your company. When you have a good grasp of it, you can allocate time and money to other important areas of business operations, leading to a more successful and profitable online business.

To learn more about ecomdash and try it for FREE, click here >>

Nick Maglosky, CEO of ecomdash
Ecomdash is a smart, multichannel inventory, order, listing and shipping software for online retailers. Nick is passionate about small to mid-sized businesses and all things eCommerce, and enjoys researching innovative ways retailers can compete online in an increasingly diverse market.

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