According to the recent Shopify report The Future of Commerce 2021 new stores created on the Shopify platform grew 71% in Q2 2020 compared to Q1 2020, and a record number of merchants added to the Shopify platform in Q3 2020.
The shift to online spending is also forecast to continue during 2021 with 79% of consumers said they will shop online regularly in six months’ time.
As this trend continues new and existing Shopify merchants will have to face the very real challenges of navigating the ever-changing landscape of meeting customer demand, satisfactory order fulfilment satisfying consumer preferences and streamlining inventory management.
Consumer demand can be fickle, dynamic, and volatile and ultimately a stressful issue for Shopify merchants.
Relying on manual processes, inaccurate data and human error can incur significant costs to a company. Being able to accurately predict which products are needed for individual stores or channels on a day-to-day basis is key to ensuring order fulfilment and optimum levels of stock.
Less than accurate sales forecasting can result in too much stock which increases the likelihood of additional space costs or obsolete stock. On the flip side inadequate stock levels can result in stock outs especially during promotional periods leaving customers feeling frustrated due to lack of order fulfilment.
There is no question that sales forecasting is complex and low forecast accuracy is a significant challenge. Demand planning and inventory forecasting becomes much more difficult when stock levels are hard to monitor or lack visibility.
The problem of not getting sales forecasting and inventory control right increases the risk and potential financial burden to Shopify merchants with missed sales opportunities, loss of revenue and increased costs due to errors.
The 2 key strategies to overcome these inventory challenges are:
1. Utilize machine learning for faster and more accurate sales forecasts
Without the proper sales forecasting processes in place, it is difficult to have the right number of products on hand at any given time. TrueStock’s machine learning technology can create sales forecasts more accurately and more quickly.
Some of the key features of this forecasting method includes the ability to combine many different types of internal and external demand impacting data types including historical sales data, pricing history, promotions, seasonal trends, the weather, events, and other marketing activities.
TrueStock’s machine learning algorithms process the data and can identify patterns and behaviours. Over time and with more data being processed forecast accuracy continues to improve.
TrueStock syncs daily with Shopify and provides complete visibility across all teams who need access to the information. Accuracy reports are also provided so that forecasting performance can easily be tracked and measured.
The Institute of Business Forecasting states that even a 15% forecast accuracy improvement will deliver a 3% or higher pre-tax improvement. With machine learning studies showing up to 65% increase in forecasting accuracy, leveraging this sales forecasting methodology can have a significant impact on revenue growth.
2. Couple with an integrated automated stock monitoring and inventory replenishment system
TrueStock also has an integrated automatic replenishment process that informs via sales forecasting about future inventory replenishment quantities, the costs of replenishment, predicted revenue and the costs of missed sales opportunities.
It is also possible to add alerts on inventory including the supplier lead time so merchants can replenish with ease. Shopify teams can also be notified when stock levels are low or at a buffer stage allowing them to take immediate action.
To stay competitive in a growing Shopify marketplace where e-fulfilment is king, Shopify business owners can be more strategic and smarter.
Merchants can now embrace the emerging sales forecasting and inventory replenishment technologies available to make these complex processes much easier, quicker, and more accurate than ever before.