Accurate forecasting is essential no matter what type of business you’re in. Forecasting helps you predict future revenue, expenses, net income, and profit. It allows you to better determine inventory and staffing needs, as well as lets you focus on becoming more effective at sales. On the flip side, inaccurate forecasts can increase pain throughout the business, leading to lost sales, over- or understocked inventory, and ultimately dissatisfied customers.
The Pain of Inaccurate Forecasts in eCommerce
Being able to peer into the future to determine sales isn’t necessarily a superpower (though it sometimes feels like it). You can use meaningful data insights combined with industry trends and collaborative efforts with your third-party fulfillment provider to create a better understanding of the future. Neglecting this important work, on the other hand, can be painful as with inaccurate forecasts can come:
- Resource miscalculations, which can lead to over- or understaffing, leaving people waiting for work or being sent home when overstaffed. Or, if understaffed, hustling to get orders out, which can rush pick and packs, increasing the likelihood of errors and late deliveries.
- Inventory instability is one of the biggest challenges of inaccurate forecasting or failing to accurately anticipate both surges and troughs in customer demand. These mistakes in forecasting can lead to either an over- or undersupply of needed products, which can impact orders (and customer confidence), profits, and cash flow.
- Compromise products, especially for health and beauty brands that must keep an eye on expiration dates. If you order too much, good, high-quality products may need to be sold at a discount, donated, or destroyed, which can not only impact your bottom line but also damage your brand’s sustainability goals.
- Decrease brand satisfaction can occur when orders are out of stock or delivered late, negatively affecting customers. It can also result in unhappy, overworked staff, impacting their pay and ability to support themselves and their families.
- Subpar supplier relationships as upstream suppliers can also be negatively affected by brands that need to increase or decrease material orders. This can lead to contract disputes and increased costs for goods in the future if your company has to expedite materials or rush shipments.
- Cash crunches as stock is one of the biggest investments and has a huge impact on cash flow. If you overstock inventory, you may be crunched to pay salaries, utilities, or other essentials to keep the lights on and the business running. Accurate forecasting can help you keep cash on hand to deal with increased sales and staffing needs rather than just sitting on product that hasn’t sold.
Improving your business’ ability to accurately forecast is vital, especially as you grow and the business landscape changes. Fortunately, you don’t have to do this alone. QuickBox provides transparent data that allows you to use historical and real-time ordering to ensure you have the right stock when you need it, understand and remove inefficiencies, and make smarter decisions faster.
Contact QuickBox today to find out how we can help you forecast more accurately and avoid these pain points, so you can focus on growing your business healthfully.