Sales forecasting is the process of estimating what your future sales figures would be just by determining the number of products that you would sell in the upcoming days, weeks, and months. Think of it as the computation of your earnings, even if you haven't even sold your products yet.
They say that you should not count your eggs before they've even hatched, but in this case, there is a viable reason why.
Even eCommerce companies are required to do the same thing so that they would be able to estimate their selling efforts in the foreseeable future.
If you happen to be one of them, there is no need to worry. Below are just a few sales forecasting tips for eCommerce sellers.
1. Check Your Historical Data
If you have been in business for a while now, you might have a few months of sales history.
Before you get all excited, however, you should check the dates of your records. What you are looking for is the baseline of your sales.
Ideally, you should have data on the past 12-month period so that you would see any patterns that would help you predict how your sales will be in the coming months.
2. Look for Seasonality in Your Data
Seasonality refers to the changes in sales volumes that happen consistently in a certain period of time, usually tied to the changing of seasons.
Note that some businesses experience seasonality regardless of their industry. For example, real estate agents usually get a lot more clients when the weather is good.
But when the weather is not good, you can expect a drop in agents.
If you are not sure if any seasonality exists in your product or your industry, look at your sales data again. Are there any patterns that you can identify with the change of seasons?
If there is, use it to your advantage. For example, you can plan some promos and sales during the time when your sales are low.
3. Check the Productivity of Marketing Campaigns
Have you started running any marketing campaigns yet? If you haven't, you should be monitoring your website's traffic metrics closely.
If you're already running various marketing campaigns, then you should be monitoring your conversions as well.
Even if your eCommerce store is not yet generating a lot of sales, you should check how many people are clicking your ads, how many people are visiting your site after your ads get clicked, and how many of them are buying your products.
This will help you determine the effectiveness of your campaigns.
4. Check Other External Forces
You should also keep an eye on your competitors. Check their prices, their catalogue, and their marketing campaign.
This will help you determine if they're giving you any competition and if they're making sales in a way that you should be wary of.
If you can, find out what other external factors may affect your business, like the economy and the political climate.
5. Do an Assessment
If you've done all of the things that we've mentioned above, it is time for you to do an assessment.
When you do an assessment, you will be able to determine your sales forecasts for the coming months.
You should know your goals for the period and how your competitors are doing as well. This will help you project your sales figures for every month.
The sales forecasting process is not an easy one. It requires that you have a lot of information and data and that you have to be able to make sense of it all.
That said, it is easy to forecast your sales if you have been in business for a while now, as you will only be using your previous sales data.
However, if you are just starting out, use these tips, and you should be able to create a realistic sales forecast.
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