Have you ever thought about how helpful it would be to know your sales beforehand? For D2C (Direct-to-consumer) commerce sales forecasting can be extremely helpful when planning the business future, allocating resources and of course when making data-driven decisions. In Ellis, it is possible to forecast your future sales with AI and all historical sales data from Shopify. Ellis can generate a sales forecast for up to 21 days to come. The more data and stable environment your Shopify Plus store has the more accurate the sales forecast will be.
How to read the sales forecast?
In Ellis, the sales forecasting data is visualised clearly and it is intuitive to read the chart. On the left side of the “start date,” you can see the sales predictions and total sales that actually occurred. The Green line depicts the estimated minimum sales, black the estimated maximum sales and turquoise the predicted total price. You can choose what information you want to look at by clicking the precise estimations to remove other predictions from the graph. Also when you move your mouse on the line you will see the date and the exact sum of that precise day for more in depth analysis.
As you can see the purple total sales line shows that the forecast is not completely in line with the predicted total price or in some months not even in the range of the estimated minimum and maximum sales. In other words, the sales forecast is not the absolute truth and it should be used as a guideline rather than something you can 100% count on going to happen. That is why it is important to know how to use the sales forecast feature.
Factors affecting sales forecasting
Now when looking at the future we can see the predictions based on your sales history and key events in the past. That will help e.g. with stock and analysing if there is a need for additional campaigns or if for some reason there are issues on the customer journey. It is important to consider seasonality and understand your business's seasonal trend cycle.
Depending on your business area, seasonality can show differently. For example, if you are a swimwear brand you probably sell more during the summer months than in the winter or if you present a chocolate factory there will be a peak close to the holiday season. In any case, most likely there will be moments when you sell more and moments when the sales are lower.
Advertising in different channels will obviously affect sales. Let us say you have for the first time a big Valentines day campaign that you advertise on social media and on emails. Since you have not had a big campaign at that time of the year, that is good to take into account. On the other hand, if you normally would have big and successful campaigns on Valentines day but this year you decide to try something else, then in the sales forecast it is better to look at the predicted lower bound just in case.
Example of used cases
First example where sales forecasts come in handy is a situation where you are experiencing a traffic spike. This can mean a spike in demand as well. If the volume is high and people convert to buyers, it’s essential to try to make sure the brand is well set for such a sudden spike in demand. You might want to make sure you have enough stock and that customer service agents are informed. In case of a situation with sold out stock, there should be a pre-planned strategy on what to do with all of the traffic, such as a waiting list for a new batch or pointing out related items in stock.
Second example is relying on an estimation which predicts a sudden downturn in sales. These are usually related to slower seasons or a public holiday. These estimations can be used to help to avoid a complete stall in sales. Quite many Ellis customers have managed to overcome a potential dip in sales when they have managed to quickly run a discount campaign or other related activity during a predicted sales dip season. To win a lousy looking prediction is a satisfying victory!
Key benefits of Ellis sales forecasting
- Look into the future, not just to the past!
- Easy-to-read sales forecasting that is smooth to take as a part of your routines
- Act before it is too late and predict potential sales dips
- Compare forecasts between multiple Shopify Plus stores or different markets
- Forecast also your Shopify POS sales to make sure you are one step ahead also in physical retail
Remember that you do not have to figure these out alone. We are excited to help you learn how to benefit the most from the sales forecasting tool!
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Written by Junior Insight Consultant Anna Kalliomaa