Tips for Forecasting on Amazon

May 18, 2023

The Importance of Forecasting on Amazon

You’ve done the hard part: you have an excellent product and launched your e-commerce business on Amazon. However, selling online can be volatile: even after the turbulent start-up phase, navigating demand spikes and drops can be challenging if you are not fully prepared. Forecasting is an essential tool to ensure you are ready for the ebbs and flows of supply and demand.


Forecasting: Amazon vs. “Brick and Mortar”

Accurately predicting sales is critical for inventory management, pricing, and marketing. However, forecasting in e-commerce looks different than for brick-and-mortar stores, primarily due to differences in data availability. On Amazon, sellers have access to a wealth of automated data on customer behavior, sales trends, and competitor activity – all of which are essential for making accurate forecasts. On the other hand, brick and mortar businesses typically require more manual means of collecting data, which are time consuming to compile and analyze.


Forecasting Tools for Amazon Sellers

Forecasting on Amazon is simplified through tools that are a part of Seller and Vender Central dashboards, which are accessible to all Amazon sellers. The dashboard provides a breakdown of sales by product, marketplace, and time, as well as can track customer reviews and analyze traffic data. Amazon sellers can also utilize Selling Coach, which uses algorithms to analyze sales data and provide actionable insights to sellers on aspects of their business, like inventory.

Amazon’s tools, however, are based on consumer demand, and, as a result, they struggle to account for seasonal goods, promotional periods, and external traffic. Additionally, these tools do not include year-over-year comparisons, nor do they anticipate stock requirements or transit times for Amazon fulfillment centers. Despite these shortcomings, they can give you a simple starting point for data and help you forecast.


Basics for Forecasting on Amazon

To forecast sales on Amazon, sellers need to have a basic understanding of traffic and conversion rates, market trends, and competitor activity. Traffic data indicates how your customers navigate to your product pages and which of your advertising campaigns are most successful. Evaluate this data over time to predict how future campaigns will perform. Understanding the underpinnings of successful marketing campaigns will help you plan for the future.

Historical sales provide a baseline for forecasting. If you need to do so, manually tracking sales history month-by-month, allows you to evaluate the year as a whole in order to fully understand macro-level market trends. When planning for the future, these figures will be a guidepost for your required supply.
For sellers using Amazon fulfillment, track how many units were sent to Amazon fulfillment centers and make sure you did not miss any sales due to unavailable stock. This data can help you accurately integrate logistic requirements to maximize profits.

Additionally, analyzing market trends and competitor activity will help you more fully understand your e-commerce environment and how it might influence your sales. Use tools like Google Trends, monitor activity on social media platforms and “social commerce,” and watch Amazon’s Best Sellers list to track emerging trends – which can help you prepare and capitalize for potential surges.


Holiday Season Forecasting

Holidays, such as Black Friday and Cyber Monday can be a significant source of revenue, but only if you are prepared. Without proper forecasting, you could fail to take advantage of these peak periods, or get quickly overwhelmed due to poor planning. Analyze data from previous holiday periods to see whether your products are relevant to specific times of the year.

For example, if your products are popular during summer vacation, be sure to account for the surge in demand and ready your inventory ahead of time. Having enough stock on hand to meet demand, but not so much that excess inventory becomes a burden or costly, is an important balance.

Forecasting should go hand-in-hand with your marketing strategy. If you know your products are in demand during the holiday season, offer themed promotions or bundle deals, or create gift guides to help customers find products that perfectly match their needs.

Regardless of the occasion, successful e-commerce sellers must stay diligent and adjust to yearly trends in order to maximize their sales potential.


How ZQUARED Can Help

Running a successful e-commerce business is challenging; standing out in a crowded market and handling complex logistics often overwhelm businesses operating in the e-commerce space. Although forecasting requires front-loaded work, it is an essential aspect of any business strategy that will streamline your operations in the long run.

By partnering with ZQUARED, you can rest assured that your products on Amazon are handled by industry experts. ZQUARED ensures that all your product listings are optimized, MAP pricing is regulated, and core data is synthesized and easily accessible in reports. Spend more time focusing on your business strategy, and less time worrying about your Amazon channel by working with ZQUARED.