Selling and buying online has become mainstream in every possible way. We no longer reserve the practice for major experiences, but we now actually use online platforms to buy everything from groceries to industrial equipment. The world of e-commerce will consist of over two billion buyers worldwide by the time we reach 2021, making it one of the most competitive ways to run a business, albeit the most lucrative one, as well. In such a world, every single cog in the constantly working machine needs to operate smoothly so that the rest of the business can avoid issues. Therein lies the relevance of a single factor such as inventory forecasting in the entirety of any e-commerce structure.
To understand the reach and relevance of this element in your business, you need to understand all the different segments in which it plays a role, from determining your future profits, avoiding extraneous expenses, all the way to meeting customer demand. Let’s take a closer look at why your eCommerce store, no matter how big or small it may be, needs this particular feature within its operations to grow and succeed.
Regulating storage and warehouse facilities
When you don’t have timely and correct information regarding your inventory needs, you can hardly expect your staff or other departments of your business to function optimally – that especially applies to your storage facilities and warehouses. Not being able to forecast the demand of each different product you sell leads to making unsound business decisions, such as paying for an extremely overpriced storage facility that fits double the amount of what you actually need to manufacture and sell.
In turn, your warehouse management suffers on more than just your financial front. You’ll find that your workers on site will often have trouble receiving new inventory and handling remaining stocks when your business has little to no control. When you begin to use modern inventory forecasting tools, you’ll be able to choose and move to the most optimal storage facilities to preserve your budget.
Cutting unnecessary expenses across the board
Your inventory is your greatest asset and the key factor to determine the profitability of your entire business in the long term. However, just like with any other business, in the realm of e-commerce, you first need to invest in a spectrum of different processes in order to benefit from them financially. Simply put, you first need to manufacture, obtain, and store your inventory before you’re able to market or sell it. This is why the integration of your inventory forecasting with your manufacturing and sales makes all the difference for the bottom line.
Software solutions such as ERPAG combine the necessity of inventory management with manufacturing, sales, and more, so that you can rely on a single automated solution to make better business decisions. With such an all-encompassing solution, an e-commerce brand can actually have real-time control over its internal processes, all communications with vendors and suppliers, as well as all customer interactions. As a result, inventory forecasting backed up by other relevant information can help you cut extraneous production, shipping, and storage costs along the way.
Preventing overstocking and understocking
Keeping an eye on what you really need in terms of inventory means you continuously adapt to market needs. If your customers express more interest in a single product, and you actually monitor those trends and implement them within your own analyses, you can stay flexible and adapt your entire manufacturing cycle. That way, forecasting lets you prevent not being able to meet the current and expected customer demand, which means you will not lose loyal customers to brands that have that same product in stock.
On the other end of the spectrum, overstocking is another unwanted issue resulting from poor forecasting practices. Basing your e-commerce expectations on sheer guesswork without supporting your decisions with data leads to unneeded expenses, the stock that sits in your storage for too long, which can be extremely detrimental if you’re selling perishables. That directly affects your budget, your ability to satisfy your customers, and your ability to run your business smoothly every day.
Improving customer satisfaction
Forecasting has a direct impact on how your customers will feel about your brand, whether or not they’ll come back to your online store, and if they’ll recommend your business to others. To put things in perspective, businesses can lose over $40 billion due to poor customer service, which includes delays in receiving their goods, not being able to purchase what they want when they want, and pushy ads selling products they don’t need just because you’ve failed to sell your stock in time.
To provide excellent customer service, not just once, but repeatedly so, and inspire greater loyalty among your customers, you need inventory forecasting data to fuel your decisions. It will help you with your marketing and customer communications, tailoring personalized offers, and giving out discounts that matter to each customer that comes to your store.
For a single aspect of running an eCommerce business, inventory management sure runs deep with its influence. Before you run into any of the listed issues, you need to start relying on relevant forecasting data driven by actual needs and trends in your industry, so that your e-commerce store protects its reputation and your customers remain happy.
