How would you like to see nearly a three percent increase in annual sales without running a single promotion or introducing a new product?
With proper retail demand planning solutions, you can reduce your stockouts and enjoy a sales increase of roughly this size, just like so many businesses have before you.
However, you can only enjoy the benefits of demand planning if you manage it properly: In other words, if you manage to avoid the common problems associated with demand forecasting for retail.
We’ll discuss the top three problems associated with retail demand planning. Then, we’ll give you all the tools you need to fix these issues so you can confidently plan for demand, reducing your need to fear stockouts, overstock, and more.
Before we begin to discuss the common problems we’ve seen online and e-commerce businesses struggle with regarding retail demand planning, we should first establish the answer to one question: Why is retail demand planning important for online sellers?
Demand planning in retail refers to analyzing past sales, customer trends, and more to help you meet upcoming demand for your customers without overstocking products. When done correctly, retail demand planning can feel like fortune-telling: Your data allows you to see the future demand for your various products and always order the stock you need when you need it.
Related: The 3 most important inventory metrics for online retailers
What’s so important about this fortune-telling superpower for your business? Demand planning efforts can help you avoid challenges like stockouts, overstock, and more. Surveys show that around 77% of businesses lose sales due to inventory management and demand planning issues like the ones discussed in this post.
Let’s look at the challenges many businesses face regarding demand planning—and how to solve them.
Many online and e-commerce sellers rely on multiple tools and systems to conduct their business. If your organization uses multiple systems and software solutions, you will need to find a way to accurately compile all of that data to create an accurate demand forecast.
Collecting information from multiple areas of the organization is challenging (not to mention time-consuming) at the best of times. When everything is formatted differently and there is no guarantee that all information is up-to-date or accurate, this process can quickly become a nightmare.
The easiest way to solve this problem for your business is to implement a solution that combines all your data in a single system. Not only does this prevent you from wasting time compiling data from multiple disparate spreadsheets, but it gives you the ability to present demand planning data in a simple-to-read dashboard.
Having all your data in one system reduces your margin of error when it comes to copying and pasting data into a single location and errors that tend to occur when you’re manually calculating and combining data by hand.
The second challenge you may encounter on your retail demand planning journey is getting your team to trust the data. Getting buy-in from your team regarding your demand planning efforts is essential because even the most accurate forecast is worthless if your team doesn’t trust the data enough to use it.
Related: What You Need to Know About Forecast Accuracy and Inventory Optimization
Implementing a new process or tool is only effective if your team uses it to its full potential. If your team ignores your retail demand planning software’s suggestions only to replace it with manual processes, resulting in inefficiency at best and human error at worst.
Communication is key to overcoming this particular challenge. You will also want to ensure you’re implementing a solution with a trusted track record of successful demand forecasting—a solution worthy of your team’s trust.
You can also increase team trust by giving parties in all departments access to the forecasting dashboard for transparency. Another helpful way of getting team buy-in is to record product meetings or bringing in key stakeholders and department heads into those meetings with any new software company you’re using to get this done. This is a great way to ensure your team knows about your forecasting software, key features, and how it works.
The last problem you may encounter regarding retail demand planning for your e-commerce business is unforeseen circumstances. Unforeseen circumstances are sometimes unavoidable in online retail.
Such circumstances may include supply chain disruptions, competitor changes that cause unexpected demand increases or decreases for your business, vendor pricing changes, and more.
Unforeseen circumstances are a challenge because they can cause it to appear that the forecast you’ve created is inaccurate and untrustworthy. This perceived inaccuracy can cause challenges related to inventory and stocking, making it more difficult to trust the forecast moving forward.
You can overcome the challenge of unforeseen circumstances by investing in a demand planning software solution that calculates demand using data from all points in your supply chain. You may also want to invest in a solution like Flieber that enables you to make real-time adjustments in the face of unforeseen supply chain challenges or disruptions.
Demand planning for your retail business can feel overwhelming, but by fixing the three common problems listed above, you’ll be able to better forecast demand across locations, warehouses, and channels.
To enjoy demand planning benefits like increased sales, decreased capital investment, and increased customer satisfaction, you need to implement a demand planning solution that works for your business.
Flieber’s demand planning and inventory optimization solution is designed for brands selling direct-to-consumer. We offer a simple-to-use solution that compiles your data and predicts future demand using machine learning and advanced analytics. You can also use Flieber for inventory planning, leveraging your forecast to consistently and accurately replenish your inventory with ease. To see how Flieber can help you with your retail demand planning needs, schedule a demo of our software today!