For an e-commerce purchaser and/or entrepreneur, it is crucial to anticipate customer needs. Effective demand planning and accurate demand forecasting are therefore important pillars for e-commerce companies. For example, to control stock holding costs, prevent ‘lost sales’ and continuously meet customer demand.

To use demand planning properly, ensure that your purchasing and inventory management processes are set up effectively. Imperfections in your approach can lead to purchasing too few or too many products. As a purchaser, you have an important task to recognise signals that may indicate flaws in your current approach.

This article discusses seven important signals – warning signs – that you, as an e-commerce purchaser, want to recognise to prevent your demand planning from going wrong. By registering these signals in a timely manner and addressing them correctly, you can keep your purchasing and inventory management under control. For example, by using smart AI-driven purchasing and inventory management software, you can not only control processes but also optimise them and use them as a method to achieve growth.
Image 1 for Blog 7 signals for demand planning and demand forecasting

1. Unpredictable sales spikes

A common challenge for your purchasing department is unexpected fluctuations in sales. Unpredictable sales spikes can result in stockouts, meaning products aren’t available when your customers need them most. This can have a negative effect on both your revenue and customer satisfaction. By using forecasting correctly, you can better predict sales peaks and demand fluctuations. This allows you to effectively manage and balance your inventory.

2. High stock holding costs

High stock holding costs can have a major impact on your company’s finances and affect profitability. If you want to use every square meter of storage space, you want to prevent products from staying in your warehouse for too long. Unnecessary stock holding costs can significantly increase your business expenses. In addition, there is the risk that stock will become outdated, decay or – in the long term – prove unsellable due to changing trends.

To avoid high stock holding costs, try to use demand planning as effectively as possible. By optimising your inventory management in a smart way, you can save on storage costs and reduce the risk of outdated stock. By getting a grip on your inventory costs, you’ll have money left over that you can invest in other parts of your business.

3. Too many return requests

If your demand planning strategy and forecasts are not accurate, this often leads to a surplus or shortage of products in your inventory. This is frustrating for your customers, as they expect their orders to arrive on time and in perfect condition. If this does not happen, complaints and/or return requests can be the result. These things can significantly damage your customer satisfaction.

By using smart software based on algorithms and real-time data, you are able to predict customer demand more accurately. This way you ensure that you purchase the correct quantities of each product and that your customers receive the products they expect. This not only leads to a reduction in return requests but also to a significant improvement in overall customer satisfaction.

Curious about what to focus on to keep your cash flow moving? Find in the white paper six smart ways to get a grip on your supply chain and avoid that cash getting tied up in excess stock.

4. Lost sales

As a webshop, you want to take advantage of every sales opportunity and avoid ‘lost sales’. As a result of inaccurate forecasts and inventory levels that do not match customer demand, you may experience stockouts. Customers who are confronted with ‘out of stock’ notifications will be disappointed and do their next purchases elsewhere. The result? ‘Lost sales’ and – potential – customers that you will never see again.

You want to avoid ‘lost sales’ as much as possible. Accurate demand planning and demand forecasting ensure that products are available to your customers at the right time. This not only leads to an increase in revenue but also strengthens customer loyalty, because they know they can count on your shop.

5. Little insight into future trends

Especially in the dynamic e-commerce sector, anticipating future trends is very important. Without insight into emerging trends, creating a demand forecast is virtually impossible. Identifying market trends is a complex task, but enable you to proactively respond to changing consumer preferences, seasonal shifts and other factors that influence customer demand. If you don’t understand these trends, you risk not meeting the changing needs of your customers.

Integrate trend analysis into your demand planning and demand forecasting process. By using historical data and predictive models, smart software can identify emerging trends and help you have the right products available at the right time. This insight into future trends makes you flexible and responsive as a webshop.

6. Manual processes and errors

To make demand planning and demand forecasting really effective, you want to avoid manual processes. A manual method is not only time-consuming but also entails the risk of errors and delays. The use of Excel and manual data entry is very error-prone. This can significantly reduce the accuracy of your forecasts and hinder operational efficiency. By maintaining a manual working method you are not making optimal use of your strength as a purchaser.

By adding purchasing automation you can analyse larger amounts of data and create accurate forecasts faster. It ensures that you limit human errors to a minimum and eliminate delays in the decision-making process. This gives you, as a purchaser, time for strategic purchasing tasks.

7. low customer satisfaction

The ultimate goal of every company is satisfied customers. Poor forecasting has a direct impact on the satisfaction of your customers. Failure to meet – or exceed – your customers’ expectations often leads to complaints and negative reviews. Customers expect a perfect purchasing experience, and any disruptions in product delivery or availability can damage their perception of your brand.

With demand forecasting and inventory optimisation, you know that products will be available when your customers expect them. If your customers can rely on consistent and reliable service, positive reviews will encourage them to return for another purchase.

Curious about what to focus on to keep your cash flow moving? Find in the white paper six smart ways to get a grip on your supply chain and avoid that cash getting tied up in excess stock.

The role of AI tools in improving demand planning and demand forecasting

Advanced AI tools provide solutions for each of the seven signals that have emerged. Powerful algorithms and data analysis are used to improve the accuracy of forecasts. By bundling multiple forecasting models into one system, these tools can better estimate demand and optimise your inventory levels.

Using advanced AI tools for purchasing and inventory management offers a range of benefits for e-commerce businesses. These benefits include:

  • Greater accuracy of forecasting,
  • Reducing operational costs,
  • More efficient inventory management,
  • Minimising stock holding costs,
  • Higher customer satisfaction,
  • Competitive advantage in the sector.

If you choose to integrate advanced AI tools, such as the Optiply application, into your webshop processes, you can both save costs and increase revenue. This means that you are not only able to recognise those seven signals but also have the opportunity to tackle them structurally. This way, as a webshop, you are not only able to improve your demand forecasting, but you can also optimise your overall business performance.