How Do I Forecast for My Shopify or Amazon Store?

Forecasting is one of the most important tools for running a successful Shopify or Amazon store. It helps you plan inventory, manage cash flow, and ensure you’re always prepared to meet customer demand without overstocking or understocking. But how exactly do you forecast for an eCommerce business that’s constantly changing? In this article, we’ll break it down step by step so you can create a forecasting process tailored to your store’s needs.

Why Is Forecasting Important for eCommerce?

Unlike traditional retail, eCommerce operates in a fast-paced, data-rich environment where trends can shift overnight. The stakes are high: if you overstock, you risk tying up cash and paying for unnecessary storage. If you understock, you lose out on sales and frustrate customers.

A good forecast can help you:

1. Stay Ahead of Trends: Predict which products will sell well and when.
2. Optimize Inventory: Keep the right amount of stock on hand, minimizing waste and maximizing profit.
3. Plan for Promotions: Anticipate the impact of sales, seasonal events, or ad campaigns.
4. Manage Cash Flow: Ensure you have enough capital to reorder inventory at the right time.

Step 1: Analyze Your Historical Data

Your first step is to look at your store’s past sales data. This is the foundation of any forecast. For Shopify or Amazon, you can pull this data directly from your platform’s analytics tools.

Key metrics to focus on:

• Weekly or Monthly Sales: How many units of each product did you sell over time?
• Seasonality: Are there predictable spikes in demand, such as holidays or special events?
• Promotions: Did certain sales campaigns or discounts drive a significant increase in orders?

Historical data gives you a baseline for understanding what “normal” demand looks like and how external factors impact it.

Step 2: Factor in Growth Trends

Next, consider how your business is growing. Are sales increasing steadily month over month, or are they tied to specific campaigns? For Amazon sellers, factors like listing optimizations or increased ad spend can boost sales, while for Shopify, growth might depend on new product launches or traffic from social media.

To project growth:

• Look at your average monthly growth rate over the past 6–12 months.
• Account for upcoming changes, such as expanding your product line or increasing ad budgets.

Step 3: Incorporate Short-Term Trends

For eCommerce, the last few weeks of activity can be as important as long-term trends. Customer preferences, competitive pricing, or even viral moments can create sudden shifts in demand. For example:

• Did a social media post drive a spike in traffic to your Shopify store?
• Is a competitor on Amazon running a discount that could affect your sales?

Incorporating short-term trends means adjusting your forecast to reflect what’s happening right now.

Step 4: Test Your Forecast with Weighting

A great way to balance long-term patterns with short-term trends is by using weighted forecasting. This means assigning more importance to certain data points, like recent weeks’ sales or seasonal trends, while giving less weight to older data that might no longer be relevant.

For example:

• Give 60% weight to the past four weeks’ sales.
• Assign 40% weight to historical sales from the same season last year.

By testing different weights, you can identify which combination provides the most accurate predictions for your store.

Step 5: Account for External Factors

External factors can significantly impact your forecast. Some of these are predictable, while others are not. Key considerations include:

• Seasonal Events: Plan for holidays like Black Friday, Cyber Monday, or Christmas.
• Promotions: If you’re running a sale or ad campaign, factor in a temporary increase in demand.
• Market Trends: Stay informed about industry-wide trends that could affect your category.

Step 6: Monitor and Adjust in Real Time

Forecasting isn’t a one-and-done task. For an eCommerce store, it’s essential to monitor actual sales against your forecast and adjust as needed. Platforms like Shopify and Amazon provide real-time data, so you can spot discrepancies early and make quick adjustments.

Some key tips for real-time monitoring:

• Check your stock levels weekly (or daily during peak seasons).
• Use alerts to reorder inventory before you run out.
• Regularly compare your forecasted sales to actual sales and refine your model if necessary.

Should I do it myself?

When it comes to forecasting for your Shopify or Amazon store, you might be tempted to handle everything yourself. After all, most platforms provide built-in analytics tools, and there’s no shortage of guides online to help you get started. However, forecasting is more than just crunching numbers—it’s about understanding the bigger picture, identifying patterns, and making decisions that align with your business goals.

Here’s why partnering with someone who has years of demand planning experience can be a game-changer:

1. Expert Insights, Not Just Data
   While software can analyze past trends, an experienced demand planner brings industry knowledge and intuition that tools simply don’t have. They know how to spot anomalies, account for market conditions, and adjust forecasts for things like promotions or supply chain disruptions.
2. Tailored Strategies
   Every eCommerce business is unique. A seasoned professional doesn’t just apply a one-size-fits-all approach—they build a customized forecasting model that aligns with your specific goals, product categories, and customer behavior.
3. Proactive Problem Solving
   Forecasting isn’t just about predicting the future—it’s about preparing for it. An experienced demand planner can help you avoid costly mistakes, such as over-ordering inventory or missing out on sales due to stockouts. They’ll also help you plan for unexpected challenges, like sudden demand spikes or supplier delays.
4. Time Savings
   Let’s face it: running an eCommerce store is already a full-time job. Diving into the complexities of forecasting, testing different models, and constantly refining them takes time—time that could be spent growing your business. By working with a professional, you can focus on what you do best while they handle the details.
5. Access to Advanced Techniques
   Experienced demand planners don’t just rely on basic forecasting formulas. They bring advanced techniques, like weighted forecasting, scenario testing, and even machine learning models, to ensure your predictions are as accurate as possible.

The Bottom Line: Taking Control of Your eCommerce Forecasting

Forecasting for your Shopify or Amazon store doesn’t have to be complicated, but it does require thoughtful planning and a balance of long-term and short-term strategies. By analyzing historical data, factoring in growth trends, and monitoring real-time performance, you can create a forecast that not only meets your customers’ needs but also optimizes your cash flow and inventory.

Start simple, test your assumptions, and refine as you go. With the right approach, you’ll always be one step ahead—ready for the next sale, the next trend, and the next opportunity.

That said, while it’s possible to handle forecasting on your own, the expertise of someone who has years of demand planning experience can make a significant difference. They bring the skills, insights, and strategic thinking needed to go beyond basic predictions, crafting forecasts that drive actionable results.

Think of it this way: would you entrust your marketing strategy to someone with no experience, or would you work with a specialist who understands the nuances of your business? Demand planning is no different. Partnering with an expert ensures your store is always stocked, profitable, and positioned to thrive, even in unpredictable conditions.

If you’re serious about scaling your business and making smarter, data-driven decisions, investing in demand planning expertise could be one of the best choices you make. Are you ready to take your forecasting to the next level? Let’s get started!

Schedule a Free Consultation