Forecasting for Business Success on Amazon: 3 Things To Know
As an Amazon seller, forecasting for business success should be a priority if you want to thrive.
Building plans and forecasts can lead to creating a business that grows proactively.
And while the best time to do forecasting for business would have been last year, it’s better to start now.
So today, we’ll share tips on how you can do forecasting and planning for your Amazon business for 2022.
What is business forecasting?
Business forecasting is used to predict how your business performs in the future. These can include sales, expenditures, and profits the business can make in a certain period.
The goal of forecasting is to develop better business strategies based on data collected from previous campaigns.
It also helps business owners to determine how to maximize and divide their time, energy, and resources.
Forecasting allows you to realign your goals with current trends. It lets you increase your chance of success and surviving competition.
There are different techniques you can use in business in general: quantitative and qualitative forecasting.
Quantitative forecasting focuses on measurable data. Most of the time, this strategy is used for long-range forecasting.
On the other hand, qualitative forecasting relies on predictions by industry experts. It can be used to anticipate trends without sufficient historical data.
These can include market research, polls, and surveys conducted with consumers on specific products and services.
For Amazon businesses, accurate forecasting is critical in ensuring your business’s success.
It ensures you have enough to cover potential demand and also manage hidden fees better.
The good thing is, Amazon provides forecasting tools in Seller and Vendor Central. These tools can help you predict trends based on consumer demand.
However, it doesn’t account for seasonal goods, promotional periods, and advertising on and off Amazon.
It also doesn’t give you an idea if you are still aligned with your purpose.
That’s why you should be assessing your goals and doing forecasting for your business regularly.
This way you have more control over the progress and direction of your business.
Setting goals for your Amazon business in 2022
Some sellers go with hunches while running their business. And somehow, it works for them.
That might be good for a time. But it won’t be good for your business in the long run.
Setting SMART goals for your business gives you a ballpark figure of financial goals to strive for.
Ask yourself, how much revenue do you want for the whole year? What profit do you want to get for that?
This will give you a benchmark of strategies you need to take and reverse engineer it so you could hit your revenue and profit goals for 2022.
Take a look at the data you have for 2021. Then think of the reasonable numbers that might be hard but not impossible to get.
How do you reverse engineer your goals? The best thing to do is divide your numbers per month.
Put a game plan on how much you want to sell for that specific product by assigning a target value for each.
On a spreadsheet, map out your products and add your revenue and profit goals for each month of the year. Then add up the product’s data for each month to see what your monthly goals are for the business.
Then use the formulas in the sheet to create a forecast of what your annual goals should be in the business.
This will give you ideas on what strategies to improve to help you hit these numbers per month.
Do you need to add more products to hit your goals? Or is optimizing the products enough to make it happen?
Forecasting sales for your brand will help you understand the growth percentages you’d want to hit. It will also give you an idea of how to run your Amazon business during seasonal periods.
It also helps to think of possible setbacks that might affect your business. This way you can prepare for things that might slow you down.
It’s best to set goals that stretch you, so you could keep on challenging yourself to be better.
Analyze your cash flow, time, and energy
Once you’ve set your goals, it’s time to check if your cash flow can support these goals.
Always ask yourself, how much budget do I need to make it happen?
One truth is, it always takes time to get the results you want in any business.
Reasonably, it’s going to take you at least six months to get a workable product live on Amazon. And for your first product, you want to make sure you’re doing things intentionally.
This way you’ll make better business decisions to contribute to your goals.
If you’re already been in the Amazon business for some time, you’d want to review your business financials to see if you have enough cash flow.
It also makes sense for you to check if you have the time, energy, and expertise to make it happen.
Some may be thinking of expanding their brand into platforms outside of Amazon like Shopify. But if you don’t have the right contacts, experience, or expertise on Shopify, then it might just be a waste.
Be reasonable with yourself when it comes to putting your money, time, and resources where it needs to be.
Simplify your processes and be great at what you do before you expand. So this way you can also maximize your growth and speed up your results.
There’s nothing wrong with being ambitious.
But if you go beyond what you can, you find yourself being stretched too thin including your resources.
It’s easy for us to be pressured into going for the next big thing. But truth is, you always have a choice on how you could move forward.
Always think about what you can maximize at the moment and start from there. You don’t have to grow fast, focus on growing consistently instead.
Forecasting for business and planning on high impact projects
Now that you’ve set your goals and checked your cash flow, the next step is to choose high-impact projects.
Forecasting for business should be done at least a quarter before. But if you haven’t done it yet, then there’s no better time to start than now.
How do you do Amazon forecasting? There are three basic steps to follow as recommended by BuyBoxExperts.
First, you need to download your sales history from Seller Central and Vendor Central. Do this at least every week and at the end of the month.
The data you get can be used to create a rolling sales record and serve as the base for your forecasting.
Check your sales by UPC to see your best sellers per period in the previous year.
Then see the number of units sent to an Amazon fulfillment center in the same period. This will give you an idea of any missed sales due to inventory issues.
You can even expand this to include variables that may have affected the sales per unit for a specific period.
Also consider seasonal sales, promotional events, and other advertising metrics and how they affected your numbers in the past.
You also need to take note of any SKUs that had slow sales.
Knowing these numbers will make it easier for you to identify which products to sell more of and which ones to replace.
It will give you a good estimate for inventory forecasting, avoiding over-ordering and under-ordering.
Over-ordering ties up your capital and leaves you with inventory sitting in warehouses and racking up on long-term storage fees.
Under-ordering can lead you to lose potential customers and eventually impact your Amazon rankings. This can also make selling new inventory harder in the future.
So focus on getting your metrics right. This way, you will be more intentional in planning and forecasting for business success.
Bonus: Executing a 90-day success plan
It can be overwhelming to execute huge goals, especially if it’s designed for the long term.
That’s why we recommend dividing your strategy into 90-day success plans to make it easier to do.
Start with the main 90 day goals first, then cut them into 30-day actionable plans.
This is where reverse engineering takes place.
Let’s say you want to launch a new product as your main 90-day goal. The next step is to identify the course of action you need to take to make it happen.
For a launch, you would first need to identify the product you want to go for.
So in the next 30 days, you would need to do your research on Amazon. You’d want to check on your costs and cash flow, then narrow down on the products you find suitable.
After 30 days, you would want to go with product sourcing and finding the right manufacturers for your products.
Once you’ve done your research, product selection, and sourcing, the next 60 days will be all about optimization and advertising.
This is where you set up your listings, choose the best PPC keywords, and run your campaigns.
It also helps to update your metrics and optimize your current products.
Breaking down your goals into smaller steps makes it less intimidating. It also increases your chances of success and maximizes your result.
Listen to the full podcast here to learn more about forecasting for your Amazon business.
Forecasting your business is all about ensuring your Amazon business’ continuity.
You need to set SMART goals and break them into four 90-day plans to make them easier to accomplish.
Plan out what projects you want to take to maximize your growth.
And don’t forget to analyze your time, energy, resources, and recheck your personal drive so you could sustain yourself as you go on with your plans.
If you need help forecasting your business goals and implementing them, reach out to us at email@example.com.