How to Forecast Product Demand

A demand forecast is your best estimate of how much you'll sell over a coming period. It drives every inventory decision, so getting it roughly right keeps you in stock without overstocking. It doesn't need to be perfect, it needs to be good enough to reorder sensibly, and a rough forecast you actually use beats a precise one you don't.

The foundation of any forecast is your recent sales rate: how many units you're selling per day or week. Project that forward as a baseline, then adjust for what you know is coming. For an established product with steady sales, this alone gets you most of the way. The trap is reacting to a single unusual day, so use an average over a sensible window rather than yesterday's number.

• Seasonality. If your product sells more at certain times of year, build that in rather than being caught short at your busiest moment or overstocked after it.
• Trend. A product with steadily rising or falling sales needs its forecast tilted in that direction, not just flat-lined from the past.
• Known events. A planned promotion, a price change, or a new ad push will move demand, so factor in the things you're about to do.

A brand-new product has no sales history to project from, so you estimate. Use the demand signals from your product research, the sales of comparable products, and a deliberately cautious first order, because it's easier to reorder a winner than to clear a warehouse of stock that didn't sell. Once real sales start, replace the estimate with your actual velocity quickly. The first forecast is a guess. The second should be data.