Regardless of what you sell, or the channels you sell through, you will encounter fluctuations in sales that happen according to trends and seasonality.
Navigating these peaks and troughs is imperative for any business. To optimise your business for seasonal trends, a key factor is the ability to accurately plan and forecast.
Here’s how you can use business intelligence to take advantage of seasonal trends and to maximise your profits.
Seasonality Affects All Businesses
Seasonality is typically based on promotional retail events. These happen at particular times of the year – Halloween, Christmas, Black Friday, Easter, Valentine’s Day, Back to School and so on.
They affect all manner of items, especially food and drink since we traditionally celebrate these occasions with special meals or seasonal foods. We eat mince pies at Christmas, chocolate eggs at Easter and strawberries during Wimbledon.
We think of seasonality as being applicable to only a small number of goods. The truth is though, pretty much all products are seasonal. For instance, anything that can conceivably be given as a gift becomes seasonal at Christmas. And we buy clothing at certain times of the year too, such as ugly jumpers for the office Christmas party and children’s fancy dress for Halloween.
There is also – for the UK at least – weather-dependent seasonality. Sales of garden furniture and BBQs rise when it’s hot, and we buy more hats, gloves and sledges when it snows.
Whether you sell online, via retail stores, or through third-party marketplaces – or through a combination of several such channels – you are at the mercy of seasonality.
To combat it, you need to perform a careful balancing act.
The Importance of Demand Forecasting
The aim of any business optimisation is to maximise profits. This involves generating as much revenue as possible while incurring the lowest costs.
But with seasonal products, this can be hard. To optimise your business, you need to accurately forecast demand so that you have the stock to meet it.
If you don’t carry enough stock, you miss out on sales and disappoint loyal customers when you run out. You might find yourself having to pay extra for rush orders from your suppliers, or spend more in expediting shipping to your customers when the goods finally come in.
Yet, you don’t want to fill your warehouse with goods that tie up your cash and which you might not manage to sell. This is a particular problem when it comes to perishable goods that can spoil or come close to their sell-by and use-by dates, requiring promotional activity to sell them more quickly.
The ability to plan and forecast your sales accurately is key. You can then make the right financial planning and operational decisions about other aspects of your business – like cash flow, procurement, stock holding and staffing.
Improving Forecasting with Business Intelligence
Using business intelligence tools, you can achieve the fine balance required. An accurate forecasting system that takes into account historical demand, previous sales, seasonality and your own assumptions and forecasts will give you more accurate predictions about the amount of stock you need.
Data and analytical tools will let you analyse sales patterns and consumer spending trends. At the moment, for example, we are in the midst of a cost-of-living crisis that is severely impacting disposable income, and therefore affecting how much people are spending, particularly on luxuries and non-essential goods. This is a current trend that distributors need to factor into their forecasts.
Automating your demand planning through modelling and analysis allows you to spot the patterns in your sales lifecycle. Add in information on supplier lead times and your delivery timescales to customers and you can then and pinpoint when to act. You can determine the point at which your stock becomes too low, and thus optimise your business by knowing when you need to procure more – or when stock levels get too high, necessitating a sales promotion or marketing initiative.
Standard data analysis will include factors like historical sales, trends and general seasonality. But with true business intelligence, you can add more context, by tracking weather patterns, for example.
NetSuite’s Business Intelligence
NetSuite Demand Planning helps you to balance supply and demand so that you can keep costs to a minimum but maintain enough stock to satisfy customer demand.
It uses stock management and demand planning methods, along with a powerful scheduling engine and predictive analytics to ensure you optimise your business for seasonal trends.
Using input about seasonal trends, you can make data-based decisions to accurately forecast demand and remain able to fulfil sales with sufficient stock.