The power of AI demand forecasting in e-commerce

Read this blog to discover the power of AI demand forecasting in the e-commerce industry.

E-commerce business owners and online sellers make important business decisions every day. These decisions are typically based on data, probabilities, and forecasts.

Since the recent rise of AI and the introduction of AI demand forecasting, decision making has become a lot easier and a lot more accurate for e-commerce entrepreneurs.

Thanks to machine learning and innovative AI technology advancements, online sellers and e-commerce store owners can now accurately plan and prepare for the future.

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As AI becomes more prominent in the world and as more companies turn to AI for business management, it is important for e-commerce sellers to get ahead.

This blog will explain what AI demand forecasting is and how it is enhancing the e-commerce space.

What is AI demand forecasting?

AI demand forecasting is the process of leveraging machine learning algorithms and artificial intelligence technology to predict the future demand of products and services.

This technological advancement allows e-commerce business owners to improve accuracy, optimise their inventory, and save time and money.

AI powered demand forecasting considers real time data and historical internal and external datasets to predict future e-commerce trends and product demand accurately and reliably.

 By leveraging this AI e-commerce tool, e-commerce businesses can quickly adapt to real time trends and get access to emerging customer preferences.

How does it enhance e-commerce?

Improved accuracy

AI demand forecasting quickly and efficiently considers vast historical data, customer behaviours, weather, current events, and holiday seasons to provide accurate trend predictions. This helps e-commerce businesses to avoid overstocking or understocking products and make informed business decisions based on reliable data forecasts.

Real time insight

With AI demand forecasting, e-commerce store owners get access to real time changing market and consumer preferences. By utilising this information, e-commerce stores can keep up with trends and adjust their product offering to meet current demand.

Optimised inventory

By optimising inventory with AI demand forecasting, e-commerce entrepreneurs can reduce costs associated with holding excess stock and provide a streamlined service to the customer. Furthermore, an optimised inventory ensure customers can get what they want when they want it.

Enhanced customer experience

Ensuring customers have access to the products they want, when they want them by predicting demand using AI tech, an e-commerce business enhances the customer experience. This can further lead to an increase in customer loyalty and retention, repeat business, and an overall improved service.

Time and cost savings

AI demand forecasting is automated, saving e-commerce businesses time and money on resources. By eliminating the manual requirement of analysing and assessing historic data to create forecasts and predictions, AI demand forecasting allows e-commerce sellers to spend more time and money into other critical business growth areas.

Reduce waste

By accurately predicting product demand, AI demand forecasting has the power to reduce waste. It can do this by avoiding overstocking issues, improving inventory management, and ensuring inventory is reflective of real time demand. In turn, this reduces throw away waste and the environmental factors of overproduction and consumption.

Automation and consolidation

AI demand forecasting seamlessly connects to all your data, automatically suggesting the optimal amount to order based on the latest information. These intelligent tools consider future sales forecasts, current inventory levels, potential supply chain delays, and any other relevant factors to ensure your restocking plan stays on point.

Managing unpredictability from suppliers

It’s crucial that to effectively manage and plan your inventory, you’ve got to be able to accurately predict your supplier lead times. As supply chains continue to become increasingly more complex and unpredictable, and customer demand becomes more stringent, it is more difficult to keep on top of supplier unpredictability as delays and deviations stack up. AI forecasting tools can help eCommerce businesses to generate lead time data, with fluctuations automatically applied to ordering plans, giving business owners a clearer and more accurate picture of their inventory planning.

Key points to consider when using AI demand forecasting

While there are undoubtedly a host of benefits that come with implementing AI demand forecasting into your eCommerce business operations, it comes with a few important challenges to consider. While AI is evolving at a rapid rate and it’s capabilities are impressive, purely AI-based solutions rely on advanced algorithms that help protect against potentially inaccurate information – here are some of the key issues that come along with those algorithms:

  • Data quality and validity – The data used for AI demand forecasting needs to be accurate and relevant, and if historical data is used when training the AI model, or it is inaccurate, incomplete or does not reflect current market conditions, it can cause forecasts to produce unreliable reports.
  • Seasonal variations – Pure AI models may not have the capability to accurately predict changes in demand during peak holiday seasons or during unexpected events.
  • Maintenance – AI models require regular updates and recalibrations to remain relevant.
  • Consumer behaviour – AI models may fail to spot any shifts in consumer behaviour or patterns that were not present within the training data, which can result in missed opportunities or inaccurate forecasts.

Why choose Unicorn Accounting?

At Unicorn Accounting we are e-commerce accountants who help make your online business a growing success. We offer e-commerce accounting advice, financial management, bookkeeping, cash flow statement, and tax filing services to support and scale your business.

Our team of accountants and Xero-certified advisors have experience working with both small start-ups and family-run online stores to large-scale, international retail and e-commerce brands.

If you’ve got an online store, we have the best solution for you. Providing you with a financial arm to your business through our sector experience, and skills with innovative technologies. To see how we can help you maximise the scalability of your e-commerce brand all year round, get in touch with Unicorn Accounting today.

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