Understanding the Different Sales Velocities
Overview
SoStocked offers 4 baseline methodologies to calculate future forecasts: Velocity Calculation, Manual Velocity, Last Year's Sales, and the Demand Plan. From there, you can add additional trends, growth, seasonality, or marketing plans.
4 Ways To Calculate Future Forecasts
- The first one is called Velocity Calculation, and that's the default setting for all new accounts.
Basically, what it's doing is it's looking over the last six months and breaking it into these time periods. And then it's taking the average sales velocity per day (units sold per day) for each of those periods of time.
But let's say you came out of a slow sales area, and you're selling more than you were six months ago (or three months ago). You can choose to turn those time periods off.
SoStocked gives you the ability to customize your time frame and look at real-time data only. You can play around with it and see what your adjusted velocity is. So if you're looking at a shorter period of time (more current), these numbers will recalculate more frequently.
- The second methodology uses manual velocity, which is very unscientific.
Manual velocity allows you to input how many units per day you are expecting your product to sell. This is a good way to override the system and force it to predict future sales.
Let's say you're launching a new product that has no sales history on Amazon. You can use a manual velocity. Of course, these are all baseline velocities that you can add few features on top of it.
- The third methodology is Last Year's Sales. This one will actually take 365 days of sales and basically mirror them.
So, in other words, you're looking at the last 365 days of your sales for your product on Amazon, based on your Seller Central information. And SoStocked will predict that you will make those same sales again on the same day this year.
If you were stocked out on one of those days, it would have an asterisk next to it, and the number that it gives you is just an estimated sales number based on the 30 days surrounding that missing day.
If you use the monthly feature, you can see all 12 months of predicted sales.
And based on last year's sales, you can even see the seasonal sales patterns. For example, you can see that this specific product sells more during the summertime but sells less during the fall.
This is great because if you're using Last Year Sales as your velocity metric, SoStocked will predict the future sales and forecast you to place your larger orders, inventory orders, and transfers with your seasonal patterns in mind. And you can add additional growth trends, Lightning Deals, and future sales spikes on top of that.
The fourth velocity type is the Demand plan, where you can upload a year's sales into your forecast. This feature is more complex and is covered fully in its own tutorial here.
Those are your four baseline velocity options for your future forecast.
Settings To Fine-Tune Your Forecast
Now, let's look at some of the settings to fine-tune your forecast.
On any product, if you click the FBA Days (shown below), it will open up the forecast options.
Normally it will also have a sales trend (shown below) for the last couple of years.
Part of the forecast option is the Trend feature.
If you turn it on, it gives you the option to take a period of time and compare it to a previous period of time.
Now that you've added your Trend, here are additional features that you will find useful. They are the Future Lightning Deals feature and Future Seasonal Spikes.
With SoStocked, you can schedule as many Future Lightning Deals or short-term sales.
With Future Seasonal Spikes, you can actually go in and schedule an entire seasonal pattern on top of your sales velocity or forecast.
Once you've set up your velocity calculation, your order schedule, and the rest of the features on this page, your timeline and your order schedule should make a lot of sense.
SoStocked will tell you to place your inventory orders and transfers, taking into account future sales growth, future seasonal spikes, and future deals so that you never run out of inventory.