Ways to add Seasonality to Your Forecasts
Forecasting in SoStocked can be quite basic, or it can get pretty advanced, depending on your supply chain and preferences. These preferences and settings start with the basic order schedule, lead times, and warehouse transfer times. And you can get more advanced with additional growth, stockouts, etc. If you have not yet watched the basic tutorial on how to set up your forecasts, please watch that first, here.
Once you have your basic forecast preferences set up, you may choose to add seasonality to your forecasts. Seasonality simply means that your sales velocity is not flat. Instead, it may have seasonal peaks and valleys depending on the type of product or market you are selling in. For example, most Amazon sellers see a massive increase in sales during Q4. But there are other types of seasonality too, such as summertime products, or holiday products that only sell for one or two months out of the year.
In this article, we will discuss the various types of seasonality forecasting tools available in SoStocked and the best practices for each type.
Types of Seasonal Forecasting and Their Uses
Last Year's Sales. This is a basic method of using the exact sales performance for the last 365 days and then duplicating that pattern for the next 365 days. This is the best method for seasonal forecasting for products that only sell for a small portion of the year. For example, if you are selling Halloween decorations or Santa hats. For most of the year, the sales are close to 0. But during the season you will sell a lot. It simply duplicates the exact sales (day-by-day) of the product. You can then add the trend tool or the additional growth tool on top of this if you like.
NOTE: If you are selling highly seasonal products where most of the year you sell nothing, then one or two months you sell a lot, check out this article here.
Automated Seasonality. This is an advanced method of calculating the sales curve of a product by looking over the last 365 days of sales and then averaging them out. Once the average sales for the year have been automatically calculated, the system then maps each month against this annual average to look at % increases or decreases, month-by-month or week-by-week, depending on the period type selected. That sales curve is then mapped out for the next year, using today's adjusted velocity to give you an estimate of what you can expect to sell based on last year's curve. Please watch the full tutorial here.
Manual Seasonality. This works similarly to auto seasonality, in that you can build seasonal sales curves based on a % of today's velocity. The difference is that Manual Seasonality is 100% based on user input—nothing is calculated by an algorithm. You simply add % "Spikes" for a selected period of time and the system will multiply today's velocity by that % to add additional units. You can also lock in your additional units as explained more in this tutorial.
Lightning Deals. These are covered fully in the How to Set up Your Forecasts tutorial. Lightning deals in SoStocked really mean any type of sales increase that you have manually programmed into the forecast based on an increase in units sold over a given period of time. For example, you can create a Black Friday "Lightning Deal" for the day of November 26th and add 100 units to your forecast. Or you could use the Lightning Deal tool to add 1000 units for the entire month of July. It really works the same way as the Manual Seasonality but with units instead of % of velocity.
Demand Plan. We now have a bulk upload where you can build seasonality and velocity from scratch if you so desire. Check out that tutorial here.