How to [.blue]demand forecast[.blue] & optimise inventory for BFCM

August 22, 2023

min read

Most of us within the eCommerce sector know that Black Friday, Cyber Monday and the weeks that follow are manic sales periods.

As the landscape of year-end online retailing has evolved, how businesses prepare their inventory for this major trade season is far more nuanced than simply buying more of everything. By considering exactly what products to order, how much and when, you can boost cashflow, capitalise on consumers’ buying enthusiasm by promoting slow-moving stock, and ensure you never run out of your bestsellers. This blog explores the intricacies of demand forecasting and planning for Black Friday and Cyber Monday (BFCM), including strategies for overcoming potential challenges.  

Demand planning in the post-pandemic shopping era

The post-pandemic world has ushered in a host of changes that can affect online retailers’ ability to predict demand trends accurately. Indeed, traditional forecasting methods that rely on historical sales data have become less reliable, given the unprecedented sales patterns of recent years. With two years of pandemic-induced sales beginning to stabilise, some businesses that experienced extraordinary growth in 2020 and 2021 may now need to rethink their strategies if they are to maintain their trajectory.  

Consumer expectations have also evolved in the wake of heightened emphasis on delivery speed, availability and choice. Additionally, a wide range of socio-economic factors have led to a dip in consumer spending. Optimal inventory management is more critical than ever in order to maintain a healthy cash flow and avoid the burden of excess stock. Supply chain challenges such as extended lead times, a shortage of warehouse space and rising container costs, further compound the need for meticulous planning.

How to accurately forecast sales trends for Black Friday & Cyber Monday

1. Re-evaluate historical sales data

Historical sales data is fundamental to all types of demand forecasting. However, in order to use this data for the upcoming BFCM period, you will need to make some adjustments due to the unprecedented sales patterns of recent years. Shortening the historical period for forecasting calculations is likely to result in more realistic predictions.

2. Monitor sales trends

Perhaps a certain product or category is experiencing an unexpected surge, or an item that was previously selling out is no longer generating as much interest. These trends can be useful indicators of sales trends to come, but how do you know if this is merely a one-off or a sign of a burgeoning, longer-term trend? You can remove some of the guesswork by using tools like Inventory Analysis to identify valid trends and improve the accuracy of your demand forecast.

3. Align your strategy with marketing

It may seem obvious, but you should be communicating with your marketing team and other relevant departments to ensure products that are being promoted elsewhere across the business are sufficiently stocked. This could be a new product line or an older legacy product in need of some renewed hype. Make sure to consider past holiday trends and non-seasonal sales data to identify potential products to push through marketing.  

4. Leverage comparative data

The year so far can support your sales predictions, as you can use comparative year-over-year trends that you have already seen and apply it to the upcoming Black Friday-Cyber Monday season. For instance, if your sales in September to November last year were up by 20% compared to the same period in the previous year, you could assume that your sales this year will similarly increase.  

5. Conduct ABC analysis

You can employ the ABC analysis method to categorise products based on their contribution to your business revenue, so you can prioritise bestsellers as part of your demand planning and better manage slow-moving items. The top 80% of revenue typically comes from A class products, the next 15% from B class, and the final 5% from C class.  

6. Enhance sales accuracy

When forecasting demand, it’s important to consider the days a product has been in stock, rather than the overall stock history, as this will help to support a more accurate forecast. Afterall, stockouts can lead to underestimated forecasts. The goal is to find out how much your customers want a specific item to be available.

7. Consider warehouse-specific strategies

If you stock products at multiple warehouses and/or different locations, consider each site individually rather than calculate your business’ aggregated inventory demand. This is important as each site will behave very distinctly, with different products selling at varying levels of demand. It wouldn't make commercial sense to increase stock of a product selling at low volumes from one site versus another site where it is selling in much higher volumes.

8. Forecast for new products

You may have some exciting new products but want to test their popularity before you promote them over the BFCM period. As there is no historical data to work from in this case, it can be more challenging to forecast demand. However, you can use sales data from similar product categories or from previous new product launch experiences to test the likelihood of consumer interest.

How to avoid understocking & overstocking during BFCM

Once you’ve completed your demand forecast for Black Friday and Cyber Monday, the next step is to understand when to order stock from your suppliers to avoid going out of stock or having too much stock – both of which can eat into your bottom line. Let’s look at some of the steps you can take to make the most profitable decisions for your business when it comes to inventory management.

1. Communicate with suppliers about lead times

Given the ongoing supply chain issues that many countries are still facing – whether due to labour shortages or other limits on production – it’s important to engage with suppliers about lead times for BFCM and adjust your plans to allow for any potential delays.

2. Check whether suppliers can reduce their MOQ

It’s worthwhile asking your suppliers about whether they are in a position to lower their minimum order quantities (MOQs) for this BFCM season, as this will support more flexible inventory management.

3. Ensure optimal stock cover

Stock cover refers to the number of days you want stock to last after its arrival in your warehouse. Remember, stock that doesn’t sell is ultimately cash that cannot be used elsewhere within your business, so make sure you focus on frequent, smaller orders to suppliers rather than large mass orders to mitigate the impact of overstock on cash flow.

4. Use a retail calendar

As simple as it sounds, it’s essential to maintain an informative retail calendar that includes peak sales dates and recommended ordering dates. The latter is particularly important for products that have protracted lead times – usually more than 30 days. Being prepared ensures your new stock will arrive in time for when BFCM demand starts to increase.

5. Be aware of shipping cut-off times

You will know that shipping times during Black Friday and Cyber Monday tend to be slower, with each courier adhering to their own specific schedule. As such, it’s important to stay informed about shipping cut-off times to prevent inventory shortages. If you outsource your order fulfilment to a third-party logistics (3PL) provider like Zendbox, you need to know what their order cut-off times are, so you can communicate this to your customers before BFCM and encourage them to order in advance if they want items delivered by a specific date.

6. Prioritise revenue-driving stock

Although this upcoming BFCM period is predicted to be the biggest yet, there are still many socio-economic challenges that can impact the eCommerce landscape. That’s why it is vital to make inventory purchasing decisions that will drive as much revenue as possible for your business. Look specifically at product lines that yield the highest profits and attract the most customers. Then focus your BFCM strategies around those items to drive sales.

Unlock value from overstock

During Black Friday and Cyber Monday, most consumers are on the hunt for a bargain. This makes it the ideal time to push slow-moving, overstocked products in order to release cash that can be reinvested into other areas of your business.

1. Audit your current inventory

Prior to the BFCM rush, conduct a comprehensive inventory audit to gain a better understanding of your overstocked products. Essentially, if you have more of an item than there is predicted demand for the Black Friday and Cyber Monday period, then that product is overstocked. Intuitive inventory management tools like Inventory Analysis provide a snapshot of overstock and how much value it holds in real-time.

2. Create a promotional plan for BFCM

Once you know which products are overstocked and by how much, it’s time to get your customers excited about them. It’s common practice to bundle products together for BFCM (buy one get one free, for instance) or discount the original cost of the product. However, make sure you offer deals based on the minimum margin you need to cover the cost of getting that product into the hands of your customers.

With BFCM fast approaching, now is the time to consider what value your overstocked products could bring to your revenue. Make no mistake – hundreds, if not thousands of pounds can be unlocked from overstock so long as you have a clear understanding of your inventory’s health, and employ a creative, promotional strategy that drives sales.

Meeting demand takes thorough planning

Meeting customer demand means adapting to the ever-changing nature of eCommerce and following a multifaceted approach. From adjusting historical sales data to collaborating closely with suppliers, there are many steps eCommerce businesses can take to navigate the challenges whilst capitalising on the opportunities of accurate demand forecasting and inventory management. By anticipating supply chain disruptions, adjusting order quantities, and optimising stock cover, businesses can also minimise the risk of stockouts and overstocking. The ultimate goal is to maintain the right balance between meeting customer demand and ensuring a healthy cash flow during the most critical sales period of the year.

Looking for additional guidance on preparing your eCommerce operations for Black Friday and Cyber Monday? Get in touch with our experienced team today or check out our blog hub.

Gilson Pereira
Head of Customer Experience at Zendbox

Resilient and forward-thinking, Gilson is responsible for leading the strategy, planning and execution of our customer experience (CX) goals, liaising with department heads to ensure every team at Zendbox works cohesively to provide our clients a positive and seamless experience across all touchpoints.

Further Reading

ready to take control?

Automate your ecommerce fulfilment with Zendbox.

Get started


Simple pricing based on volume of orders. No hidden fees.
Get in touch

Have any

We’ve been doing this for a long time. We might have your answer here.