Inventory glossary

What is Demand forecasting?

Demand forecasting is the practice of estimating how much of each product you will sell in a future period, based on past sales and known factors like seasonality or promotions.

Demand forecasting matters because every reorder decision depends on a guess about the future. If you guess too low, you run out of stock and lose sales. If you guess too high, you tie up cash in inventory that sits on the shelf.

For a small Shopify store, the goal is not a perfect forecast. It is a reasonable estimate per variant, updated regularly, that you use to decide order timing and order quantity. Even a simple average of recent weeks beats guessing from memory.

Formula

Forecast = average of past period sales, adjusted for known trend or seasonality

Example

A candle store sold 40 units of its lavender candle in each of the last three months, with no big spikes. Using that pattern, the owner forecasts 40 units of demand for next month too, and plans to have at least that much stock ready before the month starts.

Common mistakes

Using one unusual month as the basis for the forecast instead of a longer average.
Ignoring seasonality, like holiday spikes or summer slowdowns, when the product has a clear pattern.
Forecasting at the product level instead of per variant, which hides big differences between sizes or colors.

Demand forecasting and SteadyShelf

SteadyShelf forecasts expected sales per variant and uses that number, together with each supplier's lead time, to tell you when and how much to reorder.

Work it out for your own products with our free tool: Shopify inventory forecasting.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

Full inventory glossary

FAQ

Is demand forecasting the same as a moving average forecast?

Yes. A moving average forecast uses only past sales. A forecast that adjusts for a known promotion or a slow month is not purely a moving average.

Does demand forecasting tell me when to reorder?

No. Forecasting predicts future demand. Reorder point tells you when stock on hand is low enough to place a new order, using that forecasted demand and lead time.

Let SteadyShelf do this math for every SKU

Order-by dates per supplier, seasonal forecasts and draft POs for your Shopify store. $29/month after a 30-day free trial.

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