Inventory glossary

What is Forecast accuracy?

Forecast accuracy is how closely your predicted sales for a SKU match what actually sold.

For a small Shopify store, forecast accuracy decides whether you order too much or too little. If your forecasts are consistently off, you end up with cash tied up in dead stock or you run out of your best sellers during busy weeks.

Check forecast accuracy after each selling period, not just once a year. Compare what you predicted to what sold, find the SKUs with the biggest gaps, and adjust how you forecast those specific items rather than changing your whole method.

Formula

Forecast accuracy = 1 - (abs(Actual - Forecast) / Actual)

Example

A candle store forecasts 100 units of a vanilla candle for the month. Actual sales come in at 85 units. The error is abs(85 - 100) / 85 = 0.176, or about 17.6%. Forecast accuracy is 1 - 0.176 = 0.824, or about 82%.

Common mistakes

  • Judging accuracy on total sales across all SKUs instead of per SKU, which hides bad forecasts on individual items.
  • Ignoring one-off events like a sale or viral post that skew a single period's numbers.
  • Not tracking accuracy at all and only noticing problems after a stockout or overstock happens.

Forecast accuracy and SteadyShelf

SteadyShelf builds its forecast per variant from your sales history, so you can see which SKUs it predicts well and which ones need a manual override before the next order.

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

Related terms

Demand forecasting · Forecast bias · MAPE · Demand variability · Moving average forecast

Full inventory glossary

FAQ

What counts as a good forecast accuracy for a small store?

There is no universal target. A steady seller like a basic t-shirt will forecast more accurately than a new or seasonal item. Track accuracy per SKU over time and aim to improve your worst performers rather than chasing one overall number.

How is forecast accuracy different from forecast bias?

Forecast accuracy measures the size of the error, regardless of direction. Forecast bias tells you whether your forecasts consistently run too high or too low over time. You can have decent accuracy on average while still having a bias in one direction.

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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