Inventory how-to

How to forecast when sales are falling

When sales are falling, use a short recent window instead of a long-term average, so your forecast reflects the current trend rather than an old, higher pace.

Short answer: When sales are falling, use a short recent window instead of a long-term average, so your forecast reflects the current trend rather than an old, higher pace. Compare the last few weeks to the weeks before that to measure how fast the drop is happening, then order to the lower, current rate plus a safety margin.

Why long averages mislead you

If you average 90 or 180 days of sales for a product that is now declining, your forecast will be too high. You will keep ordering as if demand is still strong, and stock will pile up. The fix is to weight recent data more heavily than old data.

Measure the trend, not just the level

Split your recent history into two or three chunks, for example the last 14 days, the 14 days before that, and the 14 days before that. Work out daily sales for each chunk. If the number keeps dropping chunk over chunk, you have a real trend, not just noise from one slow week. Use the most recent chunk as your forecast base, not the oldest one.

Watch for the cause before you cut orders

A falling sales rate can mean the product is going out of style, a competitor cut prices, the season is ending, or you simply ran low on stock and sales fell because you had nothing to sell. Check your stock level against the sales drop. If you were out of stock or low, the "falling sales" is really a supply problem, not a demand problem, and you should not cut your forecast.

Rebuild safety stock around the new rate

Once you trust the lower rate, recalculate your reorder point and order quantity using that rate, not the old one. Keep a smaller safety buffer than before, since holding extra stock on a declining item ties up cash for longer.

Step by step

  1. Pull daily sales for the last 42 days and split into three 14-day blocks.
  2. Calculate average daily sales for each block and check if the number is dropping consistently.
  3. Rule out stockouts as the cause by checking on-hand levels during the slow period.
  4. Use the most recent 14-day average as your new daily sales rate.
  5. Recalculate reorder point as new daily rate x (lead time + safety days).
  6. Recalculate order quantity as new daily rate x (lead time + days of cover) minus stock on hand and on order.
  7. Review again after another 2 to 4 weeks to see if the decline is continuing, flattening, or reversing.

Worked example

A store sells a phone case at 10 units a day over the last 90 days, but splitting it up shows 12/day two months ago, 9/day last month, and 5/day in the last two weeks. The owner checks stock and confirms it was never out, so the drop is real demand decline. They use 5/day as the new rate. Lead time is 10 days and safety days are 4, so the reorder point becomes 5 x (10 + 4) = 70 units, down from 140 units under the old 10/day rate.

How SteadyShelf helps

SteadyShelf forecasts from a 28-day sales window by default, which already leans toward recent activity rather than a long flat average, and it will lower suggested order quantities as that window's daily rate drops. It does not run separate trend-vs-noise analysis or tell you why sales fell, so you still need to check manually whether a drop is due to demand or a stockout.

$29/month flat, unlimited products and suppliers, 30-day free trial. Run the numbers now with the free reorder point calculator.

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

Related guides

All inventory how-to guides ยท Inventory glossary

FAQ

Should I just set safety stock to zero if sales are falling fast?

No. Keep a small safety buffer even on a declining item, since demand rarely falls in a perfectly straight line and a short bump in orders can still catch you out. Lower the buffer rather than removing it.

How many weeks of falling sales before I treat it as a real trend?

There is no fixed number, but two to three consecutive periods of decline, each measured over a week or two, is a reasonable minimum before you act. One slow week on its own is often just noise.

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.

Get early access