Smart inventory management is one of the key aspects of running a successful online sales business, especially with omnichannel approach, which provides extraordinary customer experience. Optimal stock levels are the goal. And, once the goal is defined, let's see how to achieve it.
Predictive Analytics employs the power of data, transforms them into useful information, and gives clear predictions and suggestions on how to achieve the ideal stock level of each product. Time is the most expensive, and critical resource, and Predictive Analytics is the master in serving the right information just in time when we need them.
While you work in sales, what really happens in the background, is that in real time, your smart software system collects valuable data from the following sources:
- stock levels
- customer product search.
It then submits data to advanced software algorithms for sales forecasting. And the analysis is done on the basis of data from the past, from real time (sales that is happening now), and from sales forecasts. Bad inventory management systems are often in conflict with systems for pricing, promotions, planning, product allocation. But, high quality Predictive Analytics solution, tailored to the needs of a specific online retail business, doesn't separate different business sectors, and takes into account all factors that influence demand. By improved demand forecasting, the product allocation is vastly improved, together with replenishment plans and strategies as well.
Predictive Analytics executes active analysis of all influencing factors, and gives recommendations about transferring products from shops where they are selling slowly because of low demand, to stores where there is higher demand, and possible shortages of the product are likely to appear. Like this, the optimal stock levels in all locations are achieved, there are no shortages, and no overstocks. Moreover, you avoid unnecessary sales, markdowns, and discounts in stores with less demand for the specific product, and preserve higher margins in stores with higher demand.
Just to give you a hint about how advanced these algorithms are, let's say that your advanced Predictive Analytics system takes into account: different combinations of product colors, sizes, prices and margins, stock levels in each store, cost of transferring the product to different locations, and all of this happens in real time, so you can have information and support for making decisions the same day, and possibly the same hour. Savings from this system are huge, and profits significantly go up as well.
To be precise, the statistics from retailers who already use Predictive Analytics show:
- significant decrease in inventory costs of up to 40%
- remarkable increase in sales volume of up to 20%
- 3.5 times faster turnover
Wise choice of an eCommerce solution which already implements Predictive Analytics with an advanced Dashboard is what modern online retailers should pay attention to. Gains are worth the investment.