What Is Demand Forecasting?

Regardless of the industry, one of the important factors in advancing business lies in the ability to better understand customer needs and to be able to predict them. More and more e-commerce companies are also using demand forecasting to boost their sales. This is because it is a great way to get a comprehensive view of potential opportunities and dangers. In this article, I will discuss the types of demand forecasting, the benefits of demand forecasting, and the ways to do it better. By reading this article, I believe it can contribute to driving your business and unlocking the code of wealth for you.

What Is The Meaning Of Demand Forecasting?

Demand forecasting is designed to make it easier to understand customer needs in advance. In simple terms, it predicts the potential demand for a product or service that may arise from potential customers. Usually, historical data can be used to predict sales over time in the future.

The Meaning Of Demand Forecasting

Types of Demand Forecasting

The types of demand forecasting include six main types:

Passive Demand Forecasting

This method is mainly used to forecast future sales by analyzing past sales data, and this type is relatively easy.

Active Demand Forecasting

New startups can use this method to actively plan for product development and marketing, etc.

Short-term Demand Forecasting

This type is useful for improving and enhancing a specific job in the short term, and it focuses only on the production demand within a specified period.

Long-term Demand Forecasting

This type gives a more visual picture of the brand’s growth trajectory and forecasts future demand in advance by planning seasonal production patterns and marketing plans.

Macro/Micro Demand Forecasting

Macro demand can help companies better understand changes in market trends; micro demand can better understand the consumption preferences and needs of specific groups of people.

Internal Demand Forecasting

Forecasting internal demand based on a company’s current situation, such as anticipating in advance the number of employees needed in the next few years.

Benefits of Demand Forecasting

Budget Funds In Advance

Prepare the budget according to the actual operation of the company and the forecast of future demand, so that the cash flow can be planned reasonably and the gap between the actual situation and the budget can be prevented from being too large.

Planning The Supply Chain

Use demand forecasts to plan a reasonable inventory, to avoid inventory backorders. Also, reduce spending on inventory purchase orders and warehousing.

Understanding Consumption Trends

By looking at historical sales data, we can understand the peak season and customer demand gathering point. And make relevant policies to increase sales in the off-season.

Understand External Factors And Market Trends

By forecasting industry trends, economic development conditions, and market implementation trends, you can rationalize your pricing strategy to better adapt and grow your business.

5 Demand Forecasting Methods

5 Demand Forecasting Methods
  • Trend Forecasting

Simply put, this is the easiest and most direct way to forecast future sales by looking at past sales data. When using this method, pay extra attention to the abnormal items in the historical data.

  • Market Research

Market research is a forecast based on customer analysis. Through this method, you can better understand the consumer needs and tendencies of customers, and provide effective information for subsequent marketing plans, to obtain more valuable opinions.

  • Expert Opinion

By hiring some outside contractors, more professional demand forecasts, as well as more reasonable future planning, can be obtained. Make demand forecasts for the short or long-term future through effective meetings and communication.

  • Delphi Method

This method is usually combined with expert opinions and is therefore considered to be the most reliable and sensible method. This method uses a wide range of people to gain knowledge and information from people in different areas of expertise. The forecast results it gets will be more accurate.

  • Sales Force Composite Method

The overall demand forecast of the company is developed by gathering the opinions of salespeople from different regions. This is also a demand forecasting method with collective opinions. Salespeople are the closest to customers and they can provide more accurate information.

How To Start Demand Forecasting?

How To Start Demand Forecasting

Set Clear Goals

With clear goals, you can more clearly forecast your company’s production needs and monitor individual data results in real time during the process. Set goals with specific periods, products, and services in mind.

View And Collect Various Data

Collecting various kinds of data can help you integrate information more efficiently. You can use your company platform to get some internal information about your customers, and you can also use market research to learn more about external information.

Measure And Analyze The Data

Start specific analysis of the various information collected to predict more effective sales patterns and sales trends. In this process, you can use some automated tools to help you make forecasts.

Make Appropriate Adjustments

The data results obtained are used to make appropriate adjustments to the current situation, such as increasing or decreasing product inventory appropriately based on customer demand. Doing this can help you to improve your business better.


Demand forecasting can help you make more informed choices and decisions. Knowing all kinds of information about demand forecasting will make your business grow more smoothly. The fulfillment company will be your key partner in the demand forecasting process, so choosing a reliable fulfillment company is a very critical factor. Honest FulPhilment has the expertise and technology to help you better understand market trends and your customers’ consumer needs and tendencies. If you are interested in working with us and would like more information, you can contact us now!

Need a Quick Quote?

– Competitive price
– Quote within 24 hours
– 30+ Shipping methods
– Dedicated account manager
– Shopify/Woo integrations
– Autofulfil
– Auto tracking
– Plus much, much more

Recent Post
Share article: