When most of your products have more than 12 months sales history, you can use the seasonality to estimate the spike.
Seasonal Forecasting Methods
Given a seasonal product, this forecast method refers to the same months in prior years as the sales reference period. This is beneficial for holiday and seasonally driven items with 12+ months of history. Trend is applied by evaluating sales over the last 12 months vs. the prior 12 months.
For example, sales from January 2018 and January 2019 impact the forecasted needs for January 2020. If today is December 31, 2019 - the trend will be based on sales between January - December 2019 vs. January - December 2018.
Top Down Seasonal Forecast
This setting computes a seasonal forecast at the Category level*, then distributes forecasted sales to the Variants. When an item has 12+ months of sales history, the same time period in prior years is used to determine each variant's % contribution to the total unit sales of the category. For items with less than 12 months of sales history, we default to the top down, non-seasonal method. Non-replenishable and non-tracked products are excluded from this distribution.
For example, if Variant A contributed 5% of the sales units to Category Z last December, then Variant A will receive 5% of the category's forecasted sales for next December.
There are three methods to set variants to use a seasonal forecast:
- Account-wide as the default forecasting method
- Use Bulk Actions to apply seasonal forecasting to a group of variants
- Individually for one variant at a time using the Details dialog
Set seasonal forecast to be used account-side by default
To set seasonal forecasting as the default method used to calculate customer demand, go to Account > Settings
> Forecast and select the Seasonal or Top Down Seasonal forecasting method.
Note: Using this approach is best when all or most variants are seasonal or should use the top-down seasonal forecasting method. If a minority of variants in your store are not seasonal, then disable seasonality only for those variants using one of the following two methods (choosing a non-seasonal forecasting method instead of the seasonal forecast selections shown here).
Apply seasonal forecasting in bulk to a group of variants
To enable seasonal forecasting, select variants in the Replenishment report.
Click Bulk Actions -> Set Forecast Settings.
Individually enable seasonality for one variant
In Replenishment, click on the Details icon.
In the Forecast Settings section, select ‘Use Custom Forecast Settings’ then choose 'Seasonal' from the Forecasting Methods dropdown options.
For other methods of editing your forecast, see our article about forecasting for the holiday season.