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Why Demand Forecasting Is Important: A Complete Guide to Finding Your Own Forecast Tool

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In business, it is customary to make predictions and estimates of future events, as constant change affects the way business is run all the time. Enterprises that use demand forecasting usually make informed and accurate decisions about the company’s growth plans.

Demand forecasting helps companies predict customer demand for a product or service. And the more accurately you can forecast demand, the more satisfied customers will be.

What is Demand Forecasting?

Demand forecasting is the process of planning and preliminary assessment of demand for goods and materials, which allows companies to maintain maximum profitability. Forecasting is based on the study of patterns in market dynamics, cause-effect relationships and major trends. This is a key component required for inventory management, forming orders to suppliers and in general for quality supply chain functioning.

Demand planning is the process of planning future operations based on a previously made forecast. This activity has a dual purpose:

  • to stimulate consumer demand;
  • to increase the company’s ability to meet growing demand.

As demand for goods or services grows, companies must move goods quickly through the supply chain to meet demand, and they seek to increase profits and reduce costs through demand planning. You can use various software and instruments to analyze demand, such as web scraping APIs, if you do business online. But we will talk about that a little later.

Without accurate demand forecasting and planning that takes into account customer needs, preferences, and intentions, companies risk significant amounts of overpriced products or missing out on additional sales opportunities.

Importance of Demand Forecasting & Why You Need It Too

The ability to accurately forecast demand can have a huge impact on your business and brings many benefits. These benefits can improve a multitude of functions, increasing business confidence and helping a company realize its ambitions.

Here are some of the benefits you can gain by implementing demand forecasting.

Price Setting

To run your business successfully, you need to determine the right markup for the situation, given market activity and demand for the product. With forecasting, you can determine exactly when products will be most popular, adjust pricing, set up sales, and make the most of opportunities when demand is high and supply is low in the market.

Understanding when and in what volumes products will sell can lead to a significant increase in revenue.

Budget

Forecasting demand plays an important role in budget planning. For businesses, having a steady cash flow and allocating resources efficiently is a top priority. The practice of demand forecasting can help in understanding how to take advantage of growth opportunities and major problems. This is especially true when demand is low and you need to allocate resources to survive revenue declines.

So you can reduce risk and make effective financial decisions that affect profit margins, cash flow, resource allocation, expansion opportunities, staffing, and so on.

Improved Supply Infrastructure

Forecasting high and low demand will help you establish a supply infrastructure. This will improve supply chain management, optimizing capacity, replenishing inventory, and optimizing warehouse personnel management.

Inventory Optimization

A good understanding of inventory needs is one way to maximize the use of available resources.

Improved order fulfillment can be equated to high long-term customer support, as more of the needed goods will be available more often. Order fulfillment through demand forecasting can encourage repeat customer referrals and word-of-mouth recommendations, which will increase your revenue and customer base.

Reducing Uncertainty

Uncertainty is a negative factor and makes decision-making very difficult, causes delays, and affects stakeholder confidence. Demand forecasting can eliminate uncertainty and ensure that supply chain functions are adequately resourced and managers are better trained to make effective decisions.

Web Scraping for Demand Forecasting

To get the right picture of demand, companies have to track interest in a product and at different market levels, from local to global.

When forecasting demand, businesses can use web scraping to track product intent and optimize the supply chain by analyzing demand in real-time. Especially since the pandemic, companies have been active in using automated data extraction in demand forecasting.

Scraping for forecasting contributes to a number of benefits by extracting content in real-time and constantly identifying new patterns. Since this option of collecting information allows for analysis of user desires and preferences, detailed data-driven forecasting analysis is possible. This capability allows companies to respond quickly to changing trends and take appropriate action.

In contrast, traditional approaches to demand forecasting require constant manual updates and adjustments to forecast results.

Web Scraping Strategies For a Demand Analysis

Building development strategies using web scraping can reveal the kind of information that provides the insights needed to assess market movement. Web scraping, for example, by collecting information from websites with specific keywords in a specific location, will help build a picture of demand and contribute to the creation or development of new products for which there is demand.

1. For more in-depth demand analysis, web scraping can gather the necessary data from Google Trends and Google Keyword Planner. These tools show how much users are interested in certain products.

Don’t forget to also research popular topics not only globally, but also in specific regions. Analyzing the most accurate keywords and queries will give you the data you need to make decisions.

2. Follow trending topics on social media, such as Facebook or Instagram. By collecting data and analyzing social media, you can track what people are saying about a particular product or brand.

3. You can also study common search queries on Amazon, frequently sold items on Shopify, Aliexpress, eBay and other marketplaces, and analyze items from the best sellers to determine consumer trends.

With this data you can build graphs that will display from when the product began to gain popularity, compare data from different sites, stores and on the basis of the resulting information make analysis and forecast demand.

4. Forecasting software makes it easy and brings together all the data on sales, reports, trends that can help you stay on top of the market. For forecasting, you can use software such as Quantics, which can help you quickly create statistically valid forecasts by combining all the necessary data for analysis in a single platform.

The Future of Demand Forecasting with Web Scraping

As you know, demand forecasting using traditional methods requires a significant amount of resources and experienced personnel. Errors and inaccuracies usually lead either to empty shelves in stores, or vice versa to overfilled counters with unnecessary goods, costs and customer dissatisfaction.

Therefore, the use of advanced data collection technologies and the implementation of intelligent systems allows to interpret unstructured text, analyze it in near real time and make predictions about customer preferences.

A Mckinsey survey found that 55% of organizations are going to invest in artificial intelligence. AI and ML-based programs can learn by taking data from forecasts, trend reports or market research, for example. Algorithms then study the data, adjusting parameters to create forecasts. This is how technology should help free workers from monitoring SKUs in favor of working on more complex tasks.

Of course, this data needs to come from somewhere. Web scraping, as we mentioned earlier, gathers the necessary information from the Internet. But automated data extraction will also use AI in its work in the future, making life even easier for businesses. AI will help identify patterns specific to data extraction and collect only structured data quickly and efficiently.

Artificial intelligence will also be able to learn and adapt easily to updates and changes in website structures. And because AI will collect information in a structured format, it will speed up the data extraction process several times over the way data is collected now.

Such advanced information-gathering capabilities will make it even faster to gather data for demand analysis and forecasting.

How to Select Web Scraping Software That Fits Your Needs and Budget?

Web scraping programs basically fall into 2 types:

  • Programs that work from the cloud with access through browsers and extensions.
  • Programs that are installed and run on your computer.

Since every business area has different needs, there are certain common factors to consider when choosing a website scraping tool if you only want to get fresh, relevant data. Here are the criteria for choosing the right web scraping software for demand forecasting:

Cost

Web scraping is quite a resource-intensive process because to extract data from websites correctly, web scraping software runs a virtual browser to properly load the pages and perform the extraction. This is all very expensive in terms of memory and processing power.

So cost is one of the first factors you want to know about when choosing a data extraction product. It’s worth choosing software or a service with clear pricing where you see exactly what you’re paying for.

Bypassing Anti-scraping Protections

Although web scraping is not illegal, there are sites that have anti-scraping measures in place. Therefore, a good web scraping tool should be able to avoid detection. These obstacles can be bypassed with scraper modifications.

Proxy Support

One of the main problems of web scraping is avoiding blocking by web servers. Since cloud-based web scraping solutions perform tasks for many users from a single server, there is the possibility of IP blocking. Therefore, it’s worth looking for a tool with proxy servers to help avoid blocking by sites.

Rendering Javascript

If a web scraping tool can render Javascript, the pool of websites will become much larger, as it will be possible to gather information from dynamic sites, for example. Being able to work with rendering Javascript increases the quality and quantity of the resulting content.

Scalability

It is better to choose a scalable tool, as your data collection needs will only increase with constant demand tracking. By choosing good scraping software that won’t slow down as your data volume increases, you can perform more information retrieval tasks in parallel.

Possibilities of Use

Web scraping should be accessible to everyone, so the software or tool you choose should be clear and easy to understand in order to use it. See if there are any tutorials or training articles offered on the subject.

If you are going to order data collection services, remember that there is a limit to the usage on your chosen subscription plan. There may be a limit on the number of queries and retrieval tasks, as well as the number of days of content collection. It is worth studying the services and tools you choose and possibly consult with specialists who offer their services to learn more about the capabilities of their software.

Conclusion

Demand forecasting is one of the most paramount tasks companies face in order to predict future sales and make decisions that enable them to compete in the marketplace. It is an effective method of business optimization that reduces waste, improves resource allocation, increases sales and copes with constant changes in demand in the most cost-effective way possible. This way, organizations can always be in the right place, at the right time, with the right offer.

 

We are a team of writers passionate about innovation and entrepreneur lifestyle. We are devoted to providing you the best insight into innovation trends and startups.

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