Amazon Tests Demand Forecast Feature For High-Velocity Items

Amazon is testing a new demand forecast functionality that will provide sellers with an estimate of future demand for their products for up to 40 weeks.

Accord to Amazon, the demand estimates are built using a probabilistic forecast model that is unique to each product, incorporating information like previous orders, active deals, and any seasonal influences.

Here's how Amazon describes the Demand Forecast tool:

The demand forecast is one of the key inputs that go into calculating restock recommendations. To use the tool, go to Restock Inventory and click View forecast in the Sales summary column for your ASIN.

A probabilistic forecast model helps you to understand the expected demand and the associated uncertainty. To convey this information, the tool provides two prediction levels:

• Mean: The expected quantity of weekly customer demand. The mean prediction level is represented by the green line in the tool.
• Optimistic: The dotted line shows the optimistic forecast. Demand for your product is expected to be at or lower than this level 90% of the time.
  
  

By default, the tool displays the mean prediction level for the forecast period. You can view the estimated demand for your product out to 40 weeks.

The tool also has two other lines, which represent the following information:

• The gray line shows the ordered units of your product. You can view your ordered units up to trailing 52 weeks if your product has been sold via Fulfillment by Amazon for that long.
• The yellow line is a comparison to the number of ordered units from last year. This line will be displayed only if you have been selling via Fulfillment by Amazon for at least two years.

Currently, in the testing phase, Amazon will show demand forecasts only for products with high-velocity sales, with plans to make it available for most ASINs in the future. New ASINs with limited historical data and ASINs that don’t fall under a specific category may also not show a forecast.

Because the demand forecasts are adjusted based on sales history, it may be impacted by out-of-stock inventory. Amazon says if a product goes out of stock only from time to time, the impact on the forecast would be minimal but long periods of lost sales due to being out of stock would have a greater impact on accuracy.

Will this new Amazon tool help you with your inventory and restock plans? Let us know in the comments below!