Forecasting Holiday Sales by Tracking Your Daily Sales Flash
The holiday season is ramping up with a bang. And it will be a holiday season like no other. People will shop more because they're at home. People will give more gifts because they won’t be able to travel to see family and friends as the pandemic drags on without an end in sight. People are simply pivoting to more online shopping as in-store shopping is restricted.
With all these unknowns, it's necessary for merchants to be able to forecast as early as possible how the holiday season will play out. Perhaps the most important data for projecting holiday sales are early season results.
The best way to look at early season results is with a daily sales flash report. The daily sales flash should include:
- daily sales;
- cumulative sales from Nov. 1 forward;
- a daily sales comparison of the first Monday in November vs. last year’s same first Monday in November; and
- cumulative daily sales comparing this year’s sales to last year’s cumulative sales.
The pattern for sales is established pretty early, and early sales are typically a good predictor for the entire holiday season. If the season starts strong, the tendency is for it to stay strong. And if the season starts slowly, it will be difficult to recover.
While early sales are a strong predictor of full-season sales, look closely at holiday milestones, including Black Friday, Cyber Monday and “second Cyber Monday” to see how your peak sales days compare to last year’s peak sales days.
It will also be useful to see the ratio of transactions that are gift orders (i.e., where the bill to and ship to addresses are different) vs. self-purchase transactions (i.e., where the bill to and the ship to addresses are the same).
It's also very useful to highlight the top-selling items early in the season to react to potential out-of-stock situations and to order more inventory of items that are projected to sell through during the holiday season.
Management wants and needs to know as early as possible how sales are projected for the entire holiday season. Using your daily sales flash is the most reliable way to build your baseline sales forecast as early as possible in the holiday season. Having a reliable forecast early allows you to craft promotional strategies, email messages, and inventory plans with enough reaction time to optimize both top-line revenue and bottom-line profitability this holiday season.
Understanding and analyzing your early season sales lets you control your season. And with all the unknowns with this first pandemic-driven holiday season, controlling the season is more important than ever before.
Jim Coogan is the founder and president of Catalog Marketing Economics, a consulting firm focused on catalog circulation planning.