Inventory Forecasting: Why Are CFOs Weighing In?

Retail profit margins in 2026 are becoming increasingly vulnerable. Operating costs are sky high and tariffs have dampened consumer spending, triggering the largest e-commerce slowdown in more than a decade. In addition, returns are taking a huge bite out of profits, accounting for an estimated 19.3 percent of e-commerce sales in 2025.

With profitability under threat, e-commerce retailers are seeking innovative ways to protect their bottom line — and inventory forecasting stands out as an area ripe for optimization.

Forecasting: Not Just an Operations Issue

Juggling an increasing number of channels, marketplaces, and SKUs, e-commerce businesses are managing inventory across a mix of warehouses, retail locations, and third-party fulfillment services — e.g., Fulfilled by Amazon (FBA) — as well as supporting upwards of five sales promotions annually.

This level of complexity moves forecasting out of the strictly operational purview and into the financial arena, with stocking decisions directly affecting margin, capital allocation, and financial risk at a level that's pulling the chief financial officer (CFO) — in cooperation with sales, supply chain, and warehouse leadership — into the conversation.

Spreadsheets: The Achilles Heel of Forecasting

With inventory-related mistakes directly affecting profitability, cash flow and working capital, forecasting accuracy is critical. Yet many e-commerce retailers still rely on inefficient manual processes and guesswork without clear insight to make forecasting and replenishment decisions.

They're bogged down with complex spreadsheets, often driven by manual exports from sales channels stitched together with custom formulas. Teams waste enormous amounts of time assembling and cleaning data; decisions are hard to explain or audit. Furthermore, reliance on tribal knowledge has the potential to create a costly single-point-of-failure.

In fact, spreadsheet-based manual forecasting processes are a silent cost center, with errors and inefficiencies representing tangible hits to gross margin and working capital. For example, overbuying to stay safe often results in post-promotion markdowns and margin losses, with excess stock tying up capital. On the flip side, underbuying leads to stockouts and missed sales while damaging customer relationships. It’s a lose-lose situation.

Taming Forecasting Chaos

Given the bottom-line impact of forecasting decisions, e-commerce retailers are adopting inventory management and forecasting tools designed to automate the operational workflow while functioning as a financial decision engine. Taking cues from their CFOs, online businesses are ensuring their inventory forecasting software has the capacity to provide answers to their key financial questions:

• COGS clarity: How accurately and consistently can we track the true cost of goods sold (COGS), including purchase price, freight, duties and fees?
• Landed cost visibility: Can we attribute the full cost of a container to the products and POs inside it to avoid underestimating unit costs?
• Profitability by SKU, channel, and location: Are we able to see where we’re actually making money vs. just moving volume?
• Channel and fulfillment cost visibility: Can we easily see channel fees and shipping costs to adjust pricing and assortment?
• Capital efficiency: How much cash is tied up in inventory by category, location, and age? What happens to cash flow if we adjust coverage days or service levels? Can we quickly see stock turns, days of inventory on hand, and how changes in buying patterns will affect cash flow?
• Return rates and reasons: Is it easy to identify products with high return rates? Can we determine whether the issue is quality, fit, or customer expectations?

Moving forecasting and inventory logic out of spreadsheets and into sophisticated inventory management software is a distinct competitive differentiator, transforming forecasting from cost center to profit lever by helping e-commerce retailers make data-driven decisions that protect margins, free up capital, and create a reliable customer experience that drives consistent revenue.

Johannes Panzer is head of industry solutions, e-commerce at Descartes, a provider of on-demand, software-as-a-service solutions focused on improving the productivity, performance and security of logistics-intensive businesses.