Overview

This article walks through Kapoq's Unit Forecasting report, which uses historical data to project unit sales for the next twelve months.

This article has the following sections:

1. How to Generate the Unit Forecasting Report

The Unit Forecasting report is available in two places: the Inventory module and the Analytics module. The same report is available in either place for your convenience. Note that to upload your forecast, you must go to the inventory module.

To download in the Inventory module, click on "Unit Forecasts" in the top ribbon and then click the bulk upload button and select the following:

To download in the Analytics module, first navigate to the Analytics module. Then select Reports in the top ribbon. On this screen, there is a download button for the Unit Forecasting report.

Once you hit download, you will be prompted to enter a "Start Date" and also select the relevant account you would like to use for forecasting.

The "Start Date" denotes the first of the twelve month forecast period. For example, if you select a "Start Date" of Jan 2024, then Kapoq will forecast sales for Jan - Dec 2024, using historical data from 2023 and before. Once you select your inputs and hit download, Kapoq will generate an Excel file with your forecast!

2. Unit Forecasting Report Contents

The first two tabs (in blue) are the input data, and the next four tabs (in green) are the forecasting logic. The final tab (in purple) is discussed in Section 4 below. For those starting off with the tool, start by looking at the Instructions tab.

A brief description of the forecasting tabs is shown below:

The final results in the output report are visualized with the graph below:

3. Methodology

This section gives a brief summary of the methodology used in the forecasting tool. First, SKU/ASINs with at least one unit of sales in the last 12 months are selected for forecasting.
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Unit sales are projected by month and by SKU/ASIN using three main assumptions:

Each of these three assumptions can be input in the forecast tab as seen in the screenshot below:

4. Uploading Forecasts

Unit forecasts can be uploaded into Kapoq as a custom daily demand! Simply go to the Inventory module and navigate to the Forecasts tab on the top ribbon of the Inventory module. Then click the gray “Bulk Upload button” and select “Upload Completed Template”.

You will then be asked to upload your unit forecasting spreadsheet. If no changes are made to this file before uploading, please save the file first before submitting for upload. Make sure that you have not altered the formatting of any columns on the “Forecast Upload Template” tab of the unit forecasting spreadsheet. To avoid errors, ensure your dates are formatted the same as cell B1 on the "Forecast Upload Template" tab. Do not add or delete any columns from this tab.

For SKU-based uploads, upon successfully uploading the file, the custom daily demand will then be reflected throughout Kapoq. For example, inventory planning will be based on this custom forecast.

Note that the unit forecasting uses a monthly timestep, and Kapoq splits the forecast equally amongst each day within the month. For example, if an item is forecast to have 300 units sold in a 30 day month, then the custom daily demand forecast is to sell 10 units per day.

5. Forecast Settings

Note that if you navigate to settings within the inventory module, you will see there are five settings related to unit forecasting, as seen below:

These settings are explained in more detail below:

Growth Rate - Set the annual growth rate used to project sales over the next twelve months. The growth rate is the percentage growth in unit sales. For example, if the run rate is 100 units per year and the growth rate is 10%, then the forecasted unit sales for the next twelve months would be 110. Note that you can override the default values in column T of the Forecast tab of the unit forecasting workbook.

Lost Sales Percent - Increase the run rate by including lost sales. For example, Kapoq may calculate that a certain SKU/ASIN had lost sales of 10 units for a given month. If you have this setting set to 30%, then Kapoq will bump up demand by 10 units * 30% = 3 units. Entering 0% will ignore lost sales. Entering 100% will fully consider all lost sales.

Return Percent - Adjust your unit forecast for returns. If a value of 0% is entered for this setting, then unit forecasting is based on net sales. If a value of 100% is entered for this setting, then unit forecasting is based on gross sales. You can also enter a value between these (e.g. 5%) which will be a weighted average of these two cases.

Role Model - Months with Sales - Only SKU/ASINs with at least one unit of sales for this many months will be included when constructing the role model sales curve.

Role Model - Historical Window - Total number of months of sales history used when constructing the role model sales curve.

In other words, if the settings are used as in the picture above, then a role model SKU/ASIN is a SKU/ASIN that has had at least one unit of sales for 18 or more of the past 24 months.
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For example, a SKU/ASIN with only a year (12 months) of sales history would then not be included when creating the role model sales curve. As another example, a SKU/ASIN with sales history for all 24 months would be included when creating the role model sales curve.

6. Limitations

Forecasting unit sales is more of an art than a science, and it is impossible to generate a perfect forecast. When working with this spreadsheet, please keep in mind the following limitations:

Please keep in mind that Kapoq's projected future sales are simply an estimate based on available inputs.

Lastly, we recommend that you save and re-open the unit forecasting workbook once downloaded.

7. Conclusion

Projecting sales is critical for Amazon sellers. Staying organized can help in many areas, including improved inventory management and reduced stock-outs. We hope you find this tool helpful to help you prepare for the future!