Retailers increasingly use AI and machine learning to forecast holiday season demand and balance inventory. However, they must have accurate data.
In 2021 and 2022, many companies struggled with excess inventory while stocking up for the holiday season. Overstocking can be a substantial expense and highly risky for businesses.
Because of this, as we reported in early September, many retailers are focusing their efforts on inventory, specifically, cutting down on some seasonal products to make more room for holiday season inventory they know has a better chance of selling.
And now it seems artificial intelligence and machine learning are the next steps for retailers to maximize forecasting efficiency for the holiday season.
AI and machine learning can be used to forecast demand based on various signals from online users, on top of factors such as the number of sales.
Walmart, in particular, is betting on machine learning to help get its holiday season inventory in order.
According to Reuters, Walmart developed its machine learning algorithm in 2019, and it “relies on weather patterns and each store’s past sales data to predict inventory needs of its more than 4,700 U.S. locations.”
However, while AI and machine learning algorithms are an enormous step forward in helping retailers forecast inventory better, it’s not yet a perfect solution.
The potential problem of relying too heavily on AI and machine learning algorithms is that merchants do not always have accurate data or know how to apply it correctly.
Providing machine learning algorithms with inaccurate data will generate inaccurate forecasts, which can lead to overstocking and understocking.
As Moses Guttmann, CEO and co-founder of ClearML, tells Joe McKendrick of Forbes, “AI requires meaningful data to make noticeable improvements and drive commercial innovation.”
Sellercloud’s predictive purchasing features help merchants forecast and automate purchasing, reducing errors and getting the right inventory into the warehouse.
On top of that, Sellercloud’s inventory and reporting capabilities help keep track of merchants’ inventory and provide accurate reports to help with informed decisions.