Illustration by Pablo Stanley
Words by Nirman Dave
Continuing our Guide to Machine Learning and eCommerce, we break down how to perform sales forecasting with machine learning inside your Shopify store.
Let’s get into it.
What is Sales Forecasting?
Every time a customer buys one of your products on Shopify, you gain sales data you can use to make predictions. Sales forecasting is predicting future sales with data. With machine learning, you can use historical sales data, economic trends, and public sales data to forecast future revenue.
This is incredibly useful for Shopify store owners to know where to allocate resources, market to customers with high LTV, and identify personas. Using historical data inside your Shopify store, our app automatically predicts sales. All you need to do is click one button.
Let’s Go Through The Process Step by Step
For this post, we will focus on the question “Which demographic will have the highest sales?”
Hit the check box and press “Predict” to get a report.
- As you work your way down the report, you can see the predicted sales and the range of revenue. For example, you can see customers in Bonn, Germany are predicted to produce $24.971, give or take $0.021.
- As you scroll down you can see the top drivers that impact sales revenue by demographic. They are ranked most impactful factors to least. You can see, the price, taxes, and referring site have the most direct impact on sales. When you hover over the graph, you can get a more detailed explanation of the prediction graph
- Name your report something memorable with a date, we recommend stating what you predicted to easily scroll and compare month by month. Other great names would be “Sales Forecast - Q1 2020” or something like that.
- At the top of your report you can export your report to a CSV file to archive or share later. By hitting the “More” drop down menu, you can also refresh your report as new sales come in if you want to keep your predictions all in one updated report.
- At the bottom of your report, you can see your tech specs of the report. For more information on how we preprocess data and build machine learning models, read this post.
Explore Other Applications of Machine Learning in Shopify
The uses of machine learning for eCommerce doesn’t stop at sales forecasting.
Read how to predict customer retention and attribution.
If you’re interested in using non-eCommerce data to make predictions, join our Shopify waitlist here.