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The direct-to-consumer market will continue to grow steadily over the next 5 years. This means that dropshipping will continue to be popular as a simple and affordable online business model. Retailers and distributors use dropshipping to expand their assortment and test demand by buying small trial batches of goods.
Demand testing helps businesses make informed decisions about cash flow, resource allocation, and marketing costs.
By constantly experimenting and observing the actions of competitors and correctly identifying trends, a whole group of products can be identified for which there is already or is predicted to be an increased demand. It is necessary to take into account seasonality and prepare for sales of seasonal goods at least one month in advance.
Forecasting
Retailers usually forecast demand based on experience, sales history, trend preferences and seasonality. This approach allows for efficient supply chains. After testing demand, the retailer makes the final decision whether to buy in bulk or whether to continue with dropshipping.
In dropshipping, it is possible to sell by adapting to the “situation” in the market, or to create demand by promoting and advertising the product, the demand for which needs to be generated. In other words, sometimes creative solutions become value-added products.
Stelvel Ltd offers high-quality, powerful tools for effective demand planning that help manufacturers, retailers and distributors calculate the economic viability of a deal and plan revenues.
Data collection
The minimum amount of data needed for effective demand planning is information on transactions and sales over the last 3 years. This gives an indication of which products are seasonal and which are ad hoc and occasional. With Stelvel Ltd tools it is quite easy to import sales history from spreadsheets, databases, ERP or accounting systems.
Demand planning
Demand planning analyses the data received and decides which supplier to buy from and in what quantities. The services of Stelvel Ltd allow you to continually analyse demand and sales results.
Planning of deliveries
During this phase, you develop a plan for working with your suppliers, plan your delivery logistics, calculate your budget, and forecast your revenues. Based on this data, a final decision is made as to whether or not to proceed and key performance indicators are taken into account.
Marginality
When testing demand, don’t forget to calculate product margins. With an income of less than 30% cooperation will not be profitable.
Direct delivery orders
Study the demand for certain goods by analysing the number of queries on search engines. Then start looking for suppliers from whom you can buy high quality goods. It is important to the dropshipper that the goods supplied on behalf of your shop and brand are of high quality, have certificates and warranties. Your customer needs to become your loyal customer, and to do this, they need to receive not only high-quality goods, but also quality service. With direct-delivery orders, suppliers must be ready for more orders and shipment quantities.
Stelvel Ltd tools
If you choose demand generation tactics that do not react to customer behaviour but guide it, you can motivate customers to buy with the right marketing campaigns, promotions and special offers. Demand planning is then easier, you can act instantly and effectively. Stelvel Ltd tools simplify your testing processes with precise prioritisation functions for the tasks at hand.
Demand testing markedly improves the accuracy of business planning allowing retailers to effectively manage their product offerings, inventory levels and logistics solutions, significantly increasing profits.