How To Use Seasonal Forecasting To Grow Your Business (2025)

Many ecommerce owners see their sales surge at different times of the year. These surges tend to align with certain holidays or events, like Black Friday, Christmas, or Mother’s Day. While seasonal sales are a welcome addition to your bank balance, it’s important for you to be able to meet demand when it’s needed.

Basic seasonal demand forecasting helps you make strategic decisions, like whether you should upgrade your equipment, or when you should place your wholesale orders. Those are the kinds of calls you want to be able to make for yourself, and a demand forecast is one of the best ways to do it.

What is seasonal demand forecasting?

Seasonal demand forecasting is commonly used by ecommerce merchants to determine how many sales they can expect at different times of the year. Customer needs can change dramatically between seasons, and knowing how many units you’re likely to shift can ensure you have enough stock and can manage your cash flow. 

Why seasonal demand forecasting is important

There are months when it feels like you’re swimming in money—and others where your bank account feels more like a desert with a lone tumbleweed blowing through it.

That’s because most businesses experience seasonal peaks and troughs. A few months of the year fund your business for the others, and you probably spend your “off” months investing back into your business.

That’s why forecasting demand is critical—especially for seasonal businesses that rely on sales from one peak period.

Ensure all your expenses are fully covered

Business is never easy, let’s get that straight—but it’s easier to wing it with your business finances if you earn $5,000 every month and have only $1,500 a month in expenses.

But if you earn $50,000 two months of the year, and your monthly expenses aren’t very stable, forecasting is critical. It’s one more thing that will help you resist those treat-yourself moments in high-revenue months, and help cover any shortfalls during the offseason.

Proactively invest in your business

If you could really use a new laptop or upgraded equipment, a forecast can help you figure out when you’ll be able to afford those big purchases.

A forecast can also help you decide whether taking business financing to fund a purchase would be a good move.

Set yourself up for success during the busy season

Stocking up ahead of the busy season is critical, which is why we recommend doing things like making sure you have enough shipping supplies ahead of a busy sales season, such as Black Friday and Cyber Monday. The importance of preparing for busy time periods is magnified when the busy season is your only season, so you’ll need to invest in inventory, supplies, and more before you need them.

Take charge with strategic decision-making 

Maybe this is the year you finally decide to spring for seasonal help or take additional business financing. Making those decisions is much easier when you have an idea of what your year looks like, what you’re committed to spending already, and how much you think you’re going to sell.

Increase customer satisfaction

Don’t leave shoppers disappointed with “out of stock” notices. Seasonal demand forecasting estimates how many units you’ll need for the busy season, which means there’s less chance of a stock out. Cue happier customers that come back. 

Reduce risk

Relying on seasonal sales is risky without a solid strategy. Seasonal forecasting not only avoids stockouts by ensuring you have enough inventory to satisfy demand, it also helps you prevent over-ordering ahead of major shopping holidays and reduce any excess inventory costs.

Challenges of ecommerce demand forecasting

It can be tricky trying to predict seasonal variations. But after a few years in the game, you’ll start to identify patterns in shopping behavior from your past sales data. This will arm you with a lot of the information you need to make strategic decisions, but there are still a few challenges that can complicate things. 

1. Supply chain delays 

There’s no predicting when a freak weather incident or staff shortages will hamper your supply chain. This can impact your demand forecasting because, obviously, you’re not psychic and unlikely to know if a shipping container is going to get stuck in the Suez Canal again or not.

2. Inaccurate data

Data is the bedrock of seasonal demand forecasting. Without it, you can’t take past insights and project them onto your future predictions. Even the best-kept datasets can let you down, whether due to human input error, internet downtime, or duplicates. 

3. Changing competition

Ecommerce is booming, which means there’s a fresh wave of competition to contend with every year. Any number of new brands could swoop in out of nowhere and steal your customer base. You might have had an excellent holiday season last year because you had very little competition. But this year, things could be a totally different story, and there’s no concrete way to predict that. 

4. Shipping costs

Shipping costs tend to shoot up during busy times of the year to meet demand. Trying to factor this in can be difficult when you can’t get specific information on costs and timings. 

5. Evolving consumer preferences and trends 

Consumer preferences change with the seasons. What was a total hit last year might not be again this year, and vice versa. This can make it hard to predict what’s going to happen in the upcoming busy season.

How to build a reliable seasonal demand forecast

1. Set goals

Before you start digging into your data and polishing your crystal ball, think about what you want to achieve during the upcoming season. Use past sales figures and patterns to determine what’s possible, and make sure your goals are SMART:

• Specific
• Measurable 
• Achievable
• Relevant
• Time-bound 

For example, “Increase December holiday sales by 10% on last year” is a better goal than “Increase holiday sales.” 

2. Collect data

Once you know what you’d like to achieve, it’s time to get your hands dirty with data. The more knowledge you have, the easier it is to make accurate predictions.

In particular, look at:

• Sales data. How many products did you sell last year? Which products were your bestsellers? How much sales revenue did you make?
• Inventory data. Did you stock out last year? How many products do you currently have in your inventory? 
• Customer data. Who are your best customers? How much does each customer typically spend in your store?
• Data on your competition. Who are your biggest competitors? How many sales did they make last year?

3. Predict future demand

Your job is to make a reasonable prediction, not to nail the exact numbers you’ll be selling a year from now.

So how do you do that? There are a few ways to predict future demand. You can look at:

• Industry statistics. Is there a consistent growth rate in your industry, or have analysts predicted a specific growth rate for the next few years?
• Industry peers. Talk to other business owners. When do they typically see the most sales? How much do they sell in a year, roughly?
• Your own sales history. If you’ve been in business for a while, how much do your sales grow every year? How much did they grow last year, and how much did you sell last year?
• Signed deals. If you’ve got wholesale contracts already in place for next year, you know you’ll sell that much already, so it goes in your seasonal forecast.

If you’re a new online business, or if you plan on launching new products this year that have no historical data, use what you know about your business and your customer base to make a best guess. You’re the expert on what you do, after all.

Now it’s time to get into the numbers.

Let’s talk products. Specifically, how many do you have? If you’re rocking fewer than five or 10 signature products, you can give them each their own, separate seasonal forecasts. Once your products hit that double-digit mark, you’ll want to group them into product lines for a more manageable forecast.

Set up each product or product line as a row in your spreadsheet under “Product Unit Sales.” This is where you’re going to input your forecast of how many units you’ll sell of each product this coming year, and which month you’re going to sell them.

Download your own copy of the forecasting spreadsheet template. Go to File > Make a Copy to save one to your Google Drive account or to your desktop and keep your forecasts private.

Next, add in the prices you plan to sell those products at each month. Maybe you plan on raising your prices mid-year, or you offer so many sales in November that you know your average sale price is lower. Add in those monthly prices now for each product line.

Scroll down a bit, and boom: you have a sales forecast.

4. Measure and adjust

Keep a close eye on your numbers as the season progresses. Seasonal demand forecasting isn’t a “set it and forget it” activity. Instead, you should regularly check in to see whether you’re hitting the numbers you predicted or whether there are any friction points. 

The more you stay on top of your predictions versus what’s actually happening in your business, the easier it is to pivot to meet excess demand or address surprise challenges—like a shipping container getting stuck in the Suez Canal. 

Advanced forecasting techniques

ARIMA and SARIMA models

ARIMA stands for Autoregressive Integrated Moving Average. It combines three pieces:

• AR: Patterns where past values influence future ones, like how a hot selling product usually keeps selling well.
• I: Making your data more stable by removing overall trends.
• MA: Looking at past prediction errors to improve future ones.

SARIMA (Seasonal ARIMA) adds a fourth superpower. It can handle regular patterns that repeat, like Black Friday sales spikes or summer slumps.

Think of them as pattern-spotting pros that look at past trends, seasonal swings, and random fluctuations in your data. While these aren't technically machine learning models, they laid the groundwork for modern ML forecasting systems.

Neural Networks

Neural Networks use use sophisticated ML algorithms called "deep learning" to figure out which factors matter most for your predictions.

They're good at dealing with messy, real-world data where multiple factors affect your sales, like weather, local events, and economic conditions all hitting at once.

The cool thing is that neural networks keep learning and adjusting as new data comes in, so their forecasts sharper over time.

Random Forests

Random forests are like having a whole crowd of machine learning models making predictions together.

They're part of a family of ML techniques called "ensemble learning", or, getting multiple algorithms to work together for better results. Instead of relying on just one forecasting method, they create hundreds of different prediction trees and then vote on the most likely outcome.

External factors impact on forecasting

External factors play a huge role in shaping demand patterns. Understanding them can help you build more accurate seasonal predictions. 

Here are the five most common to consider:

1. Weather effects: Weather directly impacts consumer behavior and product demand. A warmer-than-usual winter can tank sales of cold-weather gear, while an extended rainy season might boost indoor entertainment products.
2. Economic conditions: During economic downturns, consumers typically pivot to lower-priced alternatives, while periods of growth often see increased spending on premium products.
3. Competitors: Major sales events or new product launches can create unexpected demand fluctuations. When a competitor announces a big promotion, it often pulls forward or delays purchases in your forecast period.
4. Social trends: TikTok trends and viral moments can make specific products fly off shelves overnight, completely disrupting normal seasonal patterns. These sudden spikes are increasingly common and harder to predict.
5. Regulatory changes: New regulations might restrict product availability or change consumer access. While less frequent than other factors, regulatory shifts can force significant adjustments to your forecasting models.

Best practices for improving your seasonal demand forecasting

Understand which customer segments are more active

Break down your customer base into clear groups based on their buying patterns throughout the year. For example, some customers might go all-out during holidays, while others consistently buy year-round.

Look for patterns like:

• Which groups spend more during summer?
• Who shops early for seasonal sales?
• Do certain customer segments always buy specific seasonal items?

Matching these patterns with your sales data helps predict demand and avoid the classic mistakes of over- or under-stocking. It also helps you serve each customer segment more effectively during their peak seasons. 

Know your seasonal sales trends

First and foremost, the best way to forecast your sales is to know your historical sales, and what your peak season sales are usually like year over year. So, if you’ve been tracking your sales with a system like QuickBooks Online, do a few reports to get a sense of your sales trends.

Compare your sales year over year, and note if there are any outliers—the spike or dip in sales unrelated to anything else. 

If possible, generate a report that segments by customer type and looks at the sales and growth from each customer over the past year or few years. There’s a good chance you’ll have a couple more profitable—or more reliable—customers than others, and you can focus on keeping those relationships running smoothly.

Start forecasting early

The earlier you start working on your forecasts, the more time you’ll have to plan for your best-guess forecast.

Use the templates above to predict your seasonal inventory needs and maximize your cash flow, so you’re prepared for every forecasting scenario you can dream up.

Keep stock reserves on hand

Seasonal businesses are more likely than others to experience inventory issues. That’s because inventory management is tough when your sales vary so much between seasons.

You can avoid this problem entirely by making sure you keep a little bit of inventory on hand in between seasons to tide you over until you can place your next order. Try to keep your minimum inventory at about 70% of your maximum inventory level for your busy season.

Get an inventory management software

Speaking of inventory planning and management, you’ll want to get inventory management software to help automate forecasting. 

These tools not only can track inventory levels for all the items you carry, but they also can be integrated with other tools like QuickBooks Online or your ecommerce platform, so your inventory levels are updated automatically and you can see if you’re about to run out of a product.

Shopify app Stocky is a great inventory management tool that helps you have better supply chain visibility and know what products you should order based on product performance and seasonality.

Pay attention to your supply chain

Successful seasonal forecasts hinge on a slick supply chain. You need to know exactly what steps are involved and identify any friction points before they become an issue. To make this possible, it’s important that you constantly check in on each stage of the supply chain to make sure everything’s flowing as it should be. 

For example, if you find there’s a bottleneck during the manufacturing stage, you can address it quickly before it affects other parts of the supply chain.

Forecasting seasonal demand for your store

Your forecast isn’t set in stone, and one of the most useful things you can do is adjust the numbers as you get more information.

Right off the bat, you might realize that some of your variable expenses aren’t hitting at the right time, and you might want to move them around.

Later on, as sales and orders start to come in, you might realize you need to adjust your sales forecast, and your corresponding costs to fulfill those orders.

You might even realize that, yes, you do need to secure some business financing, and you’ll have a good idea of how you’re going to use the money, since you’ve already set a budget.

And that’s all OK.

In fact, it’s great, and it’s the best part of having an annual forecast in place for your seasonal business. Being able to adjust your plan, instead of hoping for the best when things change, will help you feel on top of your business finances all year round.

*Shopify Capital loans must be paid in full within a maximum of 18 months, and two minimum payments apply within the first two 6 month periods. The actual duration may be less than 18 months based on sales.