Top Down
This setting computes a seasonal forecast at the category level*, then distributes forecasted sales to the variants. The last 2 months of sales are used to determine each variant's % contribution to the total unit sales of the category. For example, if Variant A contributed 5% of the sales units to Category Z during the last 2 months, then Variant A will receive 5% of the category's forecasted sales in upcoming months.
*Note: if a category has less than 12 months of history, forecasts are first computed at the store-wide level then distributed to the variants.
Top Down Seasonal
This setting computes a seasonal forecast at the category level*, then distributes forecasted sales to the variants. When an item has 12+ months of sales history, the same time period in prior years is used to determine each variant's % contribution to the total unit sales of the category. For items with less than 12 months of sales history, we default to the top-down, non-seasonal method.
For example, if Variant A contributed 5% of the sales units to Category Z last December, then Variant A will receive 5% of the category's forecasted sales for next December.
When should you use top-down forecasting?
- When you have enough sales data in categories (more than 12 months), the top-down forecasting can automatically account for spikes in sales
- It also works for products without a long sales history. Top-down forecasting uses the product category pattern to help predict future sales
Account-wide top-down forecasting
To enable top-down forecasting, go to Account > Settings > Forecasting and select Top-Down as your forecasting method.