How to Forecast Inventory and Plan Q4 Ad Spend

In the dynamic world of e-commerce, preparing for Q4 - the peak sales season for many brands - requires precision, strategy, and foresight. The stakes are even higher in 2025, as brands grapple with ongoing global uncertainties like tariff changes, shifting consumer behaviour, and evolving supply chain dynamics. This comprehensive guide breaks down key strategies for inventory forecasting, ad spend management, and planning beyond Q4 to set up your business for success.

Drawing from insights shared by operations and financial leaders in the e-commerce industry, this article highlights data-backed strategies, risk management frameworks, and actionable tips to help professionals in retail and supply chain sectors optimise their Q4 operations.

Understanding the Current Market: 2025 Macro Trends

The e-commerce landscape in 2025 has been shaped by several macroeconomic factors that are influencing how brands approach Q4 planning. Among the key considerations:

1. Tariff Uncertainty and Supply Chain Challenges

• Trade tariffs have fluctuated unpredictably, creating challenges for businesses manufacturing overseas. This has made inventory forecasting and supplier negotiations more complex.

• Freight charges, while having decreased due to reduced demand in ocean freight, are still subject to volatility. Brands are relying heavily on freight forwarders and supply chain partners for real-time updates.

"It’s crucial to have strong relationships with freight partners who live and breathe this industry. They are often more up-to-date than the news itself", emphasised Samish Kartka, COO of a wellness brand.

2. The Price-Sensitive Consumer

• Rising consumer debt and affordability issues stemming from higher interest rates on housing and vehicles have made consumers more price-conscious.

• Despite these challenges, e-commerce continues to grow as a percentage of total retail sales, providing an opportunity for online brands to capture market share.

3. The Rise of AI in Consumer Decision-Making

• Consumers are increasingly turning to AI tools like ChatGPT for product recommendations, challenging traditional SEO strategies. Brands must now focus on creating data-rich, authoritative content to appear in AI-driven search results.

Effective Inventory Forecasting for Q4

Accurately forecasting inventory for Q4 is about striking a balance between not overstocking (which ties up cash flow) and not running out (which means lost sales). Here's how experts recommend navigating this:

1. Leverage Historical Data and Real-Time Indicators

• Start with last year’s Q4 sales data but adjust for current market trends. For example, many brands use Labour Day performance as a benchmark for holiday season demand.

• Factor in category-specific trends. For instance, health and wellness brands noted that post-pandemic, consumer interest in health products has continued to grow, providing a stable demand base.

2. Plan for Risk and Adjust Accordingly

• Inventory decisions are fundamentally a bet. As John Blair, founder of Free to Grow CFO, points out, "Placing inventory purchases is all about making sound, risk-adjusted bets."

• Assess risks like seasonality, perishability, and obsolescence when deciding how much stock to order. For example, apparel brands face higher risks with seasonal products like sweatshirts compared to supplement brands with consistent demand year-round.

3. Build Flexibility into Supply Chains

• Diversify suppliers across regions to mitigate risks from tariffs or geopolitical issues.

• Negotiate better payment terms with suppliers to reduce cash flow strain, particularly for large Q4 orders. Many suppliers are open to longer payment terms if approached collaboratively.

Crafting A Strategic Ad Spend Plan

With inventory in place, the next step is driving demand. Ad spend in Q4 can make or break your profitability, especially in a year with heightened consumer price sensitivity. Here's how brands can optimise:

1. Understand Your Business Model

• Different e-commerce models require different ad spend strategies:

  • High LTV (Lifetime Value) Brands (e.g., subscription or consumables): Can afford to break even or lose money on new customer acquisition during Q4, as the value comes from repeat purchases.

  • New Customer Dominant Brands (e.g., durable goods): Must ensure profitability on first-time sales, as there’s limited repeat purchase potential.

  • Apparel and Seasonal Categories: Need to focus on fast turnover, as unsold inventory can become obsolete after the season.

2. Align Ad Spend with Inventory Levels

• Collaborate closely with marketing teams to prioritise ad spend on overstocked products. For instance, if sauna blankets are over-inventoried compared to other products, marketing should focus on promoting these items to reduce excess stock.

3. Diversify Marketing Channels

• E-commerce brands are increasingly moving beyond Meta (formerly Facebook) and Google ads to explore channels like affiliates, organic content, and AI-driven platforms.

• Creating educational content, such as tutorials or product benefits, helps brands engage with consumers who use AI tools like ChatGPT to make purchase decisions.

Planning Beyond Q4: Preparing for Q1

Many brands overlook Q1 amidst the frenzy of Q4, but for industries like health and wellness, Q1 is just as critical due to New Year’s resolutions and continued health-conscious spending. Even for brands that see slower Q1 sales, proper planning is essential to avoid cash flow issues, especially given the timing of Chinese New Year.

1. Synchronise Q4 and Q1 Planning

• For brands manufacturing overseas, Q1 orders often need to be placed by October or November, well before Q4 sales data is available. This requires careful forecasting for both quarters.

• Consider Q1 as an opportunity to clear any overstock from Q4 by offering promotions or repositioning products.

2. Use Financing Strategically

• Finance Q1 inventory with long-term debt that matches the time it will take to sell off stock. Short-term debt can lead to cash flow strain if Q1 sales are slower than anticipated.

• Negotiate extended payment terms with suppliers to reduce upfront cash requirements.

3. Adapt Based on Performance

• Monitor Q4 performance closely, adjusting ad spend and promotions in real-time to maximise opportunities while also gathering insights for Q1 decisions.

Key Takeaways

• Tariff Challenges: Build strong relationships with freight forwarders and diversify suppliers to stay agile amidst tariff fluctuations.

• Risk-Adjusted Forecasting: Assess risks like seasonality and build flexibility into supply chains to manage inventory effectively.

• Data-Driven Ad Spend: Align ad spend with your business model and inventory levels to maximise profitability.

• Leverage Content for AI: Invest in authoritative, scientific content to engage consumers using AI tools for product research.

• Q4-Q1 Planning Link: Plan inventory and cash flow for both Q4 and Q1, especially if manufacturing overseas, to avoid operational bottlenecks.

• Long-Term Financing: Match debt repayment terms to inventory turnover periods to maintain healthy cash flow.

• Close Collaboration: Foster alignment between operations, marketing, and finance teams to optimise campaigns, inventory management, and profitability.

Final Thoughts

Planning for Q4 in 2025 requires a blend of historical data, real-time insights, and strategic decision-making across operations, marketing, and finance. By taking a holistic approach that includes risk assessment, supply chain flexibility, and a focus on long-term growth, brands can not only navigate the challenges of the peak sales season but also set a strong foundation for Q1 and beyond.

E-commerce professionals, now is the time to evaluate your strategies, forge strong partnerships, and embrace innovative tools to stay ahead in a competitive market. Success in Q4 is no longer about surviving - it’s about thriving and planning for sustained growth.

Source: "Black Friday, Conquered: E-Commerce Holiday Planning for 2025 | Settle Webinar" - Settle, YouTube, Sep 24, 2025 - https://www.youtube.com/watch?v=bEE271Do4P0

Related Blog Posts

• 7 Inventory Forecasting Methods for E-commerce Success

• Top Strategies for Seasonal Inventory Planning on Shopify in 2025

• Demand Forecasting: Essential Steps for E-commerce Stores

• Scenario Analysis: Improve Data-Driven Inventory Decisions