How to forecast sales for a range extension

Build a forecast without the launch

Define the affected range, sales channels and forecast period. Include products customers could replace with the imported extension, even if they sit in another category. Forecast their sales without the launch, allowing for seasonality, promotions, price changes and availability. Preserve this baseline so the comparison does not change whenever the launch forecast changes. For baseline preparation, see our guide to separating normal demand from sales spikes.

Use customer sales rather than warehouse receipts or deliveries into a distributor. Flag periods when products were unavailable, since recorded sales then give an incomplete picture of demand. Keep the commercial forecast separate from supplier commitments; our guide to demand forecasts and firm orders addresses that distinction.

Identify where the new product's sales come from

For each customer group and channel, ask what buyers would purchase if the extension were unavailable. Separate genuinely additional purchases from transfers out of your existing range and purchases brought forward from a later period. Winning a competitor's customer can add demand for your business; moving your own customer between products does not.

Use comparable launches, customer purchase histories and a limited selling trial to support the assumptions. Ask customers which existing item the extension would replace, rather than only whether they like it. Treat stated interest as a hypothesis to test through purchases. Record the reason and evidence behind each assumption.

Model substitution against named products

Create a worksheet linking the extension to each existing product it could displace. Record baseline sales, expected sales transferred away and remaining sales after launch. Assign each transferred purchase to its original product so the same loss is not deducted repeatedly. Use a common purchasing basis where pack sizes differ.

Reconcile the worksheet: extension sales should equal additional purchases plus transfers plus purchases brought forward. Existing-product sales after launch should reflect those transfers and any separately supported changes. Extend the forecast far enough to show the later sales lost when customers buy early. Keep uncertain sources of demand visible.

Prepare cautious, central and stronger-demand cases. Vary substitution, selling price, returns and launch timing together where they are connected. Include a case where the extension sells well but mainly replaces a more profitable existing item.

Compare contribution across the affected range

Define unit contribution consistently as net selling revenue less landed product cost and variable selling costs. Allow for discounts, returns, fulfilment, channel fees and variable support costs. Use the same cost boundaries throughout. For the import cost build-up, see understanding your landed price.

Multiply forecast sales by unit contribution for each affected product, then total the range under each case. Compare the launch case with the baseline and deduct additional launch and range costs. Include sampling, tooling, testing, promotion and expected markdown or disposal losses on displaced stock where relevant. Count each cost only once.

Keep unchanged overheads consistent between cases. A transfer can improve contribution if the extension earns more per comparable purchase, but launch costs and stranded stock may outweigh that gain. Assess funding separately using working capital for China orders; contribution does not show when cash is needed.

Set the order decision and review the result

Before ordering, agree what improvement in range contribution would justify the launch, how much downside the business can accept and what evidence would trigger a smaller order or a pause. Ask Cambridge China Bridge's China-based staff to check factory pack sizes, minimum order quantities, tooling costs and replenishment constraints against the model.

After launch, compare actual sales and contribution across the affected range with the preserved baseline. Use comparable customers or channels without the extension where practical, and account for promotions, stock shortages and market changes. Review repeat purchases after launch promotion ends. Update substitution assumptions before replenishing rather than treating the extension's sales alone as proof of growth.