Your customers lose too. You\u2019re leaving your customers with a negative impression of your brand and ruining the reputation you\u2019ve built as being a reliable company to purchase from. <\/p>\n\n\n\n
The average out-of-stock rate for ecommerce businesses is about 8%<\/a>, and it rises to 10% for promotional or discounted items. But it wouldn\u2019t be that high if every ecommerce business had an effective strategy for dealing with out-of-stock events. <\/p>\n\n\n\n In 2021, out-of-stock products were top of mind for retailers because of a global shipping crisis. 38.8% of small businesses<\/a> have experienced supply chain delays due to the pandemic. As of October 2021, approximately 200,000 shipping containers<\/a> remain unloaded on the west coast of the U.S. due to pandemic-related gridlock. COVID-19 has disrupted the entire global supply chain, including manufacturing, transportation, and last-mile logistics. <\/p>\n\n\n\n But out-of-stock events aren\u2019t limited to global pandemics. They can happen at any time<\/em> for a variety of reasons. <\/p>\n\n\n\n In this article, we\u2019ll help you understand stockouts and how they affect your business and explain what causes them. We\u2019ll also explain how to avoid out-of-stock items where possible and recover from them when they happen. <\/p>\n\n\n\n A stockout (or an out-of-stock event) is when a specific item is unavailable at the point of purchase when a customer is ready to buy. <\/p>\n\n\n\n Stockouts shouldn\u2019t be confused with general product unavailability, which is when demand for a product is so high that all retailers run out. Out-of-stock events refer to instances where one retailer in particular struggles with supply chain issues or poor inventory management.<\/p>\n\n\n\n A study by the IHL Group<\/a> found that retailers miss out on nearly $1 trillion in sales per year because of out-of-stock items ($144.9 billion in North America alone). Shoppers encounter out-of-stock events as often as every third shopping trip. <\/p>\n\n\n\n According to research by Adobe<\/a>, shoppers saw over 2 billion out-of-stock messages online in October 2021. Electronics suffer the highest out-of-stock levels, followed by jewelry, apparel, home and garden, and pet products.<\/p>\n\n\n\n Before we can talk about minimizing and fixing your out-of-stock events, it\u2019s important to understand why they happen. <\/p>\n\n\n\n A common reason retailers are out-of-stock is when there\u2019s a disparity between the amount of inventory a business thinks<\/em> it has and the amount it actually<\/em> has. The website thinks there\u2019s one more item on the shelf, but when the picker arrives to grab it, he finds that section empty. <\/p>\n\n\n\n What causes these inaccuracies?<\/p>\n\n\n\n In some cases, out of stock events are caused by unexpected surges in demand. As a retailer, it’s your job to anticipate these surges and order\/create products as necessary. This is especially important for your most popular SKUs. <\/p>\n\n\n\n If you don\u2019t have enough cash to replenish your inventory, you simply can\u2019t buy it. This is a significant problem<\/em> that deserves your immediate attention. You might need some outside funding or better payment terms with your vendors. <\/p>\n\n\n\n Unless you are dropshipping, you can\u2019t stock products if they never physically arrive at your facility or your fulfillment house. Your shippers and vendors could fail to send your products on time. Or they might send the wrong products, creating delays and logistics headaches.<\/p>\n\n\n\n In many cases, inventory management issues due to logistical problems are outside of your control, such as the current supply chain crisis. If your products are sitting on one of those unloaded containers, your inventory is unreachable. <\/p>\n\n\n\n Stock replenishment is the practice of ensuring that you always have products to sell to customers. Someone in your organization (it may be you) needs to track the inventory, compare it to your demand forecasting, and order more as needed. 70% to 90% of stockouts<\/a> are caused by poor shelf replenishment practices.<\/p>\n\n\n\n Careful attention to stock replenishment is especially important in the era of omnichannel selling, where you need to track inventory across multiple platforms.<\/p>\n\n\n\n The best way to answer this question is with empathy. You\u2019ve been on the receiving end of stockouts before. You need something, and you need it now\u2026 but finding it in-stock turns out to be a tough proposition.<\/p>\n\n\n\n How did you deal with the situation?<\/p>\n\n\n\n Which did you choose? And how did you react?<\/p>\n\n\n\n Nobody likes stockouts. At best, they are disappointing to the eager buyer. At worst, they hurt sales and create irate customers. It doesn\u2019t have to be that way, though. There are a variety of effective ways to deal with out-of-stock products that increase revenue<\/a> and boost customer satisfaction.<\/p>\n\n\n\n Like many challenges in ecommerce, it’s easier to take proactive steps to avoid stock outs, rather than respond to them when they occur. Let\u2019s go over some ways you can avoid out-of-stock events.<\/p>\n\n\n\n Obviously you can\u2019t see the future, but it\u2019s critically important that you forecast your inventory needs correctly. 73% of retailers<\/a> struggle with this, but you must<\/em> figure it out. <\/p>\n\n\n\nWhat is a Stockout?<\/h2>\n\n\n\n
What Causes Stockouts?<\/h2>\n\n\n\n
Inaccurate item counts<\/h3>\n\n\n\n
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Poor demand forecasting<\/h3>\n\n\n\n
Poor cash flow management<\/h3>\n\n\n\n
Logistics challenges<\/h3>\n\n\n\n
Poor stock replenishment<\/h3>\n\n\n\n
How Do Customers Perceive Out-of-Stock Events?<\/h2>\n\n\n\n
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How to Avoid Stockouts in Ecommerce<\/h2>\n\n\n\n
Step 1: Anticipate your demand accurately<\/h3>\n\n\n\n
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