Stay Ahead of Stock-Out: Strategies for eCommerce Businesses

When an ecommerce runs out of inventory for a particular product, it is a Stock-Out. This phenomenon is dangerous for diverse reasons such as lost sales and lack of customer satisfaction. Let’s talk about what you can do to prevent it and, when necessary, solve it.

Causes of a Stock-Out

So, how can a Stock-Out happen? We always tend to think that we have everything under control, but busy campaigns for ecommerce businesses such as Christmas, Sales or Black Friday can throw you off track.

Lead time issues are one of the most common reasons for Stock-Outs. If suppliers are unable to deliver products in a timely manner, Stock-Outs can occur. They may also be the result of something positive, such as a particular item or collection receiving an unexpectedly positive response from consumers.

But whatever the driver is, the main reason for this phenomenon is always a lack of organization due to inaccurate forecasting.

Costs of a Stock-Out

Having frequent Stock-Outs can have serious economic consequences for an ecommerce business beyond just the cost of rushing to order more inventory. Definitely, Stock-Out costs are simply too high to look the other way.

The first concern that you might experience is the possibility of losing a purchase, but you also have to consider losing a client. One way to mitigate this issue is replacing the “out-of-stock” message with a “restocked in X days”, because loyal customers will probably consider waiting until it is available again.

Also, anything out-of-stock can disrupt the entire logistics process of your ecommerce store, leading to added workload for employees and increased expenses for express shipments.
Consumers are open to trying other brands, and in a world where most of us expect instant gratification, consumers also crave convenience. Consumers will likely purchase a product of similar quality that is readily available. In fact, 43% of consumers would look for a similar product if the preferred brand were out-of-stock.

Prevention on Stock-Outs

The most effective way to reduce your chance of Stock-Out is to find a frictionless inventory planning method. To do so, it’s important to perform regular stock counts (better if it is automatically), monitor the flow of inventory and plan refillings accordingly.

These are some measures that will help you lower the Stock-Out risks:

Integration of sales and marketing channels

Integrate your sales channels such as your online store, marketplace, and brick-and-mortar locations with your marketing channels (social media, email marketing, etc) to get a more complete vision of demand and better forecast of future sales.

Automated inventory counting

Automatically counting inventory on a regular basis can help you stay on top of stock levels and prevent Stock-Outs. If you aren’t yet, start using technology to accurately and regularly track the number of items in stock, without the need for manual counting.

Cost-effective safety stock

Maintain a cost-effective level of safety stock, or extra inventory that is held in reserve to ensure that you have enough product on hand to meet unexpected spikes in demand. The goal is to find a balance between having enough safety stock to minimize Stock-Outs while keeping inventory costs as low as possible.

Kitting and bundling

Kitting involves putting together individual items to create a single product, while bundling involves combining multiple products into a single package for sale. Bundle related products together and sell them as a single item so you can increase sales and minimize risk.

By implementing these strategies, ecommerce businesses can minimize the risk of Stock-Outs, increase sales, and improve the overall customer experience.

Calculate Stock-Out rate

The Stock-Out rate is a way to measure how much stock is available in your ecommerce store compared to the items you currently don’t have. This KPI should be tracked and analyzed regularly to understand how satisfactory the customer experience is on your site. This way, you will be able to address it as soon as possible, even before it happens.

It’s important for ecommerce businesses to stay vigilant and regularly review their inventory management processes to minimize the risk of Stock-Outs and ensure that customers receive the products they need, when they need them.