5 ways to turn your out-of-stock problems into revenue

Thanks to AI technology, you can solve all your out-of-stock problems. Thanks to these user-friendly tools with endless opportunities for what you as a brand can monitor in your reseller channels. Find a tool that helps you ensure consumers can:

  • find your product
  • get inspired to choose your product
  • buy your product

Act on your lost sales opportunities

Many things hold back sales in reseller channels, but few hurt sales as much as when products go out of stock—especially when you are unaware of the problem.

Then it can last for days or weeks.

And when these products go out-of-stock, especially your top-sellers, it means an instant drop in your sales numbers. Transactions can’t take place if the products aren’t there to buy.

It’s terrible news also when products fall in search rankings or if a product lacks reviews. Some consumers will find your products on the direct search and buy them anyway if they know what they are after.

But when a product runs out of stock, it means real troubles for that product in that sales channel—guaranteed. 

In the worst case, consumers will choose a competing brand—and stay loyal to them for years to come. Out-of-stock issues are also more dangerous to brands online than in stores.

First, there is an increase in these issues in e-commerce (where out-of-stock rates of 12—20% are typical) versus in stores (where out-of-stock rates of 5—10% are standard).

Consumer reaction to out-of-stocks is also different in the online sales compared to stores.

The report, “A Worldwide Study of Extent, Shopper Reactions, and Implications for Non-Food Online Retail Categories,” from GMA tell us that:

Consumers are more likely to remain on the E-commerce site and substitute the item looked at in 70% of all cases, which the researchers dubbed “the Amazon effect.

However, if a physical store is out of a product, consumers are more likely to switch to another store to find the same product.

Dealing with the out-of-stock problem in the online reseller channels can deliver a high return on global consumer brands’ investment. Here are some ways to do it.

out-of-stock problems

1.First, realize the extent of your out-of-stock problems

Do you know where your products were out of stock this morning? How many are out-of-stock for over three days? 

Many resellers are too busy to keep up with products that sell out, so your brand may be absent from the virtual shelves for days or weeks. 

It can be even harder to spot when it involves multiple color or size variants. For example, a product might be available in blue and red, with a zero black stock. 

By automating stock availability checks for your products, you can close those sales leaks quickly.

2. Let the relevant people get the most relevant updates about out-of-stock issues

Companies with hundreds or thousands of SKUs must filter the data to be relevant for the organization’s right people. 

For example, a regional marketing manager needs to know about the out-of-stock issues in a particular geographical area. In contrast, a key account manager is interested in a few resellers. 

Imagine getting e-mail updates saying: “Good morning! These 15 SKUs have been out of stock for over three days now in the indirect sales channels you are monitoring.”

out-of-stock problems

3. Get notified about out-of-stock issues when it matters the most

Some products might be worth monitoring daily, considering how much they contribute to total revenues. Other products are more critical during specific campaigns or high-season weeks. 

Customizing your stock monitoring lets you know what’s happening with the products that matter most, so you can ensure they are in stock while there is super-high demand.

4. Plan based on what happened in the past

Which of your resellers have a history of running out of products during high season and need to focus on better stock replenishment this year?

Once you have the data, you can cooperate with these resellers to make more solid preparations and improve sales. 

5. Analyze your out-of-stock issues on a macro-level over time

For example, you can update your forecast models to make sure products are in stock more consistently. 

What if you could improve out-of-stock issues by 50 percent on the most critical sales days of every month, which are right after payday?

What impact would it have on your revenues if you could reduce your out-of-stock rate from 10 percent to 5 percent across the board?

 

Originally published Sep. 10, 2019, updated Feb. 04, 2021
Joakim Gavelin
Joakim Gavelin
CEO, Detail Online

Joakim has spent 25 years in merchandising and conducting audits in physical stores, and for the last 5 years he has been applying the same principles online. The tactics include promotion, presentation, visibility, stock situation, position on shelf, share of shelf etc., which all affect conversion in e-commerce.

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Discover the most important parameters of ecommerce auditing and get practical advice on how to monitor your product visibility in online reseller channels.
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