How To Rescue Out-of-stock Revenue
Out-of-stocks (OOS) are a critical problem for not only traditional brick-and-mortar retailers but also online retailers and brands. Stockouts happen when a business fails to order enough inventory to satisfy the demand. On average, the out-of-stock rate for eCommerce business is about 8 percent, except for promotional or discounts periods, the rate is up to 10 percent. Stockouts have a negative impact on business, including financial and non-financial results. Thus, it’s no question that businesses should take some ways to recover out-of-stock revenue. What do stockouts result in? Stockouts could lead to several effects. Financial losses are the most obvious result. A study showed that retailers lose an estimated $634 billion to out-of-stocks each year. In addition, stockouts reduce customer satisfaction and loyalty, then results in product, brand, and category switching. There are 5 common responses that consumers make when encountering stockouts or a product they had planned to purchase: Buy the item at another store (store switch) Delay purchase (buy later at the same store) Substitute-same (for a different size or type) Substitute-different brand (brand switch) Do not purchase any item and leave the store Causes of out-of-stocks The inventory stockout happens for four main reasons: Data inaccuracy It’s hard to have an exact number of the inventory due to the shipment methods, returns, stolen products, and misplaced, as well as differences between on paper and in-store. This leads to difficulties in having accurate re-ordering of products. Failure to re-order on time When products are sold faster than the business can restock, those in-demand items are easily out-of-stock. Poor technology and management of processes If a business fails to properly manage the processes, employees, and technology, out-of-stocks problems aren’t avoidable. Poor management of relationships with suppliers Failure to manage good relationships with suppliers is one of the common reasons which results in missed or delayed orders, and then stockouts. How can businesses rescue out-of-stock revenue? Collect an email for updates about when it’s back-in-stock and utilize back-in-stock emails When a certain product is out of stock, collect the customers’ emails to notify them of back-in-stock updates. If they are actually interested in the item, the high ability that they will be willing to purchase the restocked item. This email may also be used for next subsequent promotions and further brand emails. The next step is to work on back-in-stock emails. The brand, the product, and prices are indispensable in the subject. The body should include an image and mention the brand, product name, and price again. Finally, include a clear CTA which links customers to the product in the store. Share related products In some cases, this may be a timely solution for customers who haven’t ensured to purchase the item they are looking at. A related product can attract them and be preferred to the out-of-stock item. Related products not only help save a sale when stockout happens, but they can help increase the average order value. Allow backorder There are some technology solutions that recover out-of-stock revenue for online retailers, one of them is to allow backorder. If your business is using BigCommerce, BackOrder, an effective management app, shall be the solution you are seeking. BackOrder helps automatically backorder the out-of-stock items and capture more sales. The app can switch products to backorder instantly based on pre-set inventory conditions, custom notifications, and messages. In addition, it also allows the business to make back-in-store planning while setting a backorder threshold to control quantity. Stockouts are unavoidable events for businesses of all sizes. To minimize losses for your business, ensure you have a long-term strategy, including some of the mentioned suggestions.
Defense Mechanisms: Rescue Sales With BackOrder
About Defense Mechanisms Defense Mechanisms is an American-based tactical gear and apparel manufacturer. The company prides itself on creating next-generation tactical gear that serves multiple practical uses. It is highly reliable for constant product updates, spot-on quality, and reasonable prices. The quest for a back-order solution Over the last century, the demand for tactical gear and clothing has gone beyond the law enforcement and military market to commercial sales for civilians. As the market grows, more and more customers come to Defense Mechanism in search of plate carriers, body armors, placards, pouches, and so on. Yet problems arose when they were not able to integrate currently available and backorder stocks on the same page. A temporary solution was to create a “warehouse” page for every item that is about to return. However, it did not work effectively for Defense Mechanism due to the product variety and nature. The brand cannot showcase products in their storefront even though the supply has arrived. On the one hand, it confuses visitors if they want to order more stock than is available. On the other hand, some people might not be able to find the warehouse page and leave without purchasing. Because of this difficulty, there are tens of thousands of dollars worth of in-stock items sitting on the shelves waiting to be sold. An extraordinary solution BackOrder has made it easier than ever to switch between in-stock and backorder inventory levels. Once an item is assigned to the system, a note will appear in the product description identifying the current stock level and backorder availability status. This signals that customers can place an order that outnumbers the in-stock inventory. Furthermore, they are able to adjust the term from Backorder to Made to Order, which better suits the brand identity. At the same time, there is a pop-up note specifying the back-ordered number and the expected delivery date. The idea is to ensure that customers are fully aware of the order not being fulfilled at the moment. However, it will definitely arrive in the future. Thanks to BackOrder, the Defense Mechanisms team can put returned items back into circulation as fast as a pancake. Statistically speaking, the app helps yield up to $40.000 worth of products back onto the run. None of the previous apps ever did the company as much good as BackOrder does. A complimentary support service Besides the inventory management solution, the BackOrder customer service team always comes in handy should there is any problem. Currently, the team is developing a custom function to remove product tags in the Order Note section, leaving only that statement that “Some products are on backorder which will be shipping at a later date”. Not to mention that it only takes a little time to get familiar with the system and set up the first backordered item. BackOrder has perfectly fulfilled the needs of Defense Mechanisms. “Backorder helped us fulfill a function our store desperately needed and has continued providing amazing customer service and problem-solving along the way. I’d recommend Back Order to any company looking to optimize their back-end inventory management.”
