How To Rescue Out-of-stock Revenue

out of stock

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.
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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.

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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.


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