Stockout: what it is and how to avoid it

Stockout: what it is and how to avoid it

01/25/2021 - Price optimization

Stockouts are one of the biggest fears of any eCommerce business. When faced with the unexpected demand for a product, the loss of this sales opportunity is immense. Do you know how to correctly manage your eCommerce catalogue to avoid stockouts in your warehouse?

What is a stockout in an eCommerce business?

A stockout is when a store runs out of the units of a product within its catalogue. This situation obviously creates an enormous sales problem for the eCommerce business as it becomes impossible to meet the demand of its potential customers. With this, the income fades and at the same time, the users begin to perceive the store as unreliable. This is because an empty shelf (whether physical or online) always gives a bad impression.

In the case of an online store, this damage could be worse if, at this moment, the users decide to search for new alternatives online and eventually finds your competitor’s website, who has played their cards better in terms of purchasing.

5 common causes of stockouts

Catalogue stock management is essential for any store. What could have caused a stockout? Here are five reasons for eCommerce stockouts

  1. An outdated sales forecast. Your stock must be organised in alignment with a realistic sales forecast. For this, you must consider the standard demand progression and the seasonal trend periods or calendar milestones.
  2. A punctual increase in demand. As with general planning, you must keep up to date with trends and closely follow any fluctuations in your competitor’s stock to be able to predict these behaviours. 
  3. Poor monitoring of actual stock. When faced with errors in the warehouse stock ledger, your inventory adjustments might not correspond to the number of units of the product that you actually have in the warehouse. This could be the most serious reason, since you may even register certain sales that you’ll later have to cancel with the consequent impact on the affected user
  4. Logistical problems with the merchandise. This is if there are problems with third parties that are out of your control, such as those arising from transport or related to the supplier.A lack of safety stock. If you don’t have safety stock, you won’t have a cushion covering all of these possible reasons for stockouts. For this, use the sales forecast with the necessary percentage to avoid this type of problem. 
Stockout

How to avoid stockouts in your eCommerce business

Regardless of the reason that your eCommerce has run out of a product, there are ways to remedy the situation—and even of not having to encounter it in the first place.

The first key to avoiding stockouts in your eCommerce is to have a catalogue management software that allows you to count the actual number of units as well as automate the restocking process

The second technique is to monitor your competitors’ stock. Select their whole catalogue or just those products that really interest you. Through their movements, you’ll be able to understand the relationship between their sales peaks and their warehouse. With pricing optimisation software, you’ll also be able to monitor price fluctuations and create offers and promotions while maintaining margins and competitiveness.

Finally, keep in mind that having zero units of a product doesn’t always have to be a bad sign. A bestseller? Just keep seasonality in mind to avoid this. And, in this final case, suggest similar products to your potential customer. Don’t let the sale pass you by completely!

Category: Price optimization

Tags: ecommerce

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Angela
Angela de la Vieja
Content Manager

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