Research has shown that the average stockout rate for retailers is around eight percent. In other words, when a customer visits your store (be it online or brick and mortar) one in 13 products will not purchasable at that time. It’s evident that stockouts are a universal problem costing retailers tear-inducingly large sums of money in lost sales.
For most retailers, stockouts are one of the top contenders for “worst nightmare” situation, and for good reason. Not only does OOS affect profits, but in our digital age of instant gratification the unavailability of products can have a devastating affect on customer experience. 30% of customers feel that products being OOS hurts their shopping experience. In most cases when a product is unavailable, frustrated customers will simply switch to a competitor or buy substitute products rather than wait it out.
In today’s fast paced retail environment, real-time inventory management is commonly reported as one of the biggest headaches for retailers. There is a myriad of reasons why a stockout may occur. For example, retailers may underestimate customer demand for a particular item, their employees may lack sufficient training on the subject, or it may simply be the case that a supplier has let them down.
So what can be done to prevent stockouts? Fortunately, there are many solutions to stockout troubles. One effective way to combat OOS is to put inventory controls in place; a good rule of thumb is to always eliminate stock issues for the 20 percent of items that account for 80 percent of total sales. Another good idea is to dedicate a good amount of time to demand planning and sales forecasting or to implement an inventory management system.
Check out our infographic below to learn more about how you can prevent the out of stock problem to boost profits and satisfy customers.