BBB Business Tip: Don’t lose customers over out of stock items

Whether you run an online store or a brick-and-mortar business, out-of-stock items could cost you not only revenue but also customer relationships. Knowing how to handle “stockouts” is important to your business.

Although you may not be able to eliminate the possibility of out-of-stock items completely, proper inventory management can greatly reduce it. By handling out-of-stock inventory properly, you can also avoid losing loyal customers.

BBB recommends the following tips to help you make the most of your inventory and keep customers returning. 

What to do when a product is out of stock:

• Be honest. Honesty is always the best policy. If you're running low on inventory or an item becomes out-of-stock, be open and honest with your customers about it. Communicating this information can help set customer expectations and reduce frustration. For example, if you choose not to communicate low inventory on a product and then quickly run out of it, your customers may get frustrated with your business when their orders take too long to be fulfilled (which can be especially problematic during peak shopping seasons like the holidays). A Harvard Business Review analysis found that disclosing items that are running low or are more likely to be out of stock can help businesses suffer from stockouts and improve customer satisfaction.
  
  
• Provide customers with other options. Be sure that your website’s product page or in-store display offers your customers alternative products to choose from that are similar to what they were originally looking for. This article has examples of websites doing that well.
  
  
• Offer back-in-stock alerts. If possible, provide your customers with an option to sign up for a text or email notification when the product is back in stock. If a customer is loyal to supporting your business, this can help retain them.
  
  
• Selling online? Know how to handle SEO. Avoid pulling the landing page completely when a product is out of stock. This can create a “not found” error page which is frustrating for consumers and could negatively impact your SEO. Redirecting users to the homepage can also be confusing. Instead, be hoenst and make it clear that the item is out of stock right away. Make sure the product page is still useful by providing links to similar items. 
  
  
• Offer pre-orders. If you know that a product you're selling will go out-of-stock quickly, or if you're currently waiting on a restock of an item, offer your customers the option to pre-order it. This can help retain your loyal customers by locking in sales early and also help set customer expectations for the demand for your product. Remember, being open and honest is key. Share with customers the anticipated date of the restock so they know when to expect it. Be sure to communicate if shipping times will be delayed as a result, too.
  

Inventory tips and resources:

• Put someone in charge. If your shop is struggling to keep items in stock, Forbes suggests a few steps to help with inventory. Start by making one person, perhaps a manager, responsible for overseeing inventory. This way, when questions come up, there will be one person responsible.
  
  
• Use data to forecast sales. Your point of sale (POS) system can give you the data you need to forecast sales accurately and avoid stockouts, according to SBA.gov. Good POS systems help you look up transactions, track sales, and determine what your most popular products are. Use this data, rather than guesswork, to forecast upcoming sales. Be sure to factor in seasonality, upcoming promotions, and current demand trends.
  
  
• Keep track of what you have in stock. You can track your inventory the old-fashioned way in a spreadsheet. However, software that integrates with your point of sale (POS) system will streamline that process and reduce errors in inventory. Shop around to find inventory management software that will work well with the size and type of business you run.
  
  
• Check your par levels regularly. Par levels are the minimum amounts of products you should have on your shelves at all times (in-store or in-warehouse, depending on the size of your business). If your inventory drops below the minimum level, it’s time to reorder the product immediately. Score.org recommends checking these levels frequently to make sure they still make sense, considering how fast items sell and how long it takes to get them back in stock.
  
  
• Consider having multiple backup suppliers. Having one or more backup suppliers on hand can reduce the possibility of a stockout on high-demand products.  
   

For more information:

Learn how to prepare and organize your inventory for the holiday season and how to run your business more efficiently.

Read BBB’s advice for shoppers on how to find out of stock items.  

For more business resources, see the BBB Small Business Resources page and find more articles about managing your marketing and sales.

Learn how to become a BBB Accredited Business.