(Getty Images)
Whether you run an online store or a brick-and-mortar business, out-of-stock items could cost you dearly. Knowing how to handle “stockouts” is important to your business.
To put things in perspective, "21% to 43% of consumers faced with a stock-out will go to another store to buy the item... Those abandoned purchases translate into sales losses of about 4% for a typical retailer," according to Harvard Business Review.
So how can you avoid these “stock-out walk-outs”? You may not be able to eliminate out-of-stock items completely, but you can greatly reduce them with proper inventory management. You can also avoid losing customers with the way you handle out of stock inventory.
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:
- 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 an email notification when the product is back in stock. For example, Amazon provides availability alerts on a product's information page. If you sign up, Amazon will send an e-mail when the item becomes available.
- 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, 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.
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. But software that integrates with your point of sale (POS) system will streamline that process. 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.
For more information:
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. Learn how to become a BBB Accredited Business.