The small details of running an eCommerce business are not always easy.
There are a lot of operations to worry about. Data can help clear up the chaos, highlighting processes that can be improved to keep your productivity and profit margins high.
When it comes to business operational processes, there's a well-known dreaded trio that makes organization and predictions difficult: It's overstock, out-of-stock, and returns.
What is out of stock?
A stockout can occur when a customer orders a product exceeding the amount of inventory kept on hand. This situation arises when demand is higher than expected and the amount of inventory and safety stock is too low to fill all orders.
A stockout can also arise due to delays in the supply, as well as miscount of inventory, spikes on demand that surges for a particular item, suppliers getting delayed, etc. A stockout causes an increased risk of lost sales since customers are more likely to look elsewhere for the necessary items. This can have a negative impact on long-term customer relations.
Reasons behind stockouts
Poor supply planning
The supply process includes the acquisition of products and all the activities necessary for a company to operate correctly. From the purchase of indirect supplies to internal and external services.
Therefore, supply management is the process of planning, executing, and controlling operations in a company, with the purpose of meeting customer needs as efficiently as possible.
When a retailer can not effectively anticipate demand for a specific item, it’s almost inevitable that some customers will end up disappointed when that item is unavailable: unavailability of specific items or products at the point of purchase when the customer is ready to buy, this can create a higher risk of losing sales, and the impossibility of supplying the demand of the moment.
Demand planning in Supply Management is the set of actions and calculation techniques necessary to supply a product, stock, to one or more consolidation or storage centers and whose main objective is to maintain adequate stock levels to meet demand. average requested by the set of clients in a period of time.
An unexpected increase in demand can cause stockouts, since the product is sold at a higher rate than it is stocked.
Delays in supply chain
The suspension of activities due to the pandemic has generated restrictions on the movement of workers, transport, and materials and this is causing a shortage of merchandise in most sectors, as well as serious problems in the transport of goods between continents.
Freight forwarding companies have had to increase transit times causing the collapse of containers due to lack of personnel. Restrictions on air transport have negatively affected import/export capacity.
So, there are bottlenecks at every link in the chain, whether it's shipping, ports, trucks, trains, planes or warehouses, leading to delivery time delays that are reaching all-time highs in some countries.
The supply chain was interrupted last year due to the pandemic and quarantine measures. Now it is struggling to recover as it grapples with surging demand triggered by vaccinations and the lifting of lockdown measures, and the inability of manufacturers and distributors to supply and produce at pre-pandemic levels.
For example, COVID-19 continues to reduce factory capacity in Asia, making shipping and logistics more expensive. Extreme weather events due to global warming cause disturbances.
Constantly having products out of stock can be stressful, it can cause a big dip in potential sales, drive customers away, and ultimately stunt business growth.
Some companies might even think of hiding / temporarily disappearing those products.
Should I hide my out-of-stock products?
No, you should not hide them. If you plan to keep selling them, you should put them on backorder. If you decide to discontinue these products, you can push them down in your catalog and hide them from the catalog pages but don’t take the product page offline.
The main reason not to delete them is because of the positioning. Since each product has its own URL, and for Google that is just another web content. If it is deleted, it will automatically be completely removed from Google.
The answer is easy: the product is not deleted so that they can find your profile!
That discontinued or exhausted product will not be sold anymore. But that does not mean that there is no substitute, complementary, or similar product! Perhaps there is an equivalent or even better alternative. But of course... If they don't find them in the first place... How will the alternative be presented?
How good are back-in-stock apps?
The conversion rate of back-in-stock apps is very low. You lose the customer interest and intent of the customer when you ask them to leave their email and you will notify them later. Instead, you should be able to sell them right at that moment on backorder by clearly communicating the estimated arrival date.
Increasing the conversion rate is one of the great challenges. This is especially due to the sputtering of the market, which offers very similar services to users, who often look for advantages that attract their attention.
For example, if it was a cleaning product, an e-commerce store can tell you that instead of that, they can now offer another one that fulfills the same task. Or if it is a book, can propose other books by the same author. Or other books on the same theme. Imagination to power, let's have a little inventiveness!
What is backorder?
As an eCommerce brand, you can’t afford to lose interested shoppers due to stock outs. Customers will take the time to browse your store, find the product they are looking for, only to find it out of stock. When this happens, they end up abandoning your Shopify store altogether and shopping from your competitors instead.
Backorders are orders that are made and processed despite the fact that the requested products are not in stock in the warehouse, but knowing that your supplier will be able to respond quickly enough so that the product reaches the customer within the established period.
The management of backorders is one of the main logistical challenges facing warehouses today, both due to its complexity and the consequences that it may entail. Every company must previously define what percentage of backorders is ideal and not exceed it. Otherwise, the brand image could be damaged.
What is the best way of taking backorders?
Turn out-of-stock products into revenue!
Allow your customers to buy products they love when out of stock. Manage expectations right and build a transparent communication with a smart backorder feature for your Shopify store!
Transparent communication along the customer journey
68% of shoppers value brands that communicate estimated shipment times. Make your customers happy!
Two-thirds of consumers are aware of supply chain problems. They don’t mind waiting for their orders as long as timelines are being shared transparently by the brand.
Do like modern brands do and start using smart backorders!
Out of stocks happen but worry not! We got you covered. Install our 5-star reviewed Shopify app and start taking smart backorders fully on automation.
While a company can minimize stock-outs, there will always be times when certain products sell out faster. It is impossible to avoid such cases, but e-commerce brands can set up alternatives to reduce the loss of sales due to stock outs. There are several apps that help you capture interested shoppers during stock outs and bring them back to purchase when the item is back in stock.