As a Shopify store owner, the last thing you need your customers to face is their favorite item being out of stock. You want to maximize every sales opportunity you can to increase your revenue as much as possible, and having optimal inventory levels is one way to get there. The sad truth, though, is that online shoppers faced over 2 billion out-of-stock alerts last year, so this clearly isn’t happening across the board. Those customers end up taking their business elsewhere, but you can prevent this. It just means you need to know exactly how to prevent stock outs in your store.

Keep reading to learn:

Avoid Out of Stock Inventory With Back in Stock

Back in Stock notifies your customers the moment an item is back in stock, helping you recover lost sales.

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What is a Stock Out?

A stock out, also known as an out-of-stock event, happens when a specific item is unavailable when your customer is ready to buy it. It’s a result of your store’s inventory management, as opposed to an overall supply issue affecting other retailers in your industry.

What Causes a Stock Out?

stock out

Stock outs can happen for various reasons, like:

  • Increased demand for a certain item
  • Miscounted inventory that results in less stock than you realized
  • Delays with your suppliers
  • Cash flow issues that leave you without enough cash to cover the inventory

We’ll unpack these in more detail, below.

Inaccurate demand forecasting and reporting

While there can be totally unexpected boosts in consumer demand for particular products, there can just as easily be inaccuracies in your demand forecasting and reporting – both leading to inadequate ordering and out-of-stock items in your store.

The hard truth is, if you can’t effectively predict consumer demand for your items, you’ll most certainly leave customers disappointed at some point when an item is no longer in stock. By the same token, since you can only base decisions on the data you have, you need that data to be sound and as accurate as possible. If your sales reports are far from this, you’ll be making decisions blindly that could lead to inefficient stock replenishment and inventory shortages down the line.

Inventory count discrepancies

The difference between inventory counts and your record of what’s in stock is a common stock-out cause. This can happen because of technical glitches, human error, theft (shrinkage), or any combination of these things, though human error is often the case. After all, you have super busy times and your team is trying to get everything done yesterday, so it’s to be expected. Technical issues can be, for example, inventory management systems experiencing downtime or a delay in syncing up.

Issues with delivery or logistics

shipping logistics

Part of being in retail means relying on logistics and shipping time frames from outside suppliers – something essentially out of your control. The COVID-19 pandemic has slowed the global supply chain, including manufacturing, transportation, and logistics. Thousands of unloaded merchandise containers sit on undocked ships worldwide, meaning that, sometimes, you simply won’t get your merchandise on time and there’s nothing you can do about it. But remember, you’re not alone. In fact, nearly 40% of small businesses have experienced pandemic-related delays so, for now, it’s a waiting game.

On top of this, there is always room for human error on the shipping side. Whether it’s an incorrect status of a package being in transit when it’s not, the wrong package sent to the right address, or the right package arriving at the wrong location, these types of mistakes happen and can affect your business.

Poor cash flow

No matter how well you predict your inventory demand or how often your supplier delivers on time, it won’t matter if you don’t have enough cash to cover your inventory costs. If you’re finding that poor cash flow is causing out-of-stock events in your store, you’ll need to roll up your sleeves to plan and allocate your resources more effectively. Whether this means taking out a small loan, reducing your teams’ hours, or cutting a low-selling product line, temporary measures like these can help get you back on the right financial track.

Don’t assume it all works! Put yourself in your customer’s shoes and do everything they will do.
Gary Gebenlian

Strategy Executive

Notify Your Customers When Products are Back in Stock

Back In Stock is an easy-to-use tool that helps you minimize the impact of stock outs and keep those sales.

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Why Out of Stock Inventory is Awful for Your Shopify Store

stock outs bad for business

Regardless of the reason, stockouts are beyond frustrating for your shoppers. Your best-case scenario is a disappointed but patient customer. But, your worst-case scenario is an annoyed customer who leaves a bad review and doesn’t come back to your store.

When people have a specific product in mind, they want it now and if they can’t have it, they move on quickly (and may forget about your store in the process!) Plus, online shoppers are often left in the dark as to the reason behind the stock-out – whether it’s a quick technical glitch or a major supply chain problem. Yet, when they know the reason they might be more understanding and likely to wait things out with you.

Shoppers can and will perceive out-of-stock events in different ways and take any number of actions as a result. For example, they might:

  • Find & buy the item at another retailer,
  • Backorder the item and wait to get it at a later date,
  • Decide against buying the item altogether, or
  • Find an alternate item to meet the same need.

They also might roll their eyes, vent with a few expletives, tell themselves they’ll never shop with you again, and leave you a bad review. Or, hopefully, they might simply blink and move on. The point is you won’t know, so it’s in your very best interest to mitigate stock outs as best you can.

It’s not just customers that stock outs bring disappointment to. Ecommerce operators like you are also affected. Besides lost sales and revenue – retailers give up close to $1 trillion in annual sales due to out-of-stock items – out-of-stock events also create missed opportunities to engage your shoppers, possibly damaging your brand in the process. Bottom line: you simply can’t afford to ignore this issue.

Using an Out-of-Stock Strategy to Prevent Shopify Store Stock Outs

Best Out of Stock Strategy for Shopify Store Success
When you proactively implement an out-of-stock strategy, you’re doing your business a huge service because it will help you prevent future stockouts, or at least mitigate their impact and frequency. Then, even if they do occur, you’ll likely spend less time and resources to make them disappear. Here are just a few things you can do to avoid stock out events in the future.

1. Notify your customers as soon as an item is back in stock

Don’t rely on your customers to remember to keep checking back at your store for that out-of-stock item – most of them simply won’t. A helpful Shopify app for back-in-stock notifications like Back In Stock makes it incredibly easy to automatically let customers know when this happens. Once you have it set up, your customers simply sign up for notifications and everything else is done for you. From the product’s page, all they need to do is sign up to get an instant text, email, or web push notification when their product of interest is back in your store.

How Back In Stock can help with your out-of-stock strategy

Not only can Back In Stock alert your customers when the item they want has arrived back in your store, but the tool can help you gauge interest in products well before reordering, so you can confidently predict your demand. You can also configure it to collect pre-orders, so you know the revenue you can expect upon product restock.

Here are some of the amazing features and functionality that Back In Stock comes with:

  • Notifications via text, email, or web push
  • Analytics dashboard and reports
  • Customizable email template
  • Customizable signup form and button
  • Instant setup
  • Mailing list integrations
  • Quantity required field
  • Email delivery settings
  • Instant and scalable email delivery
  • Experienced support
  • Shoelace retargeting integration

Check out this video to learn all about customer alerts with Back In Stock:

 

For any business, large or small, not to have an ecommerce strategy is a big mistake.
William M. Daley

Former White House Chief of Staff

Back In Stock: the Key to Your Stock-Out Inventory Strategy

Back in Stock notifies your customers the moment an item is back in stock, helping you recover lost sales.

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2. Effectively anticipate your demand

forecasting demand

While you can’t predict the future, of course, you can certainly forecast demand and predict your inventory needs. This means understanding and spotting the things or events that create sudden spikes in consumer demand. Big holidays like Black Friday, Christmas, and mother’s day will likely have a huge effect on your store’s demand. But, be sure to look at other times throughout the year and plan accordingly. For example, if you sell bathing suits, chances are your sales might spike right before summertime.

As part of this, you need to know your lead time for each item or the time frame between placing and receiving an order. Track if your suppliers are actually delivering when they say they will. If not, consider another carrier, since these promises trickle down from you to your customers and your reputation is on the line.

3. Reconcile any incorrect inventory count

To avoid stock outs, you need your inventory to be synced and accurate. For this to happen, reliable technology for inventory management along with a straightforward, clear process for your team to follow are non-negotiable.

An automated purchase order tool that integrates well with tools you’re already using and loving is a great help. In fact, automating inventory management so it orders products for you will save you time and effort, which contributes to your store’s bottom line, so this is a no-brainer, too. As far as processes go, consider these rules of thumb:

  • Count any new stock twice.
  • Organize and label all new items ASAP upon receiving them.
  • Ask your team to watch for stock discrepancies and report them to you right away.

4. Keep some backup stock onhand

Backup stock is the extra product you keep around to avoid stock outs. The idea behind this tactic is that it lowers your chances of running out before you can replenish your stock. How much backup stock you decide to keep will ultimately depend on several factors and look different for every business, but some solid demand forecasting and truly understanding your customers’ habits will guide you in the right direction.

5. Anticipate and plan for logistical hiccups

Your best bet to preparing for and minimizing the impact of stock outs on your business is to be as well-informed as possible about your suppliers’ logistics process. Why? Information is power, as they say, and the more of it you arm yourself with, the better proactive decisions you’ll make.

For instance, you can choose to partner with companies that provide shipping notifications in advance of package arrivals, which will inform you of a shipment’s timing and location. If you notice unusual delays on its journey, you can act fast by inquiring about the hold-up immediately and informing your customers as needed. They’d most likely prefer to hear about delays in advance, rather than finding out after the fact and spending time contacting you themselves.

6. Find reliable backup suppliers

Just like for your inventory, you need a contingency plan for your suppliers. The reality is that suppliers also run out of product from time to time, due to manufacturing delays, border control issues, or any other number of issues along the way. This is why it’s important to have a few pre-vetted backups in mind, including Shopify dropshipping suppliers, just in case your go-to can’t deliver on time. Especially for your best-selling items, you’ll be glad you did.

Out of Stock Inventory FAQs

What is a stock out?

A stock out happens when an item is unavailable at the time your customer is ready to buy it, often due to poor inventory management.

Why should I have an out-of-stock strategy?

If you’re unprepared, you’ll annoy and alienate customers and get bad reviews from them, which can result in a damaged reputation and lost sales and revenue for your business.

What can I do about stock outs in my Shopify store?

  1. Alert your customers the moment their item is back in stock
  2. Correctly anticipate your demand
  3. Reconcile your inventory
  4. Maintain some backup stock
  5. Anticipate logistical setbacks and plan accordingly
  6. Partner with reliable backup suppliers
Dig your well before you’re thirsty.
Seth Godin

American Marketer, Entrepreneur, Author, Public Speaker

 

Now that you understand what a stock out is and how it can quickly impact your Shopify store, you can take the simple strategy steps we’ve provided and hang onto those potential sales. Over time, you’ll enjoy a wider audience, more sales, happier customers, and a bigger bottom line.

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