Shopping and not finding what you’re looking for is a tale as old as time. But over the past two years, out-of-stock items—both in-store and online—have become more common.
As supply-chain issues have mounted and consumer demand has shifted to the essentials, online retailers need to more intentionally shore up inventory or potentially lose customers who are but a click away from another option.
“The biggest impact an out-of-stock has on a brand is damage to its reputation,” Michael Keenan, freelance commerce writer and contributor at Shopify, told Retail Brew. “Customers are willing to forgive a brand to an extent, but if they keep experiencing out-of-stocks, then they’re likely going to leave.”
From March 2020 through February 2022, online shoppers received 60 million out-of-stock messages, according to Adobe Analytics.
- Pre-pandemic, the odds of a shopper seeing an OOS message was 1 in 200 pages. That figure has risen to 1 in 59 pages, a 235% increase.
- In 2021, 7.4% of retail sales were not realized due to out-of-stock/out-of-shelf items, which cost retailers $82 billion, per NielsenIQ data.
For companies like SnackMagic, a customizable snack service, these challenges have offered up a business opportunity.
The service curates packages from CPG brands including Partake Foods, Dots Pretzels, Pipcorn, Belgian Boys, and Milk Bar. The company uses a proprietary inventory management system, in which its partners track how much product is in stock, how quickly it’s moving, and how much capacity there is.
- “Going into the holidays, we know it’s gonna get crazy,” Shaunak Amin, co-founder and CEO of SnackMagic, told Retail Brew. “So we’ll automatically up everybody’s capacity, and we’ll let them know.”
SnackMagic
SnackMagic also uses variety to its advantage. If a product is OOS, SnackMagic’s platform will redirect the shopper to the brand’s Shopify store.
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If the Shopify store is OOS, “it’s a great way to say, ‘Here’s a product that you tried…here’s something that other people also bought when they tried that previous product that you like,’” Justin Queen, merchant developer at SnackMagic, told Retail Brew.
SnackMagic declined to disclose revenue, but said the company is doubling revenue every year. The company buys all of its goods from its brand at a mutually agreed-upon wholesale price.
“Every morning, we get an email showing exactly how many units/per flavor were sold the previous day,” Emanuel Schmerling, founder of MilkBoy, said in an email. “They also let us monitor in real time inventory of our chocolates at their warehouse, and they leave it up to us to decide how much product we want to ship to restock their inventory.
The effect of OOS varies from retailer to retailer, Keenan said. For example, apparel brands that sell plain, white T-shirts are more vulnerable to customers going elsewhere than luxury brands that sell very specific, high-end merchandise. Plus, Adobe notes that OOS messages haven’t deterred demand, as shoppers are very willing to substitute.
Keenan said best practices around handling OOS situations include…
- Updating customers when product is back in stock
- Recommending different products, particularly to recurring customers
“The great part about being a retailer right now is that there are so many tools in place that can help you automate and keep your counts accurate,” he said, adding that the key is “leveraging those tools in order to make the best out of a situation, even if there’s a supplier delay, manufacturing hold-up, or logistics issue.”