The Real Cost of Stockouts for Ecommerce Businesses

We’ve all been there. You’re online, looking for that perfect something.
You find it and get excited, only to find it’s out of stock! Disappointed, you seek an alternative supplier.

This is why the phrase “Out of Stock” should never, ever show up on your ecommerce site.

The Dreaded “OOS”

People opt to purchase goods and services online for a number of reasons. One of the biggest benefits is convenience; ecommerce sites are available when and where customers are ready to shop. Online stores also allow buyers access to goods and services that may be unavailable at nearby shops.

But what happens if shoppers visit your ecommerce store or marketplace listing and see the words “Out of Stock” displayed? Let’s look back at one of America’s most beloved toy stores. Toys ‘R” Us left an indelible mark, as we grew up with this behemoth of a company. Yet, the giant toy store struggled to keep up with the new service standards associated with an omni-channel customer experience.

On Black Friday and Cyber Monday 2015, the Toys “R” Us site failed to accurately show inventory available at local stores. In an interview on the site Retail Dive, a former employee claimed inventory tracking was off and orders were made that couldn’t be filled, resulting in thousands of unhappy customers. Moreover, Toys “R” Us ran out of top-selling toys during the most critical selling season of the year. It was a PR and branding nightmare for a company that had always touted itself as the biggest toy store in the country.

Today’s buyers expect to drop the item they want directly into a virtual shopping cart, click checkout and have it shipped immediately. If you don’t have the item in stock, they won’t hesitate to take their business elsewhere. If you sell on Amazon, stockouts can be even more costly. As a top 250 Amazon seller, Chad Rubin explains, “…to Amazon, your empty inventory translates to a view of unreliability to which they must make you suffer by stripping your sales ranking.” Diminishing your online visibility only gives your competition an even greater advantage.

Are You Properly Managing Your Inventory?
If you’re like most online sellers, you purchase goods from different manufacturers to satisfy your customers’ needs. You may also make bulk purchases in anticipation of future orders. This can tie up the cash within your business for months – especially if you’re sourcing internationally – and make it difficult to keep your inventory steady.

Proper inventory management is a critical priority for online sellers.

Ask yourself:

1. Do you have a system in place helping you forecast future purchases?
2. Are you using an electronic inventory management system that automatically monitors inventory levels?
3. Do you have enough cash on-hand to support any unanticipated costs associated with your company’s rapid growth?
4. Do you have options to increase liquidity in the event inventory is needed?

To learn more about how UPS Capital can help your protect your inventory, reach out to an account representative today at Call 877-263-8772.