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Retailers Hate Stock-Outs – What's The Solution?

May 12,2024

The problem of out-of-stocks has plagued retailers for years. It occurs when a product is not available in the store or online when a customer wants to buy it. Out-of-stocks can lead to lost sales, decreased customer satisfaction, and a damaged reputation for the retailer.

There are many reasons why out-of-stocks happen. Some of the common causes include poor inventory management, inaccurate forecasting, supplier issues, and unexpected demand. For example, if a retailer underestimates the demand for a particular product, they may not order enough inventory to meet customer needs.

Out-of-stocks can have a significant impact on a retailer's bottom line. According to some estimates, out-of-stocks cost retailers billions of dollars in lost sales each year. In addition to lost revenue, out-of-stocks can also result in increased costs for the retailer, such as rush orders, expedited shipping, and overtime pay for employees.

causes of stockout

Fortunately, there are ways to mitigate the impact of out-of-stocks. Retailers can use data analytics to better understand customer demand and forecast future sales. They can also improve inventory management practices by implementing automated replenishment systems and optimizing stock levels based on sales data.

A popular system used is StockTrim, which is an inventory forecasting add-on to the most common Inventory Management system. Small & medium sized businesses love having a resource like this as it allow them to get access to information much bigger companies have had for years.

Ivor, Managing Director of Scientific Sales says “I used to use a monster spreadsheet for my e-commerce stock management. StockTrim makes it much easier and adds some algorithms to predict demand based on previous sales, all drawn from Xero inventory.

In my first week of using it, it identified a stock-out risk that my spreadsheet missed allowing me to place an order.

Recently, I have been adjusting lead times to account for the pandemic-derived delays in sea freight giving me more realistic projections. Takes a couple of minutes with StockTrim, or about half a day in Excel.”

Other strategies include establishing better relationships with suppliers and improving communication channels to ensure timely deliveries. Retailers can also use technology such as RFID tagging and real-time inventory tracking to gain better visibility into their supply chain and identify potential out-of-stock situations before they occur.

inventory stock-outs

In summary, out-of-stocks are a significant problem for retailers that can result in lost sales and decreased customer satisfaction. However, retailers can take proactive steps to mitigate the impact of out-of-stocks by implementing data analytics, improving inventory management, establishing better relationships with suppliers, and leveraging technology. By taking these steps, retailers can minimize the impact of out-of-stocks and provide better customer service to their customers.

Readers of this article can get 14 day free access to StockTrim and get an automated assessment of their inventory before deciding if they want to subscribe. Plans start from only $99 per month, depending on SKU’s and term. Users can rely on significant ROI within the first few months.